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Nov 21st
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Protecting the Home Front

barbara palmer 1SANTA CRUZ > Real estate agent lobbies for struggling local families

Barbara Palmer, president of the Santa Cruz County Association of Realtors, met with 28 out of the 55 U.S. Representatives from California, as well as Treasury and Federal Housing Finance Agency executives on five separate trips to Washington D.C. last year. Lobbying on behalf of cash-strapped homeowners and the statewide realtors association, Palmer emphasized the devastating impacts of foreclosures on families and neighborhoods.  

“I’m looking for practical solutions, “ Palmer says. “There are some very practical rule changes that could be made, that do not necessarily require writing down principal, that could save many people from losing their homes, right now, and in the year ahead.”

Palmer is worried about many exorbitant, adjustable rate mortgages (ARM’s) out there, originated in the hey day of flexible, if not predatory, lending practices beginning around 2003 that are scheduled for significant interest rate hikes on their 10 year anniversaries later this year and next. Palmer says the interest rate hikes of ARMs, in some cases exceeding six percent, may push many families already struggling to stay current over the edge of foreclosure in the near future.   

A practical solution? Palmer advocates for banks to refinance these ARMs into 30-year fixed mortgages at today’s low interest rate of around 4 percent, making loan payments manageable for many households in potential trouble, even if the refinanced loan still renders the homeowner “underwater” in terms of current market value. “At least the family can make the payments and stay in the home,” Palmer insists.

One key obstacle is that, by current rules, the refinanced loan cannot exceed 125 percent of market value, cutting off that option for borrowers more than “25 percent underwater.” “Waive that appraisal requirement and the 125 percent of market value rule,” Palmer  proposes, ”and let families out of these exorbitant ARMs and take advantage today’s low interest rates with a 30-year fixed.” Are there any incentives for the banks to do this? “Yes,” replies Palmer enthusiastically, “the banks have a real PR problem. Here’s a way for them to solve it. ”

Recalling the famous axiom that “all politics are local,” Palmer is serious when she says, “all solutions are local too, we just need to work them out.”

“My vision is to get local bank officials, troubled homeowners trying to avoid default, realtors and public officials all in the same room and come up with workable alternatives to foreclosure,” she says.


Check back with Good Times later this week for an in-depth look at the continuing local foreclosure crisis.

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