Foreclosures Crisis - Stockton Meeting On Foreclosures

December 19th, 2007

Henry Paulson Jr. the US Treasury Secretary and Governor of California, Arnold Schwarzenegger met at Stockton to discuss foreclosure matters on Tuesday 18^th. Stockton can be termed the foreclosure capital of US! During the third quarter of this year Stockton, situated 80 miles from San Francisco, has the highest foreclosure rate among the 10 metro areas. There is one foreclosure for every 31 houses. Like many others across the country Stockton residents could not resist on indulging in a loan-taking spree when the sub-prime agents came forward with teaser rates with practically no down payment. The duo tried to assuage the fears of house owners as the crisis has begun to worsen.

The meeting was held in the town hall and was attended by other leaders of the community as well as borrowers to thrash out the issue of predatory lending, mortgage disclosures and palliative measures.

Schwarzenegger tried to impress upon the audience that the crisis would not last indefinitely. It is just a ‘bump on the road’. He is optimistic that the market is sure to rise again with demand over weighing supplies. For the moment he told the borrowers to face the problem, take the bull by the horns and keep constant touch with the lenders. He stressed that it would be a grave mistake to ‘avoid the lender’ in the same manner others have done. Both have got into this mess. Both must come together to pull themselves out of it.

Paulson opined that there are some corners in the loan industry that need to be straightened out – one being the complicated financial language of agreements that is incomprehensible to many borrowers. Many clauses have no meaning. The language must be simple, direct and clear cut.

The house owners who attended the Tuesday’s meeting were tensed about the rising interest rates that would inevitably lead to foreclosures; foreclosures usually ended up with evictions and a bad credit rating. One such victim is Trudy Crawford-Green. She had purchased her house for $368,500 about two years ago. Today it is worth $271,000. Within this short span of time the interest rate has jumped twice. Her question is that from where will she fund these increases? A foreclosure is sure to hit her. She comments that they are all ‘just one paycheck away’ from eviction and open skies. The mood of the audience was grim.