Dear President Obama,
As we enter what is now the fourth year of a seemingly never-ending foreclosure crisis – and with fresh evidence of widespread bank fraud in the foreclosure process further undermining both homeowner and investor trust – we implore you: now is the time to take a new approach to solving the foreclosure crisis & keeping our families in their homes.
We believe in affirming the good we see. Over the last year-and-a-half, your mortgage modification program has helped close to half-a-million families save their homes, including many in our communities. For that we are grateful.
But, for the overwhelming majority of Americans, it is difficult to see and feel any progress, and for good reason. Since January 2009, 5.5 million homes have received foreclosure filings. What we see everyday is a continued avalanche of foreclosures besieging our communities and banks continuing to be as untrustworthy as when this crisis began four years ago. And recent evidence of fraud – along with an anemic response from your Administration – has only eroded our trust more, leaving many to wonder which side you are truly on: the big banks that caused this mess or the families that have been left to suffer its consequences?
This problem will be with us for years to come unless a new approach is taken. With unemployment expected to remain high, economists estimate that as many as 13 million families could face foreclosure. This is not only economically and politically unsustainable, it is morally unacceptable.
There is nothing good about foreclosures. As Damon Silvers from the TARP oversight committee put it: "Mass foreclosures are a sure sign of a failing economy and a society that has been unable to provide basic economic security to its citizens." That's why it is particularly vexing to hear your Administration defend the need to foreclose on families in the name of economic recovery. This message only continues to cement the public's perception that you care more about the health and safety of banks than you do about them.
We believe that helping families stay in their homes and rebuild their equity – and not foreclosing on them – is the true ticket to recovery. That’s why we want you to take a new approach to stopping foreclosures, one that starts with:
- Placing a temporary, targeted pause on owner-occupied foreclosures to allow time for a federal investigation of banks’ mortgage documentation processes and the development of a plan to once and for all clean up this mess that has been at the root of the housing crisis;
- Immediate help for those facing foreclosure due to unemployment by requiring banks to extend forbearance -- without the accrual of interest -- for the period of un- or underemployment, or at least for up to 12 months;
- And a new loan modification plan that places principal reduction at the core, to help struggling homeowners who have negative wealth in their homes and who are sitting on the sidelines unable to participate in the economic recovery effort.
We understand that, as President, you must ensure the safety and soundness of our financial system, and that this means making very tough choices. Your leadership has averted what could have been an even worse economic calamity. But at this point, we believe that you have gone too far in the direction of protecting big banks that are engaged in what appears to be criminal behavior. It’s time for a new approach, an approach that puts the economic soundness of everyday Americans at the foundation for recovery.