For Immediate Release: March 4, 2009
Contact: Austin King, Financial Justice Director, (608) 213-0104
ACORN Applauds Obama Administration's Progress on Foreclosure Prevention
Newly Release Guidelines Will Forge Industry Consensus to Halt Unnecessary Foreclosures
ACORN is applauding the release today of new details of "Making Home Affordable", the Obama Administration's comprehensive plan to assist up to 9 million homeowners. Since last fall, ACORN has been calling for the Wall Street bailout to come with some strings attached that would mitigate the record pace of unnecessary and economically irrational foreclosures that are at the heart of our economic meltdown. Today, the Obama Administration has released its "Home Affordable Modification Program Guidelines", which comprise a rational system for analyzing the options that mortgage servicing companies have available in dealing with a delinquent mortgage. Far too many foreclosures in recent years have happened without due diligence to evaluate whether an affordable loan modification that keeps the borrower in the house would actually be a smaller loss than a foreclosure. In the pioneering work the FDIC did with IndyMac, which heavily informed these guidelines, modifications offered saved investors an average of $50,000 more than a foreclosure.
"Finally, the federal government is telling Wall Street that everyday Americans need to get something back for their largesse, and that help will come in the form of rational foreclosure policies," said Maude Hurd, ACORN President. "Of course, providing more modifications and starting fewer unnecessary foreclosures will help investors as well as families, neighborhoods, and our economy. This new announcement is far from a bailout for homeowners-it is merely a requirement that the mortgage servicing industry do the job it is supposed to do. The entire industry must embrace these protocols and begin applying them right away, whether planning on coming back for more handouts or not." The Obama announcement so far has only indicated that this requirement will apply to companies who take taxpayer assistance in the future.
Combined with incentives announced by President Obama two weeks ago in Mesa, AZ, this requirement that bailout recipients engage in due diligence before foreclosing will help prevent millions of unnecessary foreclosures, especially if it is applied retroactively and immediately. For maximum efficacy in preventing foreclosures, however, these plans must be accompanied by Congressional action to lift the ban on judicial modifications, which is moving through Congress this week. Until such time as all these pieces are in place and actually helping the millions of American homeowners who need it, a binding moratorium should be enacted to ensure that no homeowner who may qualify for this assistance loses his or her home when help is on the way.
"President Obama's plan will help homeowners get bad loans under control, so that they are only paying 31% of their income toward their total housing costs," said Hurd. "That level of affordability is absolutely essential to creating a sustainable solution to the foreclosure crisis that is dragging down our entire economy. Through a clever combination of sticks and carrots, the Obama Administration has provided a strong and comprehensive plan to get our nation's housing market and homeowners back on track and fix our economy. That's something everybody-renters, homeowners who are behind, and homeowners who are current-can celebrate enthusiastically."
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ACORN is the nation's largest community organization of low- and moderate-income families, with over 400,000 member families organized into neighborhood chapters in 100 cities across the country. Since 1970 ACORN has taken action and won victories on issues of concern to our members. Our priorities include: better housing for first time homebuyers and tenants, living wages for low-wage workers, more investment in our communities from banks and governments, and better public schools. ACORN is an acronym, and each letter should be capitalized. ACORN stands for the Association of Community Organizations for Reform Now.
ACORN's website is at http://www.acorn.org.