HOLLISTER
Local politicians and real estate professionals said Friday they support President Bush’s plan to alleviate the national mortgage foreclosure crunch. But many added that Bush’s efforts aren’t going to solve the problem.
“It’s probably more symbolic, but it’s a good first step in the right direction,” said Karl Skow, a director with the California Association of Mortgage Brokers. “At least the government is asking lenders to try to address the issue.”
On Thursday, the Bush administration called for a freeze on the subprime mortgage interest rates that are set to increase between Jan. 1, 2008 through July 31, 2010. Subprime mortgages that reset to higher interest rates after two or three years are widely blamed for this year’s spike in mortgage foreclosures, which in turn has damaged the housing market and the economy as a whole.
“The reality is that foreclosures are causing a lot of distress in the local economy,” said George Lewis, president of the San Benito County Economic Development Corp.
San Benito County has not been immune to the national housing problems. Between July and September 2007, data firm RealtyTrac reported that the county saw 193 foreclosure filings, almost four times the 55 filings during the same period in 2006.
And as Lewis noted, many of those homes are dragging down the region’s housing market. In the past year, San Benito County home sales and prices have dropped, and some local real estate agents have left the business.
Peter Fleming, an agent with Intero Real Estate, said Bush’s plan is “too little, too late.”
“My opinion is that while it’s good in theory, the fact of the matter is that there are already people in trouble,” Fleming said. “The government should have gotten involved sooner than it has.”
Assemblywoman Anna Caballero, whose district includes San Benito County, agreed that the Bush plan won’t help many of those hurt by the foreclosure crisis. For one thing, the rate freeze only applies to homeowners whose loans haven’t already reset.
Still, Caballero called the steps taken by Bush and Gov. Arnold Schwarzenegger “great efforts,” and she said the government may not be able to do much more.
“(On a state level), we just don’t have a lot of money, so we’re going to have to look to private industry,” Caballero said.
She added that it’s important to promote financial literacy among prospective homebuyers and borrowers who are already in trouble.
Skow also pointed out that the rate freeze is voluntary, so it’s not clear which lenders will follow the Bush plan, and to what extent.
The California Association of Mortgage Brokers is pushing for a “three-pronged” approach that allows more financial support from the Federal Housing Administration and government-backed lenders Fannie Mae and Freddie Mac, Skow said. Those reforms would benefit both future homebuyers and current homeowners who need to refinance, he said.
“But if (Bush’s plan) works for one person, it was a good thing,” Skow added.
