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RESOLUTION URGING THE CEOS OF THE 25 LARGEST SUB-PRIME LENDERS TO FREEZE FORECLOSURES IN MIAMI-DADE COUNTY; TO REACH OUT TO HOMEOWNERS IN FORECLOSURE; TO MEET WITH THE COUNTY TO DISCUSS LENDING AND FORECLOSURE POLICIES

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WHEREAS, sub-prime lending has grown rapidly in Miami-Dade County during the last few years; and
WHEREAS, the Center for Responsible Lending estimated in a December 2006 report that one in five sub-prime loans will end up in foreclosure; and
WHEREAS, approximately 80% of sub-prime loans are Adjustable Rate Mortgages (ARMs) for which the interest rate increases after two years and then every six months after; and
WHEREAS, many borrowers with sub-prime ARMs were never given a choice between an adjustable or fixed rate or were promised a fixed rate but given an ARM; and
WHEREAS, sub-prime lenders made ARMs without regard to whether the borrower would be able to afford the payments after the rate increases; and
WHEREAS, sub-prime lenders made ARMs assuming that homeowners would refinance before the interest rate increased; and
WHEREAS, many homeowners with sub-prime ARMs have not been able to refinance due to the stagnation or decrease in home values; and
WHEREAS, more than two-thirds of sub-prime loans have prepayment penalties, compared to just 2% of prime loans; and
WHEREAS, prepayment penalties trap borrowers into sub-prime loans with high or adjustable rates; and
WHEREAS, some mortgage brokers and lenders made loans to people despite knowing that the family would not be able to afford the loan; and
WHEREAS, 46% of sub-prime loans made in 2006 required little or no income documentation; and
WHEREAS, approximately 70% of sub-prime loans were refinances for families who had already bought a home; and
WHEREAS, less than half of all sub-prime loans include taxes and insurance in the monthly payment; and
WHEREAS, many borrowers end up in foreclosure when they have to make a lump sum payment of their taxes and insurance; and
WHEREAS, these practices are commonly referred to as "predatory lending"; and
WHEREAS, these predatory loans have led to an increase in foreclosure rates which hurts the families who are losing their homes as well as the neighborhoods where there are a concentration of foreclosed homes; and
WHEREAS, these vacant homes attract crime and cost Miami-Dade County money in crime prevention and the deterioration of neighborhoods; and
WHEREAS, the mortgage industry maintains that their companies lose money on foreclosures and only foreclose as a last resort; and
WHEREAS, most Pooling and Servicing Agreements (PSAs) allow servicers to modify loans in order to make them affordable for the homeowner; and
WHEREAS, many homeowners facing foreclosure report that their servicer never offered them an opportunity for loan modification; and
WHEREAS, Freddie Mac reports that half of all foreclosed homeowners never talked with their lender,
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF MIAMI-DADE COUNTY, FLORIDA, that this Board:
Section 1. Urges the 25 largest sub-prime mortgage lenders and servicers in the County to voluntarily suspend foreclosures of owner-occupied properties in Miami-Dade County for a period of three (3) months and make every effort during the suspension period to help their customers avoid foreclosure and remain in their homes, including modifying loans by reducing the interest rate and/or the principal to achieve an affordable monthly payment.
Section 2. Directs the Clerk of the Board to transmit certified copies of this resolution to the CEOs of the 25 largest sub-prime lenders and servicers in the County.
Section 3. Requests of the CEOs of those companies to work with Miami-Dade County and community-based organizations during the suspension period to reach those homeowners who are not communicating with the servicer.
Section 4. Requests that these lenders and servicers provide a timely response to Miami-Dade County noting whether the company will agree to the voluntary foreclosure suspension.
Section 5. Requests that those lenders, who refuse to implement the voluntary suspension, appear before the Miami-Dade County Commission to discuss the company's lending and servicing practices.