Stop Foreclosures, Massachusetts Community Leaders Demand

Several community organizers and religious leaders from Massachusetts will meet in the nation's capital with members of President-elect Barack Obama's transition team, Treasury officials and lawmakers to urge them to launch significant loan modifications to avert the rapidly rising rate of foreclosures across the country.

Lewis Finfer, head of the faith-based Massachusetts Communities Action Network (MCAN), said the talks are part of a nationwide grassroots effort to persuade Treasury Secretary Henry Paulson to embrace the loan modification initiative of the Federal Deposit Insurance Corporation and launch it as part of the TARP program.

The other community leaders participating in the meeting are members of the United Interfaith Action of Southeastern Massachusetts, the Brockton Interfaith Community and the Essex County Community Organization.

Finfer said there are thousands of homeowners facing foreclosure problems in Massachusetts and thousands more will be receiving foreclosure notices in 2009 and in the succeeding years if nothing is done to avert foreclosures.

The community leaders cited the loan modification model used by FDIC to help borrowers of the bankrupt mortgage lender IndyMac Bancorp Inc. as the best among foreclosure intervention schemes that have been implemented. Under the FDIC scheme, troubled borrowers' monthly payments were reduced to about 31 percent of their monthly income.

In the prepared statement of Treasury Secretary Henry Paulson to be delivered at the House Financial Services Committee hearing, Paulson insisted that the TARP funds were not meant for direct foreclosure intervention. He said that the rapid deterioration of the financial sector has necessitated the rescue of financial institutions in order to stabilize the financial system.

Furthermore, Paulson explained that the strategy of investing in the country's largest banking and insurance corporations to prop up their finances will ultimately lead to financial stability and thereby be more effective in enabling the financial sector to prevent further foreclosures.

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