A key D.C. Council member wants to set aside a pot of public money to assist homeowners facing foreclosure because of an emergency, one of several measures the city is considering to address the growing foreclosure crisis.
Ward 3 Council Member Mary Cheh said she is in talks with Mayor Adrian Fenty to establish a program that provides temporary assistance to those with a short-term inability to pay their mortgages.
The fund would not be intended to bail out people in bad mortgages, Cheh said, but rather to protect homeowners encountering “non-recurring emergency situations” such as a lost job or a medical crisis.
“The government exists to protect people from harm,” Cheh said from the steps of the Wilson Building, joined by D.C. Attorney General Linda Singer.
Cheh could not say how much money she’d need to start the program, because its dimensions have not yet been established. But she said the city could probably reprogram the dollars from other areas of the budget.
Foreclosures in the District this year are expected to double all of those in 2006 — 219 were reported through July.
Cheh has called on Fenty to establish a foreclosure information office, introduced legislation requiring better disclosure of loan information prior to closing and offered another bill to coordinate the city’s financial literacy efforts.
Singer described the “mortgage foreclosure boom” as a “manmade disaster of potentially massive proportions.”
She pledged to investigate and crack down on unscrupulous business people who offer to buy a homeowner out of foreclosure by purchasing the title and mortgage as a “temporary” help to a person in financial distress.
The homeowner believes he will eventually be able to repurchase the title, and keep his equity. But the buyer flips the house, and pockets the equity, leaving the original owner homeless.
The D.C. Council is soon expected to pass a law banning the so-called “foreclosure rescue transactions.”
Marian Siegel, executive director of Housing Counseling Services Inc., urged D.C. residents to “seek help from experienced agencies, not from the lamp posts.” Her organization is now offering walk-in foreclosure clinics.
