Moratorium on Foreclosures Urged in California
Consumer advocates have called for a moratorium on home foreclosures, warning that California is facing a tidal wave of foreclosures over the next year as more homeowners are hit with payment increases brought on by subprime loans and risky mortgages.
“The curve is really starting to go up,” said Alan Fisher, executive director of the California Reinvestment Coalition, a collection of nonprofit organizations and public agencies that advocate for the poor and minorities. “We’re seeing just the beginning of a problem.”
He told the Senate Banking, Finance and Insurance Committee on Tuesday that a six-month moratorium would give officials time “to figure out how to keep people in their homes.”
The Mortgage Bankers Association estimates that more than 46,000 California homes were in foreclosure in March and another 76,732 mortgage loans were seriously delinquent.
Witnesses warned the committee that the numbers would grow over the final months of this year and in 2008 as more homeowners face higher payments because of adjustable-rate mortgages.
“By all accounts, the big spike in terms of subprime mortgages is coming in the fourth quarter of this year and the first three quarters of next year,” said Paul Leonard, director of the California office of the Center for Responsible Lending, a nonprofit group that advocates for homeowners. “California is clearly ground zero for this problem nationwide.”