California Legislature Meets In Special Session for Budget and Foreclosures Discussions

(as reported by Housing California)

On Thursday, November 6, 2008, the Legislature returned to Sacramento to convene the Fourth Extraordinary Session, focused on mid-year budget cuts and stemming the foreclosure crisis. In a special session, only legislation on the enumerated topics can be considered by legislators.

Governor Schwarzenegger has proposed a mix of program cuts and revenue increases to fill the state's $11.2 billion gap in the current budget year. None of his proposed cuts directly impact housing programs; however, he is advocating the acceleration of Proposition 1C spending. No details are available yet.

Some of the drop in state and local revenues can be attributed to the plummeting housing market. Housing California will use this opportunity to talk with policymakers about the positive economic stimulus provided by state investment in home construction. Boosting the housing market will not only benefit Californians who cannot find an affordable place to live, it will benefit state and local governments as well.

On the foreclosure front, Schwarzenegger wants to place a moratorium on foreclosures for 90 days unless lenders begin aggressive loan modifications that keep homeowners from losing their homes. He also proposes increasing lenders and brokers' fiduciary responsibility to their borrowers and requiring counseling before certain home loans are signed.

Assembly Democrats also have called for passage of legislation to stem many of the dubious lending practices that resulted in millions of Californians being saddled with home loans they cannot afford. In October, the governor vetoed some of the measures that are expected to be reintroduced in the special session, including AB 1830 (Lieu, D-Torrance).