Markell Backs Plan To Help Homeowners, Lenders Weather Housing Storm
Delaware State Treasurer Jack Markell and six other State Treasurers have united behind FDIC Chairperson Sheila Bair’s national foreclosure proposal and requested the support of the Secretary of the Treasury, Chairman of the Federal Reserve, the United States Treasurer and Congressional leaders to support it, as well.
In a joint letter, the Treasurers emphasized the need for a stronger national strategy in the fight against foreclosures. While acknowledging Hope Now and the Lifeline project, they highlight the severe limitations of such efforts. “Across the nation, states are operating in crisis mode,” Delaware State Treasurer Jack Markell said. “We need to act swiftly in order to make a significant impact that will immediately help homeowners in our states.”
The plan is not a bailout for borrowers or banks. Homeowners would still make mortgage payments (at a higher rate than available today). Loan servicers would save the billions of dollars that would otherwise be wasted on foreclosure actions that often return little value to the loan holder, create vacant houses, and devastate property values in surrounding neighborhoods.
State Treasurers from Connecticut, Delaware, Iowa, Massachusetts, Michigan, Ohio and Wisconsin asked the federal government to adopt FDIC Chair Bair’s proposal to require subprime loan servicers to adopt a standardized approach to all 2/28 and 3/27 adjustable-rate subprime loans. Under the plan, all owner-occupied homes where the mortgage payments are current (or even slightly behind), but an expected upward rate adjustment could cause default in the near future, would be automatically converted to a fixed interest rate for five or more years.
“Chairperson Bair’s plan is a logical, systematic approach that will help homeowners and work to protect our neighborhoods,” Mr. Markell said. “I’m delighted to join with my counterparts from across the country on this reform”
The letter was signed by Timothy P. Cahill, Massachusetts State Treasurer and Receiver General, Richard Cordray, Ohio Treasurer, Michael L. Fitzgerald, State Treasurer of Iowa, Robert J. Kleine, Michigan State Treasurer, Jack Markell, Delaware State Treasurer, Denise L. Nappier, Connecticut State Treasurer, and Dawn Marie Sass, Wisconsin State Treasurer.
You can view the Letter from the State Treasurers here
