Jimmy Carter Urges Government to Rescue Subprime Mortgage Borrowers

LOS ANGELES - Former U.S. President Jimmy Carter on Monday urged the federal government to rescue millions of distressed subprime mortgage borrowers with a program that would help them keep up payments and avoid losing their homes.

The long-time advocate for affordable housing said not enough had been done to help families facing foreclosure and even criticized fellow Democrats for not focusing on the issue.

On a visit to Los Angeles to build houses for the Habitat for Humanity charity, Carter proposed a special allocation of funds to help families make rising subprime mortgage payments and keep their loans from slipping into default.

“A special program to help tide them over… would be a top priority among domestic affairs,” Carter said outside the Habitat townhouses going up in the port area of San Pedro. It’s unclear how much money would be needed for the program.

Foreclosures from subprime mortgages will hit 2 million homeowners through 2009, according to a study commissioned by Democrats in Washington and released last week.

Carter predicted the housing and mortgage crisis could become the second-most important domestic issue in the 2008 presidential election, after healthcare.

Democratic presidential candidates, he said, “are arguing about who is going to have the best program to give health services to all.”

Regarding housing, Carter told Reuters: “I hope there will be some competition among them, who can have the most generous, but also the most business-like way to approach overcoming the crisis.”

Carter said he has seen little action in Washington from Congress and President George W. Bush’s government, even as the subprime mortgage crisis takes its toll on major lending institutions and banks dealing in subprime loan securities.

“I don’t know that very much is actually happening,” he said.

Carter chose Los Angeles for Habitat’s annual Jimmy Carter Work Project because high home prices and poverty made it one of the most difficult places to own a home, even before the subprime crisis mushroomed this year.

“The biggest problem in Los Angeles has been the extreme disparity between the value of the average home, $545,000, and the average income of the families that have to rent a home…only $35,000,” said Carter.

That disparity fueled subprime borrowing in Southern California as families took out mortgages with low introductory rates, which often would spike upward in two years.

Los Angeles County, one of the wealthiest in the nation, showed a 144 percent rise in defaults on mortgage loans in the third quarter from a year earlier, according to DataQuick Information Systems.

Jimmy Carter urges rescue for subprime borrowers
by Mary Milliken | Reuters