Moratorium on Foreclosures Lobbied by California Activists

The Greenlining Institute has started a movement in California seeking for a moratorium on foreclosures. This advocacy group has expanded their appeal base by meeting with federal officials and House representatives.

The group’s general counsel, Robert Gnaizda, met with Sheila Bair, the Chairwoman of Federal Deposit Insurance Corporation. Sheila Bair authored the loan modification program aimed at restructuring loans of troubled homeowners in a bid to prevent foreclosures. Various sectors have been pushing for the implementation of this restructuring program.

In support of this loan modification plan, Democratic legislators passed a bill for a 120-day moratorium on foreclosures. This will allow homeowners and lenders to work out the details of modifications for troubled mortgages.

Gnaizda will also meet with House Speaker Nancy Pelosi of California as well as Rep. Barney Frank of Massachusetts, who is also the Chairman of the House Finance Committee. Part of their discussion will include the efforts by investors, who bought mortgage securities, to block the loan modification program to stop foreclosures. He mentioned that hedge fund investors are vocal in their opposition to the foreclosures remediation program. These investors have pointed out the potential losses from modifying loans which could amount to billions of dollars.

Gnaizda also mentioned that the proposed moratorium would be critical for the success of the restructuring program. The moratorium on foreclosures and the loan modifications would be a way to protect homeowners who were victimized by predatory loans. He pointed out the case regarding the $8.68 billion settlement against Countrywide Financial Corporation which was sued for predatory lending practices by California and Illinois attorney generals. The settlement was made after Bank of America took over Countrywide Finance.

In his discussion with Bair, Gnaizda mentioned that the Bank of America settlement should not be patterned as a standard since there was no admission of fraud by Countrywide. He also believes that only 20 percent of homeowners that are in danger of foreclosures from their Countrywide account will benefit from the settlement.

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