New Law Helps Working Families Facing Home Foreclosure
Statement by California Labor Federation Executive Secretary-Treasurer Art Pulaski
“Millions of working families are at risk of losing their homes due to reckless and predatory mortgage lending. Now, with the economy in recession and the cost of gas and food at record highs, these homeowners are seeing their monthly payments double and triple overnight.
“Today, Governor Schwarzenegger signed SB 1137 in order to provide some desperately needed protection for families who can no longer afford their home loan. This bill, carried by Senator Don Perata, requires lenders to contact borrowers before they start the foreclosure process. This gives families a chance to try and modify bad loans before they lose their homes.
“Over the past few years, more and more California borrowers have been persuaded to take out loans with exorbitant pre-payment penalties. Predatory lenders have steered them into high-cost loans, even when they actually qualified for lower, fixed-rate loans. Far too many families have ended up in loans they don’t understand and can’t afford.
“No one wins with a home foreclosure; a family loses not only their most valuable asset, but the roof over their children's heads as well. The banks lose money from a short sale, and neighbors watch property values plummet. When a family is trapped in a loan they cannot afford, the best outcome is for everyone is a loan modification. That's exactly what this bill promotes.
“This bill provides immediate protection to those who need it most. We commend Senator Perata for championing this bill and the Governor for signing it. But this is just the first step in banning the abusive lending practices that created this crisis. California's working families, and our struggling state economy, simply cannot allow this sort of foreclosure freefall to happen again.”