Clergy and congregants from more than 40 states gathered in front of the Department of Treasury on Tuesday to pray for Secretary Henry Paulson and members of Congress to put an end to the home foreclosure crisis.
PICO, a network of faith-based community organizations that helps provide affordable housing, is demanding that the Treasury require all banks receiving a chunk of the federal bailout package to adopt systematic loan modifications that could keep 2 million people from losing their homes, they said.
“We want them to look at the bigger picture. Don’t just look at Wall Street, look at Main Street. Look at the man next door who is working hard and really paying taxes,” said Marvin Webb, the assistant pastor of Peniel Full Gospel Baptist Church in El Sobrante, Calif. “We are asking the secretary and Congress to keep people in their homes.”
Translation- “We want speculators to be shielded from the consequences of their own bad decisions.”
The lending rules were re-written to encourage lending money to bad credit risks. The quasi-federal agencies aided and abetted in this enterprise. This fueled a real estate price bubble. The bubble popped and the bad loans are being called.
That’s the real estate crisis. I fail to understand how bailing out the owner of a $600,000 house is a worthwhile charity. I have yet to hear the case made that it makes any economic sense. It’s time to accept that the real estate market has taken a blow and move on.
All of the bailout proposals have the major benefit of sheltering a class from their poor decisions (bankers, originators, speculators or investors) whilst distributing the financial cost to those who were not so foolish.
I’m all for clothing, feeding and sheltering the poor. I do not understand why I should pay for someone in the upper middle class to continue to enjoy their prior lifestyle.
Let’s see, at the present count I remember ~$30-$40 billion would help the homeowners and I wouldn’t mean a government buy out. The money would for the most part be paid back by refinancing the mortgages to a longer term of payback. Am I worng in hearing that a number of business came into existence just to obtain this low rate financing and then didn’t even use it for the purpose for which is was passed out for. Compare 30-40 billion for refinancing home mortgages to the 100’s of billions proposed for business bailout; “..methinks something is rotten in Denmark..” (Hamlet)
Mousestalker:
I’m not sure what the foreclosure crisis looks like where you live, but here in California, it is the low end of the market that is being foreclosed on. The lowest value quartile is seeing foreclosures a five to seven times the rate of the market at large. This in turn has exacerbated the urban blight phenomena. It is the lower-middle class, particularly minority and FTHB’s that are in need of help here.
It certainly makes some sense for lenders to modify mortgages that are underwater. If they foreclose, they will resell them for about 75 to 80% of their fair market value. So what is the downside to refinancing them at reasonable interest rates that reflects where they would wind up anyway if the foreclosures are completed? I am not interested in the government guarantying those loans. Let the market dictate the values and the terms of the refinances. Lenders know they will take a hit one way or the other so let them choose whichever hurts them the least and gives them the best chance for an upside if the market changes..
#3, here in Atlanta, it is low end housing that is getting foreclosed upon as well. However, the bulk of the housing hit is not owned by the dwellers therein, but rather by people who bought the houses as little as a year ago as speculation (they called it investment in 2006-2007). For four months (June-September) I only saw one property that was not a rental.
I do not know for certain if that is the case elsewhere, but I suspect that a large percentage, if not a majority, of those hit nationwide are burnt investors.
I will admit that my suspicions as regards to the mainstream media have been fueled by the families trotted out on local newscasts as having been hit hard. I am familiar with 95% of all the foreclosures that have been done in Fulton County, Georgia (the largest county in Georgia and the one where the City of Atlanta mostly is). The facts have never been portrayed accurately.
It’s similar to what they do when they discuss the homeless. Rarely is anyone representative of the majority of the homeless shown. Rather, it is a good looking family that has hit hard times.
One family was shown as being under the threat of eviction were posed in front of a distressed property. The family actually lives in the Bronx and the property shown was a rental that they have been unable to rent.
An awful lot of people took advantage of easy money on bad terms over the past four years. The perception was that a small investor could buy property for no money down, finance it for 100% of the equity with a balloon note and sell when the note came due.
The notes are coming due. And they are not being repaid.
The problem with the news media showing a false face is that the means required to redress the ill will be crafted poorly. Any serious approach to homelessness needs to address mental illness and addiction. Hard luck families are currently well served here in the metro Atlanta area. They are also rare.
Likewise, any plan to refinance home loans has to address the probable reduction in the properties’ value and be limited to those who live in the house as a primary residence.