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GUEST: Bob Gnaizda, Greenlining instutite

Consumer advocates have called for a moratorium on home foreclosures, as they warn that California will face many more next year. The reason cited for the projected increase of foreclosures is that homeowners are expected to be hit with payment increases brought on by subprime loans and risky mortgages. The call for a moratorium comes on the heels of The Mortgage Bankers Association estimation that more than 46,000 California homes were in foreclosure in March and another 76,732 mortgage loans were seriously delinquent. Over two million families are facing foreclosure in the next two years. California will become ground zero for the bottoming out of the housing market as there will be two and half times more foreclosures in the state than anywhere else. At the heart of the housing crisis are subprime mortgages. Subprime loans target low-income families with shaky credit histories or those who cannot always document their incomes. The combined effect of falling wages with rising inflations, explosion in adjustable rate mortgages, and the fall of housing prices make it impossible for these borrowers to refinance or sell their homes to avoid financial foreclosure. Half of all Americans who have sub-prime loans are actually eligible for prime loans but were misled by mortgage brokers or financial institutions. Subprime mortgages have proven to be big business for Wall Street investment banks such as Goldman Sachs, Lehman Brothers, Bear Stearns, and Merrill Lynch. Such financial institutions encouraged risky sub-prime loans and were responsible for over 750 billion dollars in sub-prime loans made in 2005 and 2006.

For more information, visit www.greenlining.org/stories/view/90 and www.alternet.org/story/60183/?page=3