Analysts: Calif. Faces Economic Doom

Dems want homeowner package passed

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    California has big money troubles.

    If lawmakers do nothing about the state's struggling economy, analysts say California could face multi-billion dollar deficits for the next five years.


    So many people are losing their homes that the economy is sputtering. But a new plan could spell mortgage relief and it's designed to help homeowners.

    Amanda Kersey is hoping for help on her mortgage.

    Like thousands of Californians she is behind in her payments and in danger of losing her home.


    "They're asking why I am late, why, what circumstances that have created this," she said.

    Kersey said she welcomes the rescue package now moving forward at the capitol.

    On Tuesday assembly Democrats were pushing for a moratorium on banks and lenders from filing default notices against homeowners for 120 days.

    "In August of this year, we had 101,000 foreclosure filings, the most of any state," said Ted Lieu, a Democratic Assemblyman from Torrance.  "Again that's one filing about every thirty seconds."

    The Democrats say the relief package would cost taxpayers nothing but instead the pain would fall on Wall Street firms and bankers.

    Republicans worry the new rules would make it harder for Californians to get loans.

    "Well I think it provides uncertainty within the marketplace," said Republican Ted Gaines of Roseville. "In order to provide liquidity, you've got to have certainty. So if you start changing the rules and breaking contracts or contractual obligations, that creates a real problem."

    Gov. Arnold Schwarzenegger has proposed a 90-day stay on foreclosures but the Democrats want to add thirty more days.

    Meanwhile, the mortgage meltdown is causing a severe cash crunch in California, where analysts now see a $28 billion deficit in two years unless lawmakers take immediate action.

    Democrats expect a vote on the mortgage plan by the middle of next week

    The mortgage relief package needs only a simple majority vote to pass and with the Democrats fully in charge, Republican support is not required, except of course for the most important Republican: Arnold Schwarzenegger.

    If the governor signs the package it would take effect in ninety days.