Last year Banks foreclosed on ONE MILLION HOMES in the United States. And the trend is moving upward:
Banks repossessed a record one million US homes in 2010, and could surpass that number this year, figures show.
Foreclosure tracker RealtyTrac said about five million homeowners were at least two months behind on their mortgage payments.
Foreclosures are likely to remain numerous while unemployment remains stubbornly high, the group said.
Considering all the fraud and abuse that has been reported regarding the foreclosure process by many, many banks, isn’t it time for our government to place a moratorium on further foreclosures? I think so.
FDR declared a Bank Holiday when there was a run on the Banks. Well, right now there is a run on people losing their homes to often unscrupulous Banksters. I don;t know what authority President Obama may have under existing Banking laws, but I would sure look for any justification I could if I were he to stop the vast bank foreclosure machine from gobbling up anymore homes and continuing to ruin our economy.
One of the best things we could do for the economically stressed and distressed American people would be to put a halt to all foreclosures for as long as possible while we attempt to get legislation passed to deal with this ongoing and ever expanding crisis. At the least, Democrats should be proposing bills in the House and Senate to force Republicans to defend their support for the likely criminal actions of the big banks in pursuing this rash of foreclosures.
A moratorium would be insufficient, merely putting off til later what eventually would happen anyway and hindering economic recovery (which requires both public and private resources to be reallocated to something other than maintaining bubbles in home values). Rather, as even some politically conservative economists have been saying recently, what was needed (and still needs) to have happened is a bailout of debtors by allowing banks to write down the outstanding loans on homes to the current market value, thus effecting a massive transfer of wealth from creditors (people who invested in mortgage backed securities) to current debtors and eliminating both the solvency and liquidity problems that cause foreclosures to still occur.
While I am 100% with you on a gut level, and I think it is important to help people get back on their feet if it doesn’t cause more, worse problems or transfer responsibility from those who made mistakes to those who didn’t without regard for the general good.
I know the banks must have deceived some people, but then again, caveat emptor is NOT a new concept. Of course, we’ve got a more complicated situation than pure bankster avarice and popular, innocent stupidity.
On a microeconomic level, the fact that I got the largest mortgage that I could afford and someone else got the largest mortgage that they could possibly get doesn’t mean that I should pay theirs off too. Let’s put that one aside, but it really does matter, especially if you are going to try to get (re)elected.
On a macroeconomic level, further lengthening the process of working through this wave of foreclosures will result in a continued glut of housing and a continued paucity of jobs in the ‘housing’-related industries. That means additional people will be joining the roles of the pre-foreclosed and fewer will be able to get jobs and things may not just continue to suck, but actually snowball and feedback and bring the nation down.
BUT, we got this problem: As usual, the banks, being for-profit (for who’s profit?), are going to try to take advantage of the situation. That is their jobs, and if they are public, their REQUIRED point of view. They are going to spend as little as possible administering the situation. They are going to pay off the right people on the state level to keep/add/remove regulations of the foreclosure process that THEY will benefit from, etc. They will robo-foreclose without reviewing cases. This calls for a Federal intervention in order to protect the weakest in our society from the political influence and requisite greed of the banksters and their political influence.
BUT..
How does the Federal Government help the situation without further screwing things up?
Should it help pay people’s mortgages? I personally would love that, and think that should have been done long ago, but what do you tell people who don’t have mortgages, but still will pay for this program via taxes? The whole ‘neighborhood on fire’ argument seemed to have little effect when it was tried before, but perhaps times have changed. I would humbly suggest that those who have mortgages get a tax credit and that a tax deferral or credit be available for those who would buy a house in the next X years. This would stimulate the housing market and actually pump value back into those toxic assets since folks houses might be worth something again if the market was seen as ‘affordable’ and growing. What happens when the tax rebates end? The idea would be to end them either gradually if the economy remains in a slow-growth mode or if we have a good booom, then more rapidly. Regardless, a LOT less people will be put into foreclosure after a few years to get back on their feet than there are now that is for sure.
Should it just keep people in their homes with a foreclosure moratorium? Well, the problems with that are outlined above, but there is the additional problem of the patchwork of state regulations and the easy influence of the banksters on effecting them. I just don’t think the benefits of this policy balance the negative effects WITHOUT…
Should the Federal Government establish a stricter set of guidelines for banks that wish to foreclose? Yes, by making it bit more difficult for banks to foreclose you are just delaying the process, but at least we might know that those foreclosed upon aren’t being further duped and that the banks aren’t purely foreclosing out of the desire to own more and more real estate in the face of future economic ambiguity. They should have to invest in the foreclosure process in more ways than just hiring a few robo-signers.
So, in the hopes that the return of jobs will be the thing that really stems the tide of foreclosures, I don’t think a moratorium alone is a good idea. If the banks want to foreclose rapidly, they should have to hire people (jobs) to do it right the first time, instead of placing the burden of proof upon the already financially stressed homeowner. Doing that in the context of a strict federal regulation (do it right or you must forgive X) might just get us what we all want: people in homes, a rapid and fair foreclosure process, a relatively free marketplace, bankster behavior control and more jobs rather than less so the foreclosure mess doesn’t just feed on itself until we have collapsed as a nation.
I know this blog thinks Obama is the GREATEST PRESIDENT IN HISTORY (or at least since FDR), however this is part of the downside that gets overlooked by Obama supporters, but shouldn’t be if we are to assess his performance fairly.
Obama had the power through the HAMP program to address much of this in advance. Instead his administration chose to ignore the loud early warning signs and continue supporting a program that provided no benefits to homeowners. Instead, the program served in many cases to provide false evidence for foreclosure (owners were told by the mortgage holders to stop payments, then months later told that was a mistake and now they were in default).
In the end it appears the whole purpose of HAMP was to protect bankers by deferring the mass foreclosure action until they had their foreclosure mills fully operational.
Similarly, Obama’s administration had incredible flexibility in the use of TARP funds (which was effectively a blank check) but, as we know now, chose to make them available only to the super-wealthy as a means for selling their toxic assets to the government at face value. The wording of the TARP law would have allowed the administration to creatively help homeowners by using the funds to cover the difference between home values and amount owed.
In addition, once the first signs of foreclosure abuse were evident in late 2009 the administration could, and should, have created a special program in the Justice department to investigate and prosecute such abuses. Instead, they were ignored and treated as “business as usual”.
And that’s only the opportunities that were under Obama’s direct control. In early 2009 there was a strong movement to pass a reform act to address the problems created in the bankruptcy laws the Republicans recently passed as a response to bribes (sorry, I mean “contributions”) from the Credit industries. Some revisions were passed but one of the most effective would have been mortgage cram-downs — the ability for bankruptcy judges to force lenders to accept that the loan value was reduced to match the now lower value of the house. This is entirely reasonable — the banks can’t get more than the value of the house anyway even after foreclosure — but the Obama administration actively opposed such a provision so it was excluded. We can’t know if it might have passed anyway, but Obama taking the wrong side didn’t help.
No, this is an example of how Obama is just too cozy with those who are the most powerful in this country. The second prominent example is how his policies are completely in sync with the authoritarians who run the War and Homeland Security apparatus. The third prominent example is his collusion with the carbon energy industry — no matter how many well-publicized EPA ruling kick in against mountain top removal the truth is the industry is very happy to trade a few minor losses on those fronts in exchanged for their continued unfettered extraction of carbon world wide (often under the free protection of the US military) and ever-increasing emission of carbon into the air.
Well I have never said I think Obama is the greatest since FDR. Booman may have. We have disagreed on more than one occasion over Obama, issues etc.
Agree … was referring to Booman, as it is his blog.
Well it’s my front page post. I understand your feelings but wouldn’t they be better expressed to Booman directly in his posts?
Foreclosure is state by state. The laws are state laws.
All 50 state AGs have been looking at the banks.
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"But I will not let myself be reduced to silence."I keep wondering why no lawyer has put together a class action on this. It’s simply obvious that fraud is occurring if a single person signs 400 documents in a day. If you sign that you have read and exercized due diligence in 1.16 minutes (400 documents in a day), you are obviously lying. A lawyer needs to take these folks on. There is a lot of money to be gained by such a suit.
Someone has filed a class action:
See full article from DailyFinance: http://srph.it/gp3yL4
Hopefully more will be coming.
Unfortunately class actions take a very long time to litigate.