A new coalition of faith-based and community organizing groups is calling on the state attorneys general to "stand firm" in their negotiations with the major banks and require principal reductions on underwater mortgages as part of any settlement.
The New Bottom Line coalition wants to hold banks accountable for the housing crisis and find solutions for struggling homeowners. National People's Action, People Improving Communities Though Organizing (faith-based) and Alliance for a Just Society are the main groups behind the new coalition.
These groups have been meeting individually with AGs and they have held rallies outside of the National Association of Attorneys General meetings.
"It is imperative that we keep the message strong and that the AGs really understand that people are watching and paying attention and demanding that homeowners and communities come first," said NPA policy director Liz Murray.
"There are solutions within their power to enact. We want to make sure that happens," she added.
The New Bottom Line coalition claims writedowns of all underwater mortgages to market value would reduce homeowner payments, inject $71 billion into the economy annually and end the housing crisis "once and for all."
Such writedowns would "serve as a second stimulus that America so desperately needs, only without the added costs to taxpayers," according to a report issued by the new coalition. The title of the report is "The Win/Win Solution." (The Service Employees International Union provided research support for the report).
The 8-page report says the writedowns and subsequent reductions in principal and interest payments would save the average underwater borrower $6,500 a year.
The coalition suggests the banking regulators could change the accounting rules so banks could spread out the losses over several years.
"In the past, regulators have been more than willing to modify accounting rules to help banks, so it is only fitting that they do so in order to jumpstart the economy by preventing foreclosures and creating jobs," the Win/Win report says.
