Abayomi Azikiwe, editor of the Pan-African News Wire, covering a Moratorium Now! Coalition demonstration outside the State Office Building, Cadillac Plaza, in the Detroit New Center Area on November 20, 2008. (Photo: Alan Pollock).
Originally uploaded by Pan-African News Wire File Photos
By LIZ SIDOTI, Associated Press Writer
PHILADELPHIA – President-elect Barack Obama pledged quick work Tuesday on an economic recovery plan to include tax cuts and increased federal spending, and told the nation's governors he wants their advice in designing a package to help their hardhit states.
"We intend to put tax cuts into the pockets of hard-pressed middle class families in your states. And we intend ... to start making a down payment on the critical investments that are going to be necessary to sustain long-term economic growth as well as pull us out of the current slump," Obama said as he sat down with governors, nearly all of whom are struggling with budget deficits at home as a result of the recession.
Vice President-elect Joe Biden told the same group he hopes they will not criticize the incoming administration for raising the deficit as it tries to help them. "I know none of you would do that," he said jokingly. Many states have constitutions that prohibit deficit spending.
"Forty-one of the states that are represented here are likely to face budget shortfalls this year or next forcing you to choose between reining in spending and raising taxes," Obama said. "Jobs are being cut. Programs for the needy are at risk. Libraries are being closed. Historic sites are being closed."
The recession and the accompanying increase in joblessness translate into higher health care costs for the poor, greater use of food stamps and added strain on welfare programs, and the governors are seeking help in coping.
They have asked for at least $40 billion to help pay for health care for the poor and disabled and perhaps $136 billion more in infrastructure projects like road and bridge repairs in the legislation, which Democrats hope to have ready for Obama's signature as soon as he takes office on Jan. 20.
Obama has said he will make an economic stimulus his top priority, and his aides and congressional leaders have been discussing the outlines of a measure that could exceed $500 billion over two years. The president-elect has said his goal is to secure 2.5 million jobs.
In his brief remarks, Obama pledged a partnership with the governors, Republicans and Democrats alike. "As president, I'm not simply asking the nation's governors to help implement our economic plan," he said. "I'm going to be interested in you helping to draft and shape that economic plan."
He made a point of promising Republican governors "the hand of friendship, the same commitment to partnership as a do my Democratic colleagues."
Obama spoke to a bipartisan group of state chief executives at historic Congress Hall that included former and possibly future political rivals. Among those in attendance were Republicans Govs. Bobby Jindal of Louisiana and Sarah Palin of Alaska, the GOP vice presidential nominee in this year's campaign.
Republican and Democratic governors sat at desks in the hall, with no separation by party, and gave Obama and Biden a standing ovation.
Biden singled out Palin — his debate adversary from the fall campaign — for thanks and said his former rival's presence there is a sign that both parties are now confronting problems together. "Maybe walk outside with me later and say hello to me," he said to laughter from the crowd.
"We're going to be talking about what the elements of an economic stimulus plan will be," said Massachusetts Gov. Deval Patrick, a Democrat.
"Without federal help ... what we will have to do is just make continuing cuts and/or raise taxes, both of which would have a further deleterious effect on our states' economy. We simply need help," Ed Rendell, the Pennsylvania governor and chairman of the National Governors Association, told reporters on Monday. "When the economy is bad, the social service net demands grow."
Rendell said there are upward of $136 billion in infrastructure projects that are "ready to go," chiefly road and bridge repair projects that can get started especially quickly. Water and sewer projects and school repairs are other needs.
Rendell and NGA Vice-Chairman Jim Douglas, R-Vt., met Monday with House Speaker Nancy Pelosi, D-Calif., who said Democrats will work to have the economic stimulus measure ready for Obama's signature as soon as he takes office Jan. 20.
It's expected to blend funding for infrastructure projects and Medicaid aid to the states with tax cuts, a temporary increase in food stamp payments, as well as investments in renewable energy projects and other "green jobs" initiatives. The NGA has proposed $40 billion over two years to temporarily increase the federal government's contribution to the Medicaid program for the poor and disabled.
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Associated Press reporters Andrew Taylor and Nedra Pickler in Washington contributed to this report.
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Tuesday, December 2, 2008
Michigan tries to slow foreclosures
Rate spike spurs bids for moratorium, extended credit options
Mark Hornbeck / Detroit News Lansing Bureau
LANSING -- Scrambling to do something about Michigan's rampant home foreclosure problem before the holidays, Gov. Jennifer Granholm and lawmakers are working on a flurry of bills to ease the squeeze on cash-strapped homeowners.
Various measures would place a moratorium on foreclosures, require advance notice and give those who can't meet their monthly payments some breathing room to refinance. The key bills being considered would require mortgage lenders to give 45 days' notice in advance of a home being placed in foreclosure and mandate that the lender report to the state. There is no such time frame set in law now. A bill in the Senate would require 90 days' notice.
Using that information, the state banking regulator would determine whether a subprime loan should be extended for 30 days, giving the lender and borrower a window to work out a new payment plan. That legislation passed the Democratic House last month and is supported by Granholm, but faces an uncertain fate in the Republican Senate.
"I'm fairly confident something will get done on this very soon. Everybody agrees that the mortgage foreclosure process in this state doesn't work well in the economic situation we're in," said John Llewellyn, chief lobbyist for the Michigan Bankers Association. "But if you don't have the economic capability to live in your house, then you're in trouble. That won't change."
Another fact unlikely to change soon: Because of the financial market meltdown, the auto industry collapse and other economic woes plaguing Michigan, this state will continue to have a high rate of foreclosures. Nearly 2 percent of all households -- a total of 87,210 -- were in foreclosure last year, ranking Michigan third in the nation.
The state's foreclosure rate -- the percentage of all loans in foreclosure -- has doubled since mid-2006 to 3.6 percent in the second quarter of this year, according to a Mortgage Bankers Association survey, well above the U.S. rate of 2.75 percent.
In addition, more than 25,000 homeowners with subprime loans were in foreclosure in the quarter, about 1in every 7. A subprime loan is made to a borrower who does not qualify for the lowest market interest rates because of credit problems or other underwriting deficiencies.All involved say the foreclosure process in Michigan is highly flawed. Borrowers contend they don't have enough time or opportunity to restructure their loans. Lenders say they're not getting enough information up front from homeowners to head off a problem. Neighbors are miffed because homes abandoned in foreclosures sit vacant for months, devaluing surrounding properties.
"What's clear ... is we don't have a foreclosure process that works for anybody," said Rep. Andy Coulouris, D-Saginaw, who chairs the House Banking & Financial Services Committee.
Coulouris is among those who say an improved system will include a mediated settlement plan the state can monitor. Ken Ross, state commissioner of the Office of Financial and Insurance Regulation, also backs the House bills.
"This legislation ... would give an opportunity for those who have subprime loans and might be able to pay some amount to take a breather from the process before they go into the foreclosure loop," he said.
Mortgage lenders say they're already responding to the need to restructure loans for those who can do it, so the need for state oversight is minimal.
"The market is responding to this national crisis in an aggressive way," said Murray Brown, director of development for the Michigan Mortgage Lenders Association. He added that putting in a 30-day freeze law here would put Michigan out of step with other states and make it more difficult for subprime borrowers in this state to get credit in the future.
Sen. Randy Richardville, R-Monroe, who chairs the Senate Banking & Financial Services Committee, said the House bills are "aiming in the right direction" and stand a better chance of final passage than a measure introduced by Sen. Hansen Clarke, D-Detroit, calling for a two-year moratorium on foreclosures.
Richardville said he may prefer expanding the lled "Save the Dream" plan that broadens the traditional role of the Michigan State Housing Development Authority from helping residents buy their first homes to helping people stay in their homes.
He said legislation might also need to address another problem: When a house returns to a bank, it's often in disrepair, sometimes because the owner vandalized it in protest of foreclosure.
"Letting people stay in their homes and pay rent until they get back on their feet is one possibility we're looking at."
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