BILL NUMBER: AJR 40 CHAPTERED BILL TEXT RESOLUTION CHAPTER 140 FILED WITH SECRETARY OF STATE SEPTEMBER 18, 2012 APPROVED BY GOVERNOR SEPTEMBER 18, 2012 ADOPTED IN SENATE AUGUST 30, 2012 ADOPTED IN ASSEMBLY JULY 5, 2012 INTRODUCED BY Assembly Member Skinner (Coauthors: Assembly Members Beall, Block, Blumenfield, Buchanan, Charles Calderon, Chesbro, Dickinson, Eng, Huffman, Lara, Ma, Perea, and Williams) MAY 15, 2012 Relative to mortgages. LEGISLATIVE COUNSEL'S DIGEST AJR 40, Skinner. Mortgages. This measure would urge the Federal Housing Finance Agency, and specifically its director, Edward DeMarco, to immediately allow the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation to offer principal reductions to homeowners who owe more on their home loans than what their homes are worth. WHEREAS, Since 2008, more than half a million Californians have lost their homes to foreclosure and another half million homes are currently in foreclosure or are at imminent risk of foreclosure; and WHEREAS, There are over 2 million California homes currently "underwater" where property owners owe more than what the home is worth and collectively the value of these homes is over $196 billion; and WHEREAS, Foreclosures too often become vacant, boarded-up hazards, lower surrounding property values, increase criminal activity in neighborhoods, and discourage economic development and investment in communities; and WHEREAS, The wave of foreclosures that has already hit California substantially decreased tax revenue, which led to budget deficits, increased unemployment, and billions of dollars in cuts to schools, health services, and other vital services; and WHEREAS, The Federal Housing Finance Agency oversees the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), the two companies that control over one-half of the home loans in the United States, and specifically over 60 percent of California mortgages; and WHEREAS, The director of the Federal Housing Finance Agency, Edward DeMarco, has steadfastly opposed allowing Fannie Mae or Freddie Mac to offer principal reductions to homeowners who owe more on their homes than what they are worth; and WHEREAS, On February 9, 2012, Attorney General Kamala Harris announced that California will join a national servicing settlement that is estimated to provide up to $40 billion in benefits to borrowers across the country and much of these benefits include a program of principal reductions; and WHEREAS, Fannie Mae and Freddie Mac refused to participate in the national settlement agreement, meaning more than one-half of the home loans in the country will see no relief from this agreement; and WHEREAS, Many economists and housing experts agree that principal reductions are the most helpful tool for limiting the number of foreclosures; and WHEREAS, By refusing to allow principal reductions, the Federal Housing Finance Agency is ensuring that tens of millions of homeowners nationwide will continue to owe more on their home loans than what their homes are worth; and WHEREAS, Allowing principal reductions for Fannie Mae and Freddie Mac mortgages could deter another wave of costly foreclosures nationwide; now, therefore, be it further Resolved by the Assembly and the Senate of the State of California, jointly, That the Legislature urges the Federal Housing Finance Agency, and specifically its director, Edward DeMarco, to immediately allow the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation to offer principal reductions to homeowners who owe more on their home loans than what their homes are worth; and be it further Resolved, That all cities and counties in California that suffer the effects of foreclosures along with the individual homeowners involved should also be engaged in efforts to convince the Federal Housing Finance Agency to offer principal reductions as a means of preventing further economic and societal harm to our communities; and be it further Resolved, That the Chief Clerk of the Assembly transmit copies of this resolution to the President and Vice President of the United States, to the Speaker of the House of Representatives, to the Majority Leader of the Senate, the Director of the Federal Housing Finance Agency, to each Senator and Representative from California in the Congress of the United States, and to the author for appropriate distribution.