THAT’S DEBATABLE:

A bill designed to slow home foreclosures failed by one vote in the state Senate last week. Republicans objected to a requirement that lenders personally talk to borrowers before they start the default process. What did you think of the bill? If similar legislation is revived this spring, what would you like to see in it that’s different from the defeated bill?

It’s always smart to be skeptical when large numbers of politicians label something a “crisis.” When they do, reach for your wallet.

No doubt, the pain is real for families facing the loss of a home in the sub-prime lending “crisis.”

The question for a policymaker is not whether to have sympathy, but rather, whether to use government power to intervene in the free market.

Any state intervention in the financial markets will have the effect of punishing those who carefully considered the risks of a loan and acted prudently, while rewarding those who failed to meet their financial obligations.

Chuck DeVore

Assemblyman

(R-Newport Beach)

Senate Bill 926 was an attempt to deal with this foreclosure problem; however, if it had been approved, it would have driven real estate lenders out of California, thus further exacerbating the real estate and lending crisis.

Instead of letting the marketplace deal with the foreclosure problem, SB 926 allows the government to impose onerous new rules and restrictions on lenders in an attempt to help homeowners who cannot afford to make their house payments.

The measure would have placed a number of costly and impractical requirements on lenders that provide mortgage services.

It also contained several provisions that are impossible to comply with, leading to significant new legal exposure for lenders as they work with borrowers to prevent unnecessary foreclosures. The bill was overly broad in its scope. Instead of focusing on loans for owner-occupied single family residences, it imposed restrictions on all types of residential loans.

Some reincarnation of SB 926 will likely materialize in the spring. I remain committed to working with my colleagues here in the Senate to craft an appropriate solution.

However, I cannot support a legislative fix to the mortgage default and foreclosure problem if it is simply a government bail-out that grants months and months of additional time to defaulting borrowers to cure the default on their real estate loan. This bails out borrowers who secured risky loans. Perhaps most importantly, it punishes those borrowers who worked for years to save for a down payment, borrowed rationally and every month made their real payments on time.

Tom Harman

Senator

(R-Huntington Beach)

The dream of home ownership should be available to every American.

That is why I was proud to co-host, with Senator Tom Harman, a Community Housing Conference last year, to discuss the cost of housing, how people can turn the dream of owning a home into a reality, and free-market ways to balance current mortgage payments. But I am not sure we need a bureaucratic solution to the sub-prime mess.

I fear that a requirement that lenders personally talk to each borrower before they start the default process would result in endless litigation, with borrowers contending that lenders failed to sit down with them to advise them of all possible alternatives to foreclosure.

It is a bit absurd to try to find a quick political fix for people who should not have bought houses they could not afford and for huge companies that should not have lent money recklessly.

If we are not careful, we will have the government, once again, punish those who work hard, save and live prudently in favor of bailing out those who choose to live beyond their means and those who sought huge profits from irresponsible loans. Sacramento needs to first deal with its own spending beyond their means and irresponsible loans.

The idea that bureaucracies can solve the sub-prime loan mess is one more example of Sacramento and Washington’s detachment from reality.

Van Tran

Assemblyman

(R-Costa Mesa)