Austin King, National Director
ACORN Financial Justice Center
The foreclosure crisis sweeping across America is as tragic as it
was entirely avoidable – strong anti-predatory lending protections would have
prevented the worst abuses that led to loans that were simply unaffordable for millions of
homeowners. Now the question facing policy makers is what to do to stem the
foreclosure crisis, prevent homelessness, stabilize the economy, and save the American
Dream for millions of families.
This report discusses policy options both large and small that many states will consider
this year and next. With the Option ARM crisis threatening to supplant the subprime
crisis as a leading cause of foreclosures, this problem shows no signs of abating.
Policymakers will be rewarded who look forward and seek to stem the problem before it
gets even worse.
The most muscular version of this bill is being sponsored by Assembly Member Jim
Brennan in New York, and is a full 12-month moratorium on residential foreclosures. In a
sign of the new political realities around foreclosures, Brennan, a Democrat, has a
Republican sponsor of his bill in the GOP-held Senate. One essential purpose of such a
moratorium is to create an environment in which the parties are encouraged to find a
mutually agreeable solution on their own, as well as to actually save someone’s house.
This moratorium will force lenders to work with homeowners and review the current
mortgage document and determine the homeowner’s true financial status. Courts will
determine based on the mortgage, what the minimum amount should be for the monthly
payment schedule to preserve the relative financial position of both parties during the
moratorium. Other versions are for shorter periods of time, like six months or three
months. In response to the growing calls for a moratorium, the industry allianc