Kansas City, MO Urging Congress to Protect Homeowners from Foreclosure

Type: Resolution

Status: Introduced on 2/7/08 and referred to committee

Source File: Click here

Text:

RESOLUTION NO. 080135
Urging the U.S. Congress to enact emergency legislation to protect homeowners from foreclosure, financial hardship and loss of their homes as a result of the current financial crisis facing U.S. banking and lending institutions.

WHEREAS, the ongoing financial crisis involving home mortgages, other debt instruments and the banking system of the United States threatens to set off an economic collapse worse than the Great Depression of the 1930s; and

WHEREAS, millions of Americans are faced with foreclosure and loss of their homes over the coming months; and

WHEREAS, the hedge funds which have spread this financial collapse among markets worldwide by dominating speculation in all those markets are now going bankrupt and demanding government bailout of their securities and derivatives, and the nominal value of the derivatives based on mortgages alone is the size of the combined gross domestic product (GDP) of the nations of the world; and

WHEREAS, this financial crisis threatens the integrity of both federal and state chartered banks, as exemplified by the run on deposits of Countrywide Financial Corporation in California on August 16, 2007, which could wipe out the life savings of too many American people and drastically undermine the economic stability of our states and cities; and

WHEREAS, under similar circumstances in the 1930s, President Franklin D. Roosevelt successfully intervened to protect banks and homeowners, addressing Congress with a "declaration of national policy" on April 13, 1933, which stated "that the broad interests of the Nation require that special safeguards should be thrown around home ownership as a guarantee of social and economic stability, and that to protect homeowners from inequitable enforced liquidation in a time of general distress is a proper concern of the Government.@; NOW, THEREFORE,

BE IT RESOLVED BY THE COUNCIL OF KANSAS CITY:

Section 1. That the members of the Council hereby call upon the members of the United States Congress to take emergency action to protect homeowners and banks by enacting a Homeowners and Banks Protection Act specifically to:

Establish a federal agency to place federal and state chartered banks under protection, to freeze all existing home mortgages for a period of time, to adjust mortgage values to fair prices, to restructure existing mortgages at appropriate interest rates, and write off speculative debt obligations of mortgage-backed securities, financial derivatives and other forms of financial pyramid schemes that have brought the banking system to the point of bankruptcy; and

Declare a moratorium on all home foreclosures for the duration of a specified transitional period, thereby allowing families to retain their homes, during which monthly payments, the equivalent of "rental payments", shall be made to designated banks, which can use the funds as collateral for normal lending practices, thus recapitalizing the banking system. These affordable monthly payments will be factored into new mortgages, reflecting the orderly deflating of the housing bubble, the establishment of appropriate property valuations, and reduced fixed mortgage interest rates. During the several years the moratorium will need to achieve its goals, homeowner shall be evicted from his or her property and the federal and state chartered banks shall be protected so that they can resume their traditional functions, serving local communities and facilitating credit for investment in productive entities; and

Authorize governors of several states to assume the administrative responsibilities for implementing the program, including the "rental" assessments to designated banks, with the federal government providing the necessary credits and guarantees to assure the successful transition.