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COUNTY OF SAN MATEO
Inter-Departmental Correspondence
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DATE:
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October 23, 2007
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BOARD MEETING DATE:
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October 30, 2007
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SPECIAL NOTICE/HEARING:
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None
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VOTE REQUIRED:
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Majority
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TO:
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Honorable Board of Supervisors
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FROM:
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Rose Jacobs Gibson, Supervisor
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SUBJECT:
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Resolution calling on subprime mortgage lenders and servicers in the county to voluntarily agree to a moratorium on foreclosures.
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RECOMMENDATION:
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Adopt a resolution calling on subprime mortgage lenders and those entities that service the loans, or manage payments on behalf of the lender and investors in the loan (“servicers”) in the County to voluntarily agree to a three month suspension on foreclosures of owner-occupied properties in San Mateo County and calling on those same lenders and servicers to make every effort during the suspension period to reach out to and help their customers avoid foreclosure and remain in their homes.
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VISION ALIGNMENT:
Commitment: Offering a full range of housing choices.
Goal(s): #9. Housing exists for people of all income levels and for all generations of families.
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BACKGROUND:
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There is an epidemic of foreclosures throughout the country, including San Mateo County and California. Last year there were 1.2 million foreclosures filed nationwide. In California, there were 142,429 foreclosures in 2006, an increase of 131% from the number of foreclosures filed in 2005. That number is expected to increase further in 2007. In April 2007 the number of foreclosure filings in San Mateo County was more than six times greater than the previous year at the same time. Many reports have shown a strong correlation between the increase in foreclosures and the increase in subprime mortgages which not only have higher rates and fees, but also contain aggressive loan terms such as prepayment penalties and exploding adjustable interest rates. Lenders and servicers have a certain amount of discretion to renegotiate these loans pursuant to Pooling and Servicing Agreements with the investors in these loans. Many home owners, however, fail to reach out to lenders and servicers to renegotiate their payments once foreclosure proceedings have begun.
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DISCUSSION:
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Foreclosures do not just hurt individuals and families, they hurt entire neighborhoods and communities, leaving homes abandoned and vulnerable to vagrancy and crime. The foreclosure epidemic has significantly and negatively impacted home ownership in San Mateo County and will continue to do so unless lenders work with home owners to refinance loans, or work out reasonable payment plans that will keep families in their homes. A moratorium on foreclosures is necessary in order to create an opportunity for lenders, loan servicers and home owners to assess whether a different loan structure is feasible and to negotiate the terms of a repayment plan without fear of losing their homes.
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FISCAL IMPACT:
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There is no Net County Cost associated with this action.
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