Democratic legislative leaders are in Washington today arguing for increased stimulus money for California. I've been arguing that this is required for some time, and hopefully it will be done in such a way that a) it can be applied to the General Fund deficit (so far Arnold has not asked for budget relief in that way) and b) it can be used without up-front money that will be matched, because the cash crisis limits our ability to do that.
However, there is something else that the Obama Administration can do right away to help the bottom line of the state and its citizens, and that is deal with the crisis in the housing market here. It's no secret that California is one of the hardest-hit states by foreclosures; in Stanislaus County, for example, 9 percent of all houses and condos in the county have been foreclosed upon, a staggering figure. That's almost $4 billion dollars worth of foreclosures in Stanislaus alone. In larger counties like San Bernardino and Riverside, you can see how this foreclosure crisis affects new housing starts (there are a glut of cheaper foreclosed homes on the market) and thusly unemployment figures.
Only four years ago, Riverside and nearby San Bernardino, often called the Inland Empire, were California's economic powerhouse, accounting for more than a fifth of the state's new jobs. Today, unemployment reigns in the sprawling region east of Los Angeles. The 9.5 percent jobless rate in the two counties matches Detroit's as the highest of any major metropolitan area in the U.S.
Although there was a surge in construction employment in the U.S., and about a 50% increase in California (as a percent of total employment), construction employment doubled (as a percent of total employment) in the Inland Empire [...]
With the housing bust, the percent construction employment has declined sharply and the unemployment rate has risen to almost 10%. Is it any surprise that jobless rate in the Inland Empire matches Detroit's as the highest of any major metropolitan area in the U.S.?
Nobody is calling on the federal government to prop up a sick housing market that will not see a broad recovery for a while. But foreclosures have a disruptive effect on the greater economy. They hurt property values, they hurt banks, and they hurt employment. The crisis is only slated to grow if nothing is done, with homeowners of every income class affected. And so foreclosure aid would be a major boost to California, and it can be done both quickly and effectively. By pledging that $100 billion from the TARP program will go to limit foreclosures, Obama has already begun this effort. Ted Lieu thinks that the Obama Administration understands the nature of the problem. (over)
(Assemblyman Lieu has been a leader on the foreclosure issue. Welcome him to Calitics. - promoted by David Dayen)
Albert Einstein once said that insanity is doing the same thing over and over again and expecting a different result. Wall Street and Treasury Secretary Henry Paulson have continued to ignore the home foreclosure problem, despite clear and urgent warnings from consumer groups, legislators, and regulators. Virtually none of the $8.5 trillion in federal taxpayer bailout commitments is directed towards helping reduce foreclosures. So it should come as no surprise that new data from the Mortgage Bankers Association shows that foreclosures have increased 76% compared to a year ago to hit yet another record high, with a record 1 in 10 Americans now experiencing mortgage trouble.
The problem is particularly acute in California, which accounts for one-third of the nation's foreclosures. California alone has 54 percent of all foreclosure filings on adjustable rate loans.
I STILL haven't had a moment to process the still-brewing outcome of Election 2008 here in California, but there's not much time to savor or despair about the results. A new session of the Legislature has been called, and Arnold is starting off by calling for a tax increase:
Gov. Arnold Schwarzenegger called today for a temporary 1.5-cent increase in the state sales tax to help close an $11.2 billion deficit in the state budget, as well as new taxes on liquor and oil production.
Schwarzenegger also proposed one-day-a-month unpaid furloughs for state workers for the next 17 months, as well as rescinding two of the workers' 13 paid holidays.
There are also massive spending cuts planned, $4.5 billion in all, including $2.5 billion on primary school education. This is all happening because we have a short-term deficit of maybe $10 billion dollars, with an additional $13 billion dollar shortfall estimated for next year. In all, by the middle of 2010, the projections are that we will be $24 billion in the hole.
This proposal is completely and utterly insufficient to deal with that. A sales tax increase is regressive and there's no way around that. Part of the proposal to extend the sales tax to services like "appliance and furniture repair, vehicle repair, golf fees, veterinarian services, amusement parks and sporting events," according to the LA Times, and this is part of Karen Bass' restructuring of the revenue side. And an oil extraction fee is deeply needed. We're the only oil-producing state in the country that does not charge oil companies to take our natural resources.
But the cuts are pretty cruel. And education isn't the only thing on the chopping block. The Governor wants to eliminate dental insurance through MediCal for poor Californians, cut welfare subsidies, and reduce services for the elderly, blind and disabled. Hey, they don't have lobbyists, right? And this proposal somehow snuck into the package:
• Relaxing some state labor regulations dealing with meal and rest periods, overtime exemptions and work schedules.
Hey, it wouldn't be a Republican plan if there wasn't some giveaway for business.
There is no question that the state's finances are in the worst shape since the Great Depression. But those Californians doing well have shown, as Robert notes today, a desire to pay for those services that can make this a great state. It's aberrant for people who are wealthy to pull up the drawbridge and have no concern for the least of society. Their continued economic good fortune depends on the stability and security of all citizens, as a rising tide lifts all boats. We have been in a constant state of economic crisis for going on eight years because nobody will admit what needs to be done - to have a revenue structure that doesn't reflect the boom-and-bust cycles of the greater economy.
A couple of the things that Schwarzenegger is doing make sense. He is calling for a 90-day moratorium on foreclosures so lenders can work out loan modifications with borrowers, something President-Elect Obama has already proposed and which will improve our economy (a foreclosure costs something like $250,000 a piece to the economy). And his proposal would speed public works programs as a kind of statewide stimulus package. But the very first thing that can be done is to reinstute the automatic VLF increase that Arnold cut and is now scrambling to cover, which would cost the equivalent of $12 a month for most Californians. But Robert Lehman at SEIU has outlined a new progressive version of the VLF that I think would increase revenue and help protect the climate.
Dedicated Revenues. VLF revenues, based on up to 0.65% of vehicle market value, are dedicated (CA Constitution Article 11, Sec. 15, implemented by Proposition 47 in 1986) to cities and counties; some additional VLF revenues above 0.65% may also be partly dedicated to cities and counties, depending on current statutes. It is unclear whether additional revenues from a vehicle GHG-emission-based component of the fee, rather than the vehicle market value, might be obligated to cities and counties. GHG component revenues should be made available for other dedicated purposes, such as improving State transportation GHG emissions through R&D, energy infrastructure improvements, transportation equipment subsidies or incentives, etc.
Progressivity. The VLF is currently based on a flat 0.65% rate applied to the current estimated market value of the registered vehicle. Owners of newer and more expensive vehicles with higher current market values pay higher level fees, while owners of older and less expensive vehicles pay less. People without vehicles who use mass transit, bicycles, or other forms of transportation do not pay the fee. The 2003 reduction of the VLF heavily benefited Gov. Schwarzenegger for example, with his ostentatious fleet of Hummers, while mass transit riders did not benefit at all.
With this flat fee structure, the VLF still absorbs a larger share of low-income vehicle owners' household income than it does for upper income Californians; the VLF's moderate regressivity is similar to that of the sales tax in terms of its relative burden on the lowest income quintile compared to the upper quintile (see UCB Incidence paper below, and CBP, "Options for Balancing the Budget: Reinstating the Vehicle License Fee," 5/8/02, p.2). A more progressive alternative exists. Rather than assessing the fee on the full value of the vehicle as California has done, Virginia exempts the first $5,000 of vehicle value, making the fee more progressive. With a $5,000 exemption, for example, an estimated one third of California vehicles would be exempt from the VLF and owners of slightly higher value vehicles would pay significantly less. The exempt value could be adjusted over time. A restored VLF should initially be based on vehicle value, with a significant deductible amount from this value, and a rate probably set above 2% to compensate for lost revenue.
This is a smart idea and should be the first counterpoint that the state Democrats propose. At some point we must start raising revenue sensibly. Furthermore, doing anything before December 1, when a net of 2 new Democrats in the Assembly and possibly 1 new Democrat in the Senate join the team in Sacramento, would be ridiculous.
Over the weekend, Assembly Democrats were very firm in their desire to see significant mortgage reform as part of any special session in the Legislature in November. This is a crisis for the state that has a large impact on the greater economy. At a recent speech I attended, Bill Clinton estimated that each foreclosure costs the economy $250,000 in lowered property values, maintenance and opportunity costs. So demanding real mortgage reform is keenly sought. The Assembly has been screaming for this since September 2007, and the unholy alliance between the governor and mortgage banking interests has squashed any real reform. And in the meantime, foreclosures have skyrocketed in the state. One in three homes experiencing foreclosure in August was in California, affecting over 101,000 homes (or one every thirty seconds). The news got better in September, but only because of the one meager law that the governor allowed to get through, which included a 30-day waiting period where banks must contact the borrower in question before introducing foreclosure filings. That's a stopgap measure, and if nothing further is done, October and November will show a spike.
We understand you are considering calling a special session to address the state budget. Four billion dollars of last year's budget deficit is attributable to the foreclosure crisis and billions more will be lost this year if nothing is done to address the crisis. The special session would be an appropriate time to address California's mortgage system.
Stabilizing the mortgage mess doesn't just make economic sense, it's a moral imperative. Unless you want Arnoldville tent cities popping up throughout the state, something must be done and as soon as possible. And while this is best determined at the federal level, we have the ability to go to great lengths to fix this, as other states like North Carolina and New York have done.
Arnold vetoed AB 1830 and consigned homeowners to a pretty cruel fate. He needs to be pinned with that failure and pressured to change course. I'm glad that Democrats in the Assembly are making it a priority.
Yesterday, Bank of America announced that they would settle their lawsuit with a parade of states Attorneys General that began before BofA bought out the defendant, Countrywide Financial. The initial suit alleged that Countrywide engaged "in deceptive advertising and unfair competition by pushing homeowners into mass-produced, risky loans for the sole purpose of reselling the mortgages on the secondary market." At the time I thought it would be difficult to hold Countrywide responsible for what the mortgage market is intended to do, but I suppose they didn't want to face a jury at a time when the financial industry is melting down.
This settlement, which could provide up to $8.68 billion dollars for as many as 400,000 homeowners nationwide (and up to $3.5 billion in California), has some very laudable parts to it:
Under the terms of the settlement, eligible subprime and pay-option mortgage borrowers with loans from Countrywide will be able to avoid foreclosure by obtaining modified and affordable loans. Here is the information released by Brown's office:
The loans covered by the settlement are among the riskiest and highest defaulting loans at the center of America's foreclosure crisis. Assuming every eligible borrower and investor participates, this loan modification program will provide up to $3.5 billion to California borrowers as follows:
• Suspension of foreclosures for eligible borrowers with subprime and pay-option adjustable rate loans pending determination of borrower ability to afford loan modifications;
• Loan modifications valued at up to $3.4 billion worth of reduced interest payments and, for certain borrowers, reduction of their principal balances;
• Waiver of late fees of up to $33.6 million;
• Waiver of prepayment penalties of up to $25.6 million for borrowers who receive modifications, pay off, or refinance their loans;
• $27.9 million in payments to borrowers who are 120 or more days delinquent or whose homes have already been foreclosed; and
• Approximately $25.2 million in additional payments to borrowers who, in the future, cannot afford monthly payments under the loan modification program and lose their homes to foreclosure.
This is exactly what should have been in the bailout bill - a large-scale workout for homeowners on the brink of foreclosure to modify their loans and stay in their homes. It's arguably costlier to the bank at this point for the mortgages to go completely bust and to deal with the foreclosure. In addition, BofA is SUSPENDING subprime loans and negative amortization loans as well as loans with little or no documentation from the borrower, which is in a way more significant because that's at the root of the financial crisis.
These are also the kind of steps that Ted Lieu sought in his AB 1830 which was vetoed by the Governor - banning predatory lending and unsustainable mortgage loans. Ultimately, Attorney General Brown was forced to seek remedy in the courts because the regulatory structure had broken down and the Congress was unable or, more likely, unwilling to give struggling homeowners a hand.
This shouldn't be Jerry Brown's job, but the systemic failure fell to him, and he performed brilliantly. And he's not done:
And this is not the end of this chapter. The settlement does not include Angelo Mozilo, the former Chairman and Chief Executive of Countrywide Financial Corporation or David Sambol, formerly the President of Countrywide Home Loans and the President and Chief Operating Officer of Countrywide Financial Corporation. Brown will continue to prosecute separately his case against Mozilo and Sambol.
Lawmakers like Dianne Feinstein and others should be a little ashamed that they were able to do so little in the wake of this crisis while Jerry Brown did so much more.
That's the only explanation I have for him vetoing AB1830:
Gov. Arnold Schwarzenegger vetoed a proposal today that would have imposed tougher restrictions on mortgage brokers, such as banning them from issuing exotic loans to subprime borrowers that cause balances to grow rather than shrink over time [...]
The bill by Assemblyman Ted Lieu, D-Torrance, would have banned subprime borrowers from obtaining "negative amortization" loans, agreements that offer low initial payments but increase the principal balance over time, boosting interest costs and making them difficult to pay off.
AB 1830 also would have specified that mortgage brokers owe a "fiduciary duty" to borrowers. It would have prohibited brokers from steering borrowers toward higher risk loans than they would qualify for based on their income and credit. And it would have capped prepayment penalties for borrowers who want to refinance their loans to seek better terms.
Schwarzenegger, in his veto message, said the bill had laudable goals but that it "overreaches and may have unintended consequences."
Overreaches into the profits of his mortgage lending industry buddies, that is. Schwarzenegger's concerns about putting state mortgage brokers at a "competitive disadvantage" compared to their unregulated federal counterparts is easily managed (like forcing anyone who does business in the state to work under one standard) and just a pathetic excuse.
We are in crisis mode on Wall Street right now because mortgage lenders, pressured by investment banks and securities markets, abused the process and came up with all sorts of exotic schemes to get borrowers into homes. This bill would have curbed the worst practices of the industry. The Governor would rather they continue. He would rather mortgage lenders rip off their customers. He would rather the economy sink into a deep recession.
One unexamined aspect of the Governor's character is how much of a mindless puppet he is for Chamber of Commerce interests. Let this be another example.
While other cities are hoping for federal aid to help them address the problem, Lancaster is using city funds to buy, renovate and sell vacant homes. The need is clear....
So far, Lancaster's Redevelopment Agency has agreed to spend more than $4.1 million to acquire and refurbish 41 homes. The city took ownership of the first six properties beginning in May....
Lancaster's program mainly targets depressed neighborhoods. The city is paying between $80,000 and $110,000 for the properties and will accept bids from contractors to renovate them. Proposed repairs would include environment-friendly features such as drought-tolerant landscaping and tankless water heaters. When sold, the city hopes to recoup the price paid for each home, including the cost of renovation. But Brubaker said the goal is to keep the selling price reasonable for a family of four whose income does not exceed about $71,800 -- California's average salary for qualifying for subsidized housing.
This is precisely what governments need to be doing right now. The right-wing effort to use government to stimulate homeownership has been a catastrophic failure, leaving the global economy in ruins, millions of families bankrupt and without a home, and California facing a very uncertain future.
Lancaster's model is more along the lines of what should have been tried all along, and what is now a priceless opportunity. The foreclosure crisis has left cities like Lancaster with a huge glut of empty houses while everyone else struggles with still-high housing costs, as homelessness rises. It's a small move to rectify a massive misallocation of capital and resources, but the bubble's collapse provides opportunities for affordable housing that should be seized.
It's good that Lancaster is also promoting sustainable renovation, something that is often overlooked in the foreclosure crisis - too many cities simply want to recreate a failed 20th century model of car-dependent, resource-wasting suburbia. And Lancaster's move isn't a long-term solution nor a sign that suburbia is still viable - we do still need to redefine the California Dream by promoting greater urban densities. But that doesn't preclude governments from using the foreclosure crisis to create truly affordable opportunities for Americans to own homes.
The details matter, and the public has to be engaged to ensure that cities don't use this as a way to give away refurbished properties to developers or speculators. Still, it's good to see some California cities getting smart about how to deal with this crisis.
We spend an inordinate amount of time on the bad of California politics here on the site. And with a system this dysfunctional, there's a lot of bad to go around. But as the budget hostage crisis continues, and state workers don't know if they'll be able to afford their bills come Monday, I wanted to at least recognize some of the positive developments around the city and state:
• The Governor signed a bill today banning trans fats in all state restaurants and bakeries by 2011. Combined with the law signed earlier this week to crack down on the sale of downer cattle in US groceries, and the LA City Council moving forward on a one-year moratorium on new fast-food restaurants in South Los Angeles, this is a good week for food safety, nutrition and public health.
• As mentioned by Shayera, the Los Angeles City Council voted to ban plastic bags by 2010, if the state does not mandate a $0.25 charge for every bag by then. Additionally on the environmental front, there's also the statewide green building code adopted by the California Building Standards Commission, and another passage for the third year in a row, of a port container fee which would be invested in fighting pollution (Hopefully this time the Governor will sign it). This too is good.
• Leland Wong was convicted yesterday on 14 counts of public corruption and bribery while he was LA City Commissioner. Accountability is good.
• Unfortunately, not everything is good. Foreclosure rates are skyrocketing nationwide, more than doubling in the second quarter. In one incredible example, almost 1 in 20 homes in Merced have been lost to foreclosure, the highest rate in America. Wow. Not good.
• A couple more good things: PDLA is kicking off a Legislative Education Project and assigning progressive scores to individual Congressmembers (The first, David Dreier, has a 0). They're also going after Lou Dobbs for his criticism of their deeply unserious notion that health care is a human right.
What set off Dobbs' eruption? Apparently it was his correspondent reporting that PDA "is urging the Democratic Party to adopt a plank at the party's convention in Denver, guaranteeing accessible health care for all."
You can help us push back against Dobbs and other media demagogues.
Within a day, you'll be receiving a follow-up email from Norman Solomon, co-chair of PDA's "Healthcare NOT Warfare" campaign, about our efforts to bring the principle of guaranteed health care for all into the heart of the Democratic Convention in Denver. And ways you can participate throughout the country.
For now, I want to ask you to click here and help PDA talk back to the media attacks now underway against us.
They should take the lead on Dobbs the way Color of Change took the lead on Fox News.
Sometimes, there's progress. It's usually a game of inches. But yesterday California signed into law mortgage legislation that at least makes a start on getting a handle on this housing crisis and will help homeowners facing foreclosure a chance to stay in their homes. Hopefully this is a first step, which is how everyone at the bill signing ceremony is terming it.
The measure, SB 1137, requires lenders to contact property owners to attempt to avoid foreclosure, provide tenants additional time to move from a foreclosed property and maintain foreclosed properties to diminish the impact on the value of neighboring homes. The legislation becomes law immediately although some provisions are phased in over 60 days.
A few things of interest as we head into the holiday weekend:
• That mortgage legislation that I noted passing the Assembly yesterday was quickly taken up in the Senate (there were some amendments in the Assembly bill so concurrence was needed, and it passed easily (the vote was 32-8). The legislation will now be sent to the Governor and there are indications that he will sign it. Because of the 2/3 vote it received, most of its provisions will take effect immediately. It's a decent first step but it had better not be the last.
• The new Cook Report ratings are out, and among the slew of seats where Democrats are gaining, one race in California has shifted:
CA-46 Dana Rohrabacher Solid Republican to Likely Republican
That's pretty big news. Charlie Cook's report is widely read by insiders, and clearly they are taking notice as to the strength of Debbie Cook's campaign. Joe Shaw, communications director for Cook's campaign, calls it "the first Orange County congressional race to be considered competitive since Congresswoman Loretta Sanchez's 1996 race against incumbent Bob Dornan."
• In CA-04, Charlie Brown announced a whirlwind schedule for the 4th of July, participating in events in King's Beach, Lincoln, Roseville, Grass Valley, Auburn, and Alturas. Tom McClintock must have seen that and scrambled up on the plane from his Thousand Oaks redoubt, because he hastily scheduled a couple campaign events. In fact, the two candidates will be in the same parade in Lincoln. That should be fun.
Yesterday, the Assembly passed SB 1137, which would alter the mortgage industry in California and aid those in danger of losing their homes. It got through the Assembly by one vote, with 10 Republicans voting with the Democrats. The Senate will need to pass it again to conform to some amendments and then this will go quickly to the Governor's desk. As Frank Russo writes:
The bill that passed, SB 1137 is authored by Democratic Senators Don Perata, Ellen Corbett, and Michael Machado, and coauthored by Speaker of the Assembly Karen Bass and principal coauthor Assemblymember Ted Lieu, who presented it on the Assembly floor. It goes beyond federal laws and received broad support from consumer groups. The legislation requires lenders and servicers to: 1) contact borrowers (or engage in a prescribed process to do so) to schedule telephone or in-person meetings on restructuring options before beginning the foreclosure process, 2) requires a 60-day notice to be given to tenants of buildings facing foreclosure before they can be removed from a rental housing unit; and 3) allows fines of up to $1,000 a day for owners of foreclosed properties that fail to adequately maintain them.
I like aspects of this legislation, particularly the steps toward removing blight in homes that aren't properly maintained, which is a big problem in heavily foreclosed areas. But this bill is a watered-down supplement to the raft of bills presented by Ted Lieu earlier this year, which would have really reformed the mortgage market. There would have been enhanced regulation, limits to penalties for prepayment, a requirement to translate loan terms to non-English speaking customers (yes, that's not current law), eliminate yield spread premiums (which rewarded lenders for getting their customers into higher interest-rate loans) and gotten rid of weasel language in mortgage documents like involuntary legal waivers. Almost all of those bills were gutted to the delight of the lending industry. What's in its place is vaguely helpful to borrowers, but not at all the industrywide reform that is needed to ensure that a runaway market like we saw a few years ago will never be repeated. Lieu modeled his reforms after those in North Carolina, where they work very well. This was a case of the lobbyists getting a hold of legislation before it could actually do any good.
There actually are some things going on outside the primaries, here's what's piqued my interest the past few days:
• Matt Stoller has more on the Barbara Boxer/climate change bill debacle. What hurts the most is that she shut down any debate on the left flank, called progressive groups like Friends of the Earth "defeatists," and pressed forward with a muddled bill that rewards polluting industries without doing the work necessary to provide pushback from the inevitable corporate-funded conservative narratives. I wish she'd just pull it before she causes lasting damage; we'd be in a much better position next year to get something legitimate passed.
• Here's a very good profile in The Nation of almost-a-Congressional candidate Lawrence Lessig and his "Change Congress" movement. I'm kind of waiting for the innovative steps to get this done, but Lessig is a sharp guy. He's giving the keynote address at Netroots Nation next month.
• There's an LA Times exploration of the various health care-related bills moving through the legislature. They're all fairly small-bore but I think they will improve the situation out here, by eliminating rescission, mandating that insurers spend 85% of premium revenue on treatment, and including more procedures in baseline coverage, like maternity. As long as we have the insurance system, we need to do what we can to make sure it's not as thieving as possible.
• There's a new Field Poll on Arnold and the legislature out today that is a cavalcade of bad news - the right track/wrong track numbers are 22/68, the Governor's approval rating is down to 41%, and the legislature is at 30%. Californians don't like their government right now. Some leadership might solve the problem.
• The salmon are dying in the Sacramento/San Joaquin Delta because of ammonia runoff from sewage treatment plants, and purifying the Delta could cost up to $1 billion.
• Here's another personal story of how the foreclosure crisis is hurting individuals, this one in the Central Valley town of Merced. It's impacting practically the entire economy of the town. Just another example of the mess we're in from over-speculation and lax oversight of the financial industry.
• Obviously everyone is going to be working hard for their causes and candidates, so it may be a little quiet around here. I'll be out walking all day tomorrow. Oh, and don't vote for the racist guy, Bill Johnson, as a Judge of the Superior Court (Office number 125) in LA County.
• Yesterday was the deadline for bills to get passed out of their chamber of origin, and the Assembly passed major subprime mortgage legislation, without help from Republicans (6 of them abstained despite being seated right in the chamber). This bill has some good homeowner assistance elements that will allow people to restructure their financing before foreclosure. A mortgage bill has also passed the State Senate, so some form of legislation will hopefully get to the governor post haste.
• One of the biggest problems with the housing crisis is that, as home sale prices lower, homeowners are reassessing their value and getting their property tax lowered, decreasing state revenue yet more.
• Sticking in the shiv before riding off into the sunset, Fabian Nuñez writes a puzzling op-ed in the Sacramento Bee approving of the Governor's horrible idea to borrow against future lottery revenue. Considering that the only sustainable solution to the permanent crisis mode that we have in our budget is to reorganize the tax structure instead of constantly borrowing, I have no idea why any Democrat would veer so far off message and undermine the new Speaker's ability to move forward. What's more, lotteries are regressive taxes on the poor.
• One spot where there will be a lot of action on Tuesday is in Ventura County, where Democrats now outnumber Republicans and which could have contested elections in the Assembly, Senate and US Congress. However, the LA Times shows its political acumen by writing:
One of the more closely watched contests on Tuesday will be the Democratic primary in the 24th Congressional District. Insurance agent Mary Pallant of Oak Park; Marta Jorgensen, a Solvang educator; and Oxnard businesswoman Jill Martinez are running.
Marta Jorgensen quit the race over a month ago and endorsed Martinez. Way to go, LAT.
• Excellent news out of Los Angeles: there's been a $1 million dollar settlement with Hollywood Presbyterian Medical Center for their dumping homeless patients on Skid Row. They will also be monitored by a US Attorney for five years. This unethical practice has reached a reasonable conclusion. Hollywood Presbyterian deserved punishment.
• Trying to get rid of marijuana grow houses in Arcata is like trying to get rid of the Pacific Ocean on the California coast.
On Thursday the House of Representatives passed legislation that would provide federal underwriting for new loans to 500,000 homeowners at risk of foreclosures, as well as increase the limit on FHA loans to $729,750, include tax credits (which are loans to be paid back over 15 years) for first-time home buyers, tighten oversight of the lending industry and provide billions in grants to the states to buy and repair foreclosed homes for resale. Every California Republican voted against it except one - Diamond Bar's Gary Miller, not known as any kind of moderate squish (he voted with the majority of House Republicans 96% of the time last year). The housing crisis is playing out in districts like his, and Miller can't afford to ignore it.
...Miller, a land developer, called the housing downturn the most serious one he had seen in more than 30 years. "I really wish I could support my Republican colleagues," he said. "But I'm very concerned about the marketplace.
"A lot of people are losing their homes," he added. "That not only hurts them, but the neighbors around them because of foreclosure. Their home value drops." [...]
Miller, whose district includes parts of Los Angeles, San Bernardino and Orange counties, disputes the Republican portrayal of the bill as a bailout. Under the measure, lenders must agree to take a significant loss on a homeowner's debt in return for a federal guarantee that the reduced loan will be repaid.
"I'm not in any way supporting the concept of bailing people out who made bad decisions," Miller said. "But things happen in life. . . . There are a lot of innocent people out there."
Here's why this is notable. Miller is one of the greediest and most unscrupulous developers out there. In fact, part of his calculus may just be that it'll help bail out homeowners who can stay in the developments from which he profits. However, his concern for "innocent people" hasn't been borne out by his prior voting record. What's different here is that he ran unopposed last year, even as the FBI was investigating him for tax evasion and shady land deals. This year, three opponents have stepped up to challenge him, and if nothing else, they have forced him to at least pretend his district exists. This is going to be true in every district we're contesting in November. The twin victories by Democrats in special elections in Illinois and Louisiana (and possibly another in Mississippi next Tuesday) has House Republicans ranging from mildly nervous to scared out of their gourds. And as more swing seats open up (buh-bye, Vito Fossella), there's no way the NRCC, the campaign arm of the Republicans in the House, can step in with any cash infusion to bail out an incumbent. Tom Cole, the head of the NRCC (for now), has basically told lawmakers that they're on their own. So you're going to see more out-of-character votes like this for the rest of the year. And you will be able to tell who's more nervous by their positions on these votes. I'd say Gary Miller has a few beads of perspiration on the forehead.
You can also see which issues these lawmakers think will resonate in their particular districts. Obviously the housing crisis is hitting CA-42 hard.
(yes, I do some netroots work for Ron Shepston, who's one of the Democrats running in CA-42 to replace Miller)
Here are a few things I never got around to this week:
• Democratic Senators are asking for a real plan from Gov. Schwarzenegger about how to solve the prison crisis. AB 900 passed a year ago with the promise of building thousands more beds to address prison overcrowding. To date not one construction project has begun. This is a complete shell game, and the courts are likely to act immediately in the face of such incompetence. Just another reason why trying to build our way out of this problem was such a stupid idea.
• Not only did immigrant's rights advocates rally in Los Angeles today, they were joined by businesses who want an end to workplace raids. I actually believe in workplace enforcement to an extent, but business can be a powerful ally in reaching toward a comprehensive solution. The crowd was smaller this year but I think there's a more robust coalition for a breakthrough. Voter mobilization is going to be the key.
• Others have mentioned the new poll numbers on taxes and schools, but I'll say this - decades of anti-tax rhetoric has succeeded in dislodging the relationship between taxes and services. People want education and other services to be funded but don't want to pay for it. The only way to restore that relationship is to... restore that relationship, by specifically explaining how America is worth paying for and turning the whole issue on its head. Not a huge revelation, but thought I'd throw it out.
• Home prices continue to fall in LA and Orange County, and foreclosures continue to wreak havoc on the state's homeowners, including Jose Canseco.
It's often said, "You are what you eat," but new research suggests that where you eat may have a lot to do with it, as well.
In communities with an abundance of fast-food outlets and convenience stores, researchers have found, obesity and diabetes rates are much higher than in areas where fresh fruit and vegetable markets and full-service grocery stores are easily accessible.
"The implications are really dramatic," said Harold Goldstein, a study author and executive director of the California Center for Public Health Advocacy, based in Davis. "We are living in a junk-food jungle, and not surprisingly, we are seeing rising rates of obesity and diabetes."
Intuitive, and it's a chicken-or-the-egg argument. Convenience stores and fast-food outlets move to neighborhoods where people are more likely to only be able to afford convenience stores and fast food. However, the researchers claim this holds across socioeconomic strata. "Food environment" is something we have to think about. Education would seem to be the key,
• Forgot to link George Skelton's article on the potential for competing redistricting measures on the ballot. My position on redistricting is well-known. Skelton does segue into initiative reform, which is sorely needed.
Sinking home values and the collapse of flimsy mortgages sent a record number of California homes into the foreclosure process in the first three months of this year, a real estate information service reported today.
Default notices -- the first stage of foreclosure -- were sent to owners of 110,000 California homes from January to March, about 1% of the homes in the state, according to La Jolla-based DataQuick Information Systems. Default notices were up 143% from the same quarter a year ago.
Most California homeowners in default are now eventually forfeiting their properties to lenders. Only about 32% of those receiving default notices prevent foreclosure by refinancing or selling their property to pay off their mortgages, DataQuick reported. A year ago, 52% of those in default were able to avoid foreclosure.
If you read between the lines here, the implication is that around 70,000 families are in the process of losing their homes. In the first quarter 47,000 additional families had their homes repossessed, which is a 400% year-over-year increase.
This is hundreds of thousands of people, and it's getting to be a significant percentage of the state's population. And the federal government is dragging their feet looking for a solution. And the state can do little beyond stopgap measures.
This is why the budget projections are ballooning.
Statewide foreclosures in California hit the 24,000 mark in the third quarter of 2007 for the first time ever. In fact, it beat the previous record by 39%. Nationally, there are almost 18 million vacant homes, and the homeownership rate, often touted by the Bush Administration as proof of economic success, fell for the fourth straight quarter. What's really concerning are the foreclosures in upper-income areas:
In four Newport Beach-area ZIP Codes, for example, there were 11 foreclosures in the third quarter, up from just three in the same period last year. There were seven foreclosures in Bel-Air, and none a year ago.
"It's definitely increasing," said Joyce Essex, a Coldwell Banker real estate agent based in Beverly Hills who specializes in selling foreclosed homes.
