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RESOLUTION URGING THE U.S. CONGRESS AND THE FLORIDA LEGISLATURE PROACTIVELY TO ADDRESS THE NEXT POSSIBLE MORTGAGE CRISIS BY REQUIRING BANKS THAT RECEIVE FEDERAL BAILOUT FUNDS TO RESTRUCTURE OPTION ADJUSTABLE RATE MORTGAGES AND OTHER UNCONVENTIONAL MORTGAGES THAT WERE USED DURING THE RECENT REAL ESTATE BOOM

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WHEREAS, in recent years, lenders lured borrowers to take out loans with option adjustable rate mortgages (Option ARMs) that had low initial �teaser� interest rates, sometimes as low as one percent (1%), but after two to five years, the rates reset to a market interest rate, resulting in substantially higher monthly payments that were in some cases double the introductory rate; and
WHEREAS, banks also issued Alternative A-paper loans (Alt A loans) to homeowners with credit ratings that were better than the riskiest subprime loans, but still did not qualify as prime loans; and
WHEREAS, Option ARMs, Alt A loans, and other unconventional mortgages were frequently used during the recent real estate boom; and
WHEREAS, many homeowners bought homes using unconventional mortgages that were outside their price ranges, and when the interests rates reset to market interest rates in the next few years, some homeowners may not be able to afford their monthly mortgage payments; and
WHEREAS, when these interest rates reset, we could see another mortgage crisis and another wave of mortgage foreclosures, in addition to the prior wave of foreclosures caused by sub-prime mortgages and the economic downturn; and
WHEREAS, the federal government already has given billions of dollars to banks through bailout programs to shore up the U.S. economy, and more federal bailout funds are likely on the way; and
WHEREAS, the first round of funds the federal government gave to banks came with few requirements for how those funds should be used; and
WHEREAS, in exchange for providing banks additional federal funds, the federal government should require banks to restructure Option ARM, Alt-A and other unconventional loans; and
WHEREAS, banks should also be required to waive or reduce closing costs to homeowners that have unconventional mortgages in order to access government bailout funds; and
WHEREAS, state government can also play a role in moving banks toward restructuring Option ARM, Alt-A and other unconventional loans,
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF MIAMI-DADE COUNTY, FLORIDA, that this Board:
Section 1. Urges the U.S. Congress and the Florida Legislature proactively to address the next upcoming mortgage crisis by requiring banks that receive bailout funds to restructure option adjustable rate mortgages and other unconventional mortgages that were used during the recent real estate boom.
Section 2. Directs the Clerk of the Board to transmit a certified copy of this resolution to the members of the Florida Congressional Delegation, the Governor, Senate President, House Speaker, Chair and Members of the Miami-Dade State Legislative Delegation, and the U.S. Secretary of the Treasury.
Section 3. Directs the County's federal and state lobbyists to advocate for the passage of the legislation set forth in Section 1 above, and directs the Office of Intergovernmental Affairs to include this item in the 2009 Federal and State Legislative Packages.