Roundtable: Why Was California Homeowner Protection Act Scuttled?
Editor's note: During our broadcast, we incorrectly identified Kelly Davis as "assistant editor for San Diego CityBeat." Kelly's correct title is "associate editor for San Diego CityBeat." We apologize for the error.
Friday, June 10, 2011
Aired 6/10/11 on KPBS Midday Edition.
California Assemblymember Juan Vargas is raising his profile in preparation for a run for Bob Filner's congressional seat. But Vargas' recent no vote on a bill to help families struggling to avoid foreclosure, has people scratching their heads.
California Assemblymember Juan Vargas is raising his profile in preparation for a run for Bob Filner's congressional seat, now that Filner is running for San Diego Mayor.
But a recent vote has people scratching their heads about whether Vargas has his consituents' interests at heart. It was a bill that would have helped families struggling to avoid foreclosure, and he voted it down.
Guests: Craig Gustafson, reporter, San Diego Union Tribune
Kelly Davis, associate editor, San Diego CityBeat
David Garrick, reporter, North County Times
ST. JOHN: We're back at the Roundtable here on Midday Edition. I'm Alison St. John. And with us at the round table today, we have Kelly Davis, assistant editor of San Diego City beat, David Garrick, reporter from the North County times, and Craig Gustafson, who is with the San Diego Union Tribune. City hall reporter. So California assemblyman Juan Vargas is raising his profile in preparation for a run for Filner's congressional seat now that Filner is running for San Diego City mayor. But in a recent vote, people are scratching their heads about whether Vargas has his constituents' interests at heart. It was a bill that would help families struggling from foreclosure, and he voted it do you happen. We would like to hear from you in this, if you have experience of foreclose or you think we need legislation to bring banks around to working with people, you can call us at 1-888-895-5727. And so Kelly, your article this week in CityBeat talked about this bill. Fill us in, first of all about what was the problem? What is this thing called dual tracking that homeowners are struggling with?
DAVIS: Well, dual tracking is when a homeowner is trying to get a loan modification, basically, working with the bank to find some way to reduce their monthly mortgage payment. So the homeowner is working on that end, but at the same time, the bank is pursuing foreclosure on their property. And loan modifications, that whole process can take I've heard several month, a year, maybe a couple years. There's lots of -- I've heard phone calls, paperwork, banks losing paper work, it's a very complex involved process. So while the homeowner's pursuing the loan modification, the bank is going for the foreclosure. So what you'll hear from people is that they thought they were working on a loan modification, then they got a phone call from the bank saying sorry, your home's been foreclosed. So what this bill would have done was require banks just to give a homeowner a yes or no answer on a loan modification before foreclosing. It didn't require the banks to actually grant a loan modification because loan modifications aren't for everyone. For some people, they're far too under water, and it's just not gonna work out financially. But in a lot of cases, in some cases it could work out, and a loan modification will allow a person to say in their home. So this just simply required a bank to give a yes or no on a loan modification before foreclosing on a home.
CAVANAUGH: I think in your article, you quoted a woman who was actually making good headway on getting a loan modification, and the bank was still in parallel pursuing foreclosure.
DAVIS: Yeah, I think twice this year she's already had to call and argue against foreclosure. And I know -- and she told me that she has another one scheduled -- I think -- she had a foreclosure scheduled it might have been next week, and she was able to stave that out. And they said okay, the next date is in January. And she's meanwhile -- she kind of walked me through the time line of this whole process. And she's on top of things, she's working with her Congress member, she's working with federal over sight agencies, she's working with the state attorney general's office. So she's really on top of things, really knows what she's doing, ask even in her case, it's kind of this battle to try to get the loan modification before she loses her home.
ST. JOHN: So who proposed the bill at the state level that would have helped --
DAVIS: Two North County -- I'm sorry, not North County. Northern California senators, Darryl Steinberg and Mark Leno. They proposed something similar last year. That bill made it all the way to I think the full assembly vote, and it failed there. I need to look back on why exactly. But they --
ST. JOHN: And what happened this time?
DAVIS: This time, the bill did not even make it out of its -- the first committee. It was a senate banking and financial services committee of which Juan Vargas is the chair. And the vote was tied three to three. Vargas was seen as kind of the swing vote because it was, you know, the three Democrats in the committee voted to support this bill. The two Republicans voted to oppose it. And Vargas a Democrat voted to oppose it as well.
ST. JOHN: And yet it was even proposed by members of his own party.
CAVANAUGH: So what does he say is his reasons for voting against it?
DAVIS: I couldn't get an interview with him. Not for lack of trying. But what I've heard was that he said in committee that he felt there were reforms being made on the federal level that were gonna benefit homeowners in this situation and that also the 50 state attorney generals, state attorneys' general, were pursuing a settlement agreement with the banks based on investigation into some sketchy practices like robo signing and -- and so he felt that there were things happening in, you know, federal state level that would remedy the problem. And everyone I've talked to about this bill said no, we need something now. This was, you know, the term that kept coming up was common sense. This was common sense legislation. And even Kamala Harris, state attorney general who's part of this pursuing the settlements against the banks, she came out in support of this bill and said it was very much needed.
ST. JOHN: 1-888-895-5727. Perhaps you've had this experience of being dual tracked. You'd like to hear from you here on the round table. So now there were some corporations that were very much against this bill. Where were the interest groups lined up here?
DAVIS: It's very interesting to look at the opposition and the supporters. Because the opposition was strictly banking, mortgage associations, and I think there were a total of 11 that were opposed. The supporters were labor unions, community -- you know, community advocacy groups, consumer advocacy groups, the list was huge, went on forever. Groups that normally Vargas supports or would be supporting Vargas, you know, for instance the California labor federation was a supporter of this bill. And Vargas has made some good friends with labor recently with his legislation that would require economic impact study before a super store wants to open up in a community. So people that -- groups that you would normally think Vargas would listen to.
ST. JOHN: Yeah, we'll talk more about that actually later because you're right. That is something that he's done to try to raise his profile in this district. And by the way, in his district, are there a lot of people suffering from --
DAVIS: Oh, absolutely. I took some quick glances at some numbers, and absolutely. Parts of his district, it's the 40th senate district have been really hard hit by foreclosures. Some of the highest level -- especially recent numbers show that they have some of the highest rates of foreclosure in his district.
CAVANAUGH: So who exactly is opposing it? We didn't get to that.
DAVIS: Banking and mortgage associations. And what we found, one of the lead -- the main opposition was this group called the civil justice association of California, I think. And we looked back at donations to Vargas's 2010 senate campaign, and this group became kind of the umbrella organization for a handful of other committees that in total we found at least two point five million dollars that these committees donated to either support Vargas or oppose Mary Salas who he ran against for senate. And it was a very close race. And we think there is more money out there, there's these committees, they were giving money back and forth, and we think there were some other committees that were involved. But bottom line is that the --
ST. JOHN: Are these sort of -- what kind of businesses are they? CGA --
DAVIS: Corporate America -- you know, big insurance, banking, technology. Just very large corporations were part of this organization.
CAVANAUGH: Okay. So it seems like if you're looking for some kind of motivation why Vargas would vote against this, what must you conclude?
DAVIS: Looking at the donations, you could say that it might have been a favor for this committee.
CAVANAUGH: Okay. So now, as you mention, Vargas has been trying to raise his profile, and if looks like he might stand a good chance of winning that congressional seat in the near future. And he has done this other piece of legislation, which does appeal, I think to the people, the people on the ground, community level, which is this Wal-Mart issue. And Craig, that's something that the City Council was unable to tackle because explain why.
GUSTAFSON: Well, they did try to tackle it. They approved an ordinance that would require an economic study for super stores, places with groceries inside big retailers, shop. And they passed it, and then Wal-Mart gathered a bunch of signatures to force an initiative -- force an election, and the City Council then reversed course in order to avoid a costly election that they probably were gonna lose because Wal-Mart was gonna spend a ton of money.
ST. JOHN: And what does the City Council feel about having this issue taken out of their hands and being discussed up at the state level now?
GUSTAFSON: Well, I think they were not happy about having to reverse course. But I think that they're more than happy to have Juan Vargas doing this at the state level. So they don't have to deal with it on the local level now.
ST. JOHN: So he could be winning some friends locally with that piece of legislation in the sense of depending on who your supporters are and --
GUSTAFSON: He clearly -- clearly labor unions are in favor of this super center ordinance. And that's who backed it at the city level, and that's who is pushing it at the state level as well.
ST. JOHN: Okay. But this foreclosure issue, that's something that sort of cuts across the board, doesn't it David? Foreclosure is a huge problem in North County too right?
GARRICK: Absolutely. Especially in the poorer communities like Escondido and Vista and Oceanside. You don't see it so much in Carlsbad and San Marcos, so you've got cities that already have a lot of burden on their resources. Dealing with running around town trying to board up buildings, worried that people -- squatters in buildings. Pools that have just been abandons, and there's algaes and dead animals in them. It's created a huge headache up in North County, for sure.
ST. JOHN: Avoid that would be something that a politician might support. But in this case there must have been reasons, and you're talking about contributions that convinced him to vote otherwise. There's another issue that Vargas has also gotten involved with in North County isn't there? The Gregory canyon landfill. Tell us about that David, oh, and we don't have much time. Sorry.
GARRICK: No one wants a landfill. I guess it's a classic NIMBY issue. It's not an issue I've covered myself, but I know there's a lot of resident opposition to it, which there would be, but on the other hand, it's gotta go somewhere.
CAVANAUGH: And that's an issue that's not even in Vargas's district is it?
GARRICK: I don't believe it is.
CAVANAUGH: Do you think there's some motivation why he would be involved in that issue?
GARRICK: I don't know. I'm not sure.
ST. JOHN: Okay. Kelly?
DAVIS: Yeah, we have the same question, and in Vargas's case, during his time in the assembly, it was definitely about following the money. He took lots of donations from insurance, from the insurance industry, and left the assembly in 2006 and got a job with the insurance industry. So I had someone in my story saying if he's up for sale, you can be the highest bidder. So --
ST. JOHN: Well, we'll keep an eye on this one. Ask thanks for doing your reporter, Kelly. We've come to the end of our time here on the round tail. So I'd like it thank all of you, Craig Gustafson from the San Diego Union Tribune.
GUSTAFSON: Thanks for having me.
ST. JOHN: I'm sure we'll see you again. And David Garrick, reporter from the North County times.
ST. JOHN: Excellent survey of all those cities. And Kelly Davis, assistant editor of San Diego City beat. Thanks for your work.