Washington, D.C. – March 24, 2010 – (RealEstateRama) — Rep. Raúl M. Grijalva today called on the White House to more fully address the nation’s ongoing foreclosure crisis. Grijalva signed a letter along with 26 other House Democrats urging Treasury Secretary Tim Geithner to consider a range of options – including the creation of a new government entity to buy up distressed mortgages – and to make the issue a higher priority in the coming days.
“Passing health care reform doesn’t mean the government can take a day off,” Grijalva said. “The American people are facing serious challenges, and a year’s worth of housing foreclosures with no end in sight is at the top of the list.”
The letter argues for a new government entity, modeled on the successful Depression-era Home Owners Loan Corporation (HOLC), that would have specific tools and authorities to match the current unique situation. The new entity could be funded through remaining funds in the Troubled Assets Relief Program, the letter says, and could be given targeted authority to buy mortgages and handle them in a humane and financially sensible way.
Existing government efforts, such as the Homes Affordable Modification Program (HAMP), have so far “failed to stem the tide of foreclosures,” Grijalva said. “It’s time we got to work on the issue with a real sense of purpose. The HOLC kept families in their homes, stabilized the economy and even returned a modest dividend to the taxpayer. That’s the kind of action the American people expect and demand at a time like this.”
The letter says administration officials should reconsider the premises of their approach to the problem. “Like the Hope for Homeowners Program and other preceding federal foreclosure mitigation efforts, HAMP is premised on the assumption that private loan servicers can or will voluntarily modify loan terms in exchange for federal incentives,” the letter says. “This is an approach that has been tried time and again but has not worked.”
Grijalva’s concerns about HAMP were echoed by Neil Barofsky, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP). His newly released report says the program has, in many cases, merely delayed foreclosure at taxpayer expense. “If HAMP ends up being a foreclosure mitigation program that merely delays foreclosures rather than preventing them, the program will be of questionable value, particularly in light of the huge investment of taxpayer funds,” the report says.
“Millions of Americans are losing their homes in a financial crisis not of their making,” Grijalva said. “We can’t close our eyes to the situation and blame the victims. It’s time we started a real recovery instead of tinkering at the margins.”
Other signatories to the Geithner letter include Reps. John Conyers of Michigan, who chairs the House Judiciary Committee, and Bob Filner of California, who chairs the Veterans Affairs Committee.
“This is not a niche issue,” Grijalva said. “The personal, financial, legal and emotional stakes for this country are too high for anyone to ignore. Instead of letting the fire burn longer in hopes that it will douse itself, Congress and the administration need to step up, get creative and work hard on a meaningful solution.”
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