Congress Should Extend Wall Street Bailout to Main Street and Help Keep American Families in Their Homes
Washington, DC – Today, as Congress attempts to rescue Wall Street from financial disaster, the Leadership Conference on Civil Rights, AARP, ACORN, and the Center for Responsible Lending held a press call to urge Congress not to forget about everyday Americans caught in the mortgage meltdown.
“There is a lot of talk about how some institutions – most recently AIG – are just too big to be allowed to fail. That may be true. But this country is made up of millions of small homeowners who can’t be allowed to fail either,” said Nancy Zirkin, executive vice president of the Leadership Conference on Civil Rights.
“The Paulson $700 billion bailout simply will not work to stabilize the economy if it does not address the underlying problem of home foreclosures and falling home prices. As proposed, the bailout has virtually nothing of benefit to middle-class homeowners facing distress,” said Martin Eakes, CEO of the Center for Responsible Lending.
“Congress has the power to implement a simple solution to stop the foreclosure epidemic. Today we urge Congress to finally allow homeowners access to courts, where abusive mortgages could be restructured in a fair and targeted way. Allowing homeowners into the existing legal system would not cost taxpayers anything – not a single dime. So including this solution will help Main Street without taking any piece of the $700 billion dollar pie,” said Eakes.
Without the bankruptcy provision, which would allow bankruptcy judges to reset mortgages for families on the brink of foreclosure and allow these families to make manageable payments on their mortgages, the rescue bill will do little to help struggling homeowners.
One such homeowner, Candace Weaver of Wilmington, NC, also participated on the call. Mrs. Weaver is a middle school social studies teacher and mother of two who was diagnosed with kidney cancer within a year of getting a Lehman Brothers-backed exploding ARM loan. She needed surgery to remove the cancer and contacted her mortgage servicer and asked for a one-month deferment, which they rejected. Mrs. Weaver’s cancer is in remission, but her home is now in foreclosure. She is one of the more than half a million Americans who could avoid foreclosure if Congress passes the rescue bill with bankruptcy provisions intact.
“The government is bailing out the companies who did the wrong things in making these poisonous loans that were doomed to fail. I understand the bailout had to happen but unless something is done to help struggling homeowners, people like me are left out and we’re the victims. It’s not fair. The government needs to remember people like me who pay taxes and work hard every day. All we want is to get up and go to work, contribute to our communities, and keep our homes,” said Weaver.
“We have to do this because of the ripple effect that foreclosures have on our communities,” said Bertha Lewis, Interim Chief Organizer of ACORN. “ACORN did a study entitled: Foreclosure Exposure, in which we know once you have a foreclosed home, not only do they have to go out and try to find two or three jobs, but a foreclosed home drives down property values for at least 20 blocks around the home.”
The Center for Responsible Lending has put together a number of fact sheets about the bailout bill and its effects on homeowners. To access this information, visit http://www.responsiblelending.org/press/.
Mrs. Weaver’s Full Statement
“My name is Candace Weaver and I’m an eighth grade teacher at Roland Grise Middle School in Wilmington, North Carolina. I teach 8th grade language arts and social studies.
In December 2005, I refinanced my house to pay bills. My husband was recovering from a heart attack and was out of work. We took out an adjustable rate mortgage with an initial rate of 8.85% that eventually went up to 11.375% two years later. I didn’t understand I had an adjustable rate mortgage that could go up from 8.85% to 11.85% after two years. I certainly did not know it could go up as high as 15.85% and that it had a balloon payment at the end of 30 years. I was never offered a fixed rate. They only talked about the low rate at the beginning.
Within 6 months of obtaining the mortgage, I was diagnosed with renal cell carcinoma. Kidney cancer. I put off surgery until after the end of the school year in June to make sure I had enough money to pay our mortgage for May and June. At that time, teachers did not get paychecks for the months school was out, June and July, so I used my entire last paycheck to pay my mortgage for May and June.
Before my surgery, I called my mortgage servicer, the company that collects the mortgage payments, and told them I would not be able to pay for July on time and wanted to work something out. All I needed was a deferment for one month or to break up the payment and pay it along with my Aug and Sept payments. They said no and that they could only help me once I was in default. This was terribly frustrating. I went back to work early, against doctors orders, so that I would have the money to pay the mortgage.
When I called back when I could not make the July payment, they treated me like a criminal. I asked about my options. They said they could not propose a repayment plan until I was in foreclosure. Sure enough, they filed foreclosure in late 2006. Only then did they give me a very expensive repayment plan that was impossible to pay. So that I could stop the foreclosure, I agreed to it. I paid the mortgage company over $7,000 in about six weeks. Of course, the plan failed as the monthly payment under their plan was hundreds of dollars more than my regular mortgage payment. They immediately restarted the foreclosure that had been placed on hold.
Even now, I wonder why something could not have been worked out because I have always wanted to pay my mortgage. But these people at the loan companies, they don’t care. I never got the same person twice. I kept asking why they wouldn’t work with me. I wish there had been another option, such as modifying my loan through the court system so that it would be a performing loan that I could pay. I would have filed bankruptcy a year ago to repay the arrearage. But I cannot afford to pay a mortgage at 11.375% or 15.85% under this adjustable rate mortgage.
I didn’t do anything wrong. I didn’t ask for cancer. But once I had it, I notified my mortgage company immediately and tried to work out a simple solution
But in some ways I’m fortunate because I found a lawyer who cares about good, hardworking people like me and wants to help.
The media want you to think that homeowners aren’t calling and trying to work with the loan companies when they run into trouble. But that’s not true. I did and look what happened to me.
Don’t let them take your house. Don’t just walk away from it. If we don’t fight, they win.
The government is bailing out the companies who did the wrong things in making these poisonous loans that were doomed to fail. I understand the bailout had to happen but unless something is done to help struggling homeowners, people like me are left out and we’re the victims. It’s not fair. The government needs to remember that people like me who pay taxes and work hard every day. All we want is to get up and go to work, contribute to our communities, and keep our homes.”