The Margett Minute: February 7, 2008

After several years of news stories reporting homeownership at all-time highs, the media is now filled with heartbreaking stories of families losing their homes due to the inability to meet their monthly payments. Today, it seems nearly every neighborhood in California is seeing an explosion of homes with "for sale-bank owned" signs and the collapse of the housing market continues to take a toll on California's families and economy.

Naturally pressure is building in the Legislature to be more aggressive toward the sub-prime mortgage industry. However, as Henry Kissinger once said, "We can't make good policy by scaring ourselves to death." I agree.

California cannot fix this problem through over-regulation. I recognize the mortgage industry needs to return to more sound lending practices. I understand lenders and brokers extended loans to individuals with less stringent income and asset verification and without regard for the borrower's ability to repay loan obligations.

But we must accept the reality that due to artificial home pricing, the decline of the market is both inevitable and economically sound. Significant market and financial forces are at work that need time to resolve. Micromanaging the mortgage industry by over-regulating it will only continue to keep home prices artificially high, hurting the real estate market and in turn, hurting our economy.

Therefore, California and our nation's approach must be balanced so the American dream of home ownership can be realized by everyone, not just those who were able to buy a home before prices were artificially raised. One such balanced approach includes identifying borrowers in trouble and having lenders work with them to develop strategies that result in positive outcomes for both the borrower and the lender. When borrowers and lenders can work together to forge an agreement, the result is a home is still occupied and a mortgage still paid. It is a win-win situation for both parties.

Regardless, consumer education is always the best tool to help current and potential home buyers avoid the foreclosure crisis. Always remember to read the fine print on sales contracts and to get a second opinion if you believe your lender is not forthright. Also, if you find yourself facing the possibility of foreclosure trouble, don't wait until it's too late. Take action, call your lender immediately, and try to work out a compromise that is beneficial to both parties.

If you would like more information on consumer protection tips, as well as information on organizations which are standing ready to help, please visit my website.

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Legislative Update

With the 2008 legislative session underway, I am pleased to announce the introduction of SB 1105 and SB 1141. SB 1105 will close the loophole which has allowed teachers who plead "no contest" to misdemeanor sex offenses to continue teaching. Under current law, if a person is found guilty of a misdemeanor sex offense they immediately lose their teaching credential, effectively barring them from teaching. However, if they plea "no contest," then all credentials held by the person are simply suspended until a final decision by the Commission on Teacher Credentialing is made. This has allowed some teachers who have plead no contest to sexual offenses to come back into the classroom.

Additionally, SB 1141 will ensure local law enforcement agencies providing search-and-rescue and emergency medical services will not be restricted with regards to transporting a person to a hospital. Under current law, a sheriff or police search and rescue helicopter equipped identically to a life flight helicopter could have to land and transport a patient to the life flight helicopter, adding precious time until a critically injured individual could make it to the hospital. SB 1141 will help save lives by ensuring patients are transported to a hospital without interruption.

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Health Care Special

Shortly after the 2007 legislative session came to a close, the Governor called the legislature back into special session to specifically address California's health care crisis. Last week, ABX1 1 was defeated in the Senate Health committee, receiving only one "aye" vote. The plan, which was rushed through the Assembly in a hasty get-out-of-town session, was estimated to cost California nearly $14 billion dollars. Because of the state's precarious budget situation, members of both parties agreed that passing such a measure would be ill-conceived. However, the leaders of both parties and the Governor have agreed to continue working on the health care reform.

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Education Summit

On January 24th I co-hosted, along with Assemblyman Bob Huff, an education summit at Citrus College. Our guest speaker, Dr. David Long, the Governor's Secretary of Education, outlined many of the challenges we are facing in education today in the Golden State. I want to thank Citrus College for once again hosting this event, Dr. Long for spending some of his time with us, our distinguished set of panelists for their contributions, and everyone who braved the rain to come hear a lively and informative discussion about the state of education in California.

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Mortgage Crisis Website

I know many Margett Minute readers are seeking a way to keep updated on California's sub-prime mortgage crisis that I discussed on page 1. In an effort to keep people apprised of developments at the federal, state, and local level in this fluid situation, the League of California Cities has developed a new website devoted to monitoring developments in the housing crisis. The website can be found at www.cacities.org/subprime.

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Mortgage Assistance Workshop

California's State and Consumer Services Agency and the Business, Transportation and Housing Agency are sponsoring a series of workshops designed to help prevent foreclosures. Credit counselors, loan servicers and lenders will be present to offer assistance and information on available options to homeowners facing problems. Locally, there will be a workshop in Downey on February 9th and in Riverside on February 23rd. For further information please visit www.yourhome.ca.gov or www.sucasa.ca.gov. I applaud the efforts of these state agencies to help do what they can for consumers during the mortgage crisis.

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State Summer School for the Arts Seeks Students

InnerSpark, California's State Summer School for the Arts, is seeking the most talented high school-aged visual, literacy, media and performing artists. The 520 students who are selected will be designated California Arts Scholars and attend summer arts institutes in Valencia. InnerSpark offers instruction in the fields of animation, music, dance, film and video, theatre, creative writing, and the visual arts. More than 10,000 students have attended InnerSpark since the program was founded in 1987. Financial aid is available to those students not able to afford the tuition. Applications for InnerSpark can be obtained at www.innerspark.us and the deadline to apply is February 29, 2008.

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