California Version of Federal Homeowner Bailout

Kathleen K. Wright (Director, Graduate Tax Program, California State University, Fullerton) has published California's Version of the Federal Rescue for Homeowners, 50 State Tax Notes 519 (Nov. 24, 2008).  Here is the Introduction:

Although the news lately has been focused on the escalating involvement of the federal government in the credit markets and the bailouts of the likes of Fannie Mae and Freddie Mac, the federal government has also enacted legislation aimed at rescuing individual consumers. Although the dollars allocated to bailing out individuals have not come close to the dollars poured into the financial industry, Congress has taken some modest steps aimed at helping taxpayers caught up in the maelstrom caused by an upside-down housing market. This article summarizes recent federal changes that are directed toward helping consumers caught up in the meltdown of the subprime mortgage market and further analyzes what the states (specifically California) have done to keep up with the federal bailout efforts. The short answer is not much. Most of those programs are expensive, and Gov. Arnold Schwarzenegger (R) has just called the State Legislature back into session to deal with an unanticipated budget deficit that came to light shortly after the original budget for fiscal 2009 was signed. Now reports show that already that budget is approximately $10 billion in the hole. It will be difficult for California to consider bailing out individual homeowners when it is searching for a bailout package to save itself. To be fair, the Legislature did take one small step to help individuals caught up in foreclosure, which may add more confusion than benefit but is better than nothing.