Attempting to stem the tide of foreclosures, San Mateo County’s Board of Supervisors on Tuesday passed a resolution calling on subprime lenders to halt foreclosures for three months while renegotiating with their customers.
The measure’s provisions are voluntary and follow in the footsteps of the South San Francisco City Council, which passed a similar resolution last month.
Board President Rose Jacobs Gibson, who proposed the resolution, cited the 1.2 million foreclosures filed nationwide last year and the 142,426 foreclosures filed statewide in 1996 — an increase of 131 percent from the previous year in California. In April of this year, the number of foreclosure filings in San Mateo County was more than six times greater than the previous year at the same time, according to county officials.
“Subprime loans have turned the dreams of home ownership into nightmares,” Jacobs Gibson said.
Estela Baldovinos told supervisors she is four months overdue on the mortgage payments on her South San Francisco home. Baldovinos, a housecleaner, and her husband, a handyman, bought the $675,000 home in 2004. With monthly payments of $2,700 and 6.5 percent interest on their loan, the Baldovinos and their nine children lived comfortably.
After two years, however, the Baldovinos’ monthly payments shot up to $8,200 per month at 12 percent interest. Baldovinos says that at the time she bought her house, her lending agent assured her that her payments would go down, not up. The nonprofit group Association of Community Organizations for Reform Now is currently negotiating on her behalf and foreclosure proceedings have been put on hold.
“It’s very stressful. We can’t concentrate on our personal life at all,” Baldovinos said.
Supervisor Adrienne Tissier said Baldovinos’ story is not uncommon.
“A lot of what’s in the [loan] documentis different than what you’re being told by the lender,” she said. “This is a time to take a closer look at the lenders and the real estate agents. They extended the market to people who truly couldn’t afford the homes.”
Supervisors said they hope the moratorium will allow homeowners facing foreclosure to renegotiate the terms of their loans.
A report released last week by ACORN examines the neighborhood impact of subprime lending and foreclosures.
The report cites a study by researchers at Georgia Tech and Woodstock that found that an increase in the foreclosure rate to about 2.8 foreclosures for every 100 owner-occupied properties in one year corresponds to an increase of violent crime of approximately 6.8 percent.
The cost of likely foreclosures
617 number of high-cost loans made in 2006 in the San Francisco-San Mateo County area likely to go into foreclosure.
$4,441,666 cost to individual homeowners in foreclosure
$124,868,079 cost to lenders and investors
$11,861,098 cost to local government
$71,255,420 cost in lowered home values of neighbors
Total cost to all stakeholders: $210 million
– Sources: Acorn, The Center for Responsible Lending