55D - RESO HOMEOWNERSHIP PRESERVATION

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Homeowner Preservation Resolution March 3, 2008 Page 2 In addition, the private sector and lending industry have identified a package of homeownership preservation initiatives promoted by U.S. Treasury Secretary Paulson and the American Securitization Forum. These voluntary efforts provide additional options for borrowers with subprime mortage loans. These options are not mandated by federal law and in brief include: • Rate freeze for 5 years for qualified borrowers. • Qualified borrowers must have homes that are owner occupied, borrower must be no more than 30 days late on payments, have a FICO credit score of 660 or less and a loan originated in January 2005 to July 2007 with an initial reset date of January 2008 to July 2010. Eligible borrowers must also have less than 3o equity in their home. While this voluntary package does not allow continuation of interest only payments provided by initial "teaser" rates, significant relief is achievable for homeowners that contact their lenders in advance of any default on their loan obligations. In California, through the leadership of Governor Schwarzenegger, lenders are encouraged to: 1) reach out proactively to borrowers well before their loans reset; 2) streamline the processes by which they determine whether borrowers may reasonably be expected to be able to make the reset payment; and 3) for people who are in their homes and making timely payments now at the starter rate, but who cannot make the reset payment, keep them at the starter rate for a sustainable period of time. The proposed resolution recognizes the impact of subprime mortgage lending in our community and addresses Santa Ana's support of federal, state, local government and private sector efforts to aide homeowners affected by subprime mortgage loans. FISCAL IMPACT There is no fiscal impact associated with this action. ,'(,Stephen Harding Deputy City Manager for Development Services Community Development Agency SGH/SK/mlr 55D-2