Sunday, February 19, 2012

Home Foreclosures: Looking at the Big Picture

Why are the lives of so many good, conscientious, hard-working people being mangled — mangled by the sudden and unforeseen realization that they will soon lose their home due to mortgage foreclosure — through no fault of their own!

Since 2002, over 3,500 families in St. Louis County have lost homes to foreclosure.  The rate continues at about 500 per year.  Think of it: what must it feel like to know you will be evicted from your home — for reasons not of your own doing.

The cause?  The Big Banks discovered they could make enormous profits by inflating home values (hence, the “housing bubble”); pushing, “predatorily,” risky, “adjustable-rate” loans on people who didn’t qualify; “bundling” these  “sub-prime” loans into “mortgage-backed securities” to sell on the “derivatives” market involving “credit default swaps” and “collateralized debt obligations.”  This criminal fraud plunged the American economy into a crippling recession. 

Millions of Americans became unemployed, or otherwise suffered wage or pension loss.  Yet, major Wall Street banks reported record profits and record compensation for their CEOs, with bonuses in the millions of dollars — while also benefiting from billions in “too-big-to-fail” taxpayer bailouts!

On “Home Street,” homeowners were losing their homes — the houses where memories of raising a family still linger, where hopes and dreams for a secure retirement have now vanished .

In response to this “below-the-radar” local crisis, a group of Duluth/Superior citizens organized  “Project Save Our Homes.”  We’ve encountered heart-wrenching stories of people losing their homes — through no fault of their own!  Over half the foreclosures nationally were due to the person or a family member suffering a major medical crisis.  Others involved the unanticipated reduction of income or the unexpected loss of a job.  Others were forced to default because their mortgage “ballooned” into higher monthly payments.  And many, after the “bubble” burst, lost their homes because the amount they owed was far more than the re-appraised value of their “underwater” home.  (Note that I’m  not concerned here about those due to negligence and poor money management.)

Homeowners reported tremendous frustration trying to contact the mortgage company to work out a loan modification.  The original lending institution often no longer held the mortgage.  Mortgages were turned over to “servicers” that also did not really “own” the mortgage.  These servicers are impersonal and far from home.  They do not know the homeowner as a human being; only as a liability to their bank’s investors.

It’s extremely hard to contact (by phone) the same person twice at the servicer.  Homeowners have submitted paperwork over and over again only to have it lost in the “servicer” system.  Meanwhile, the default clock keeps ticking.   The “Notice of Foreclosure” and “Sheriff’s Sale” are announced in the local paper.  After a redemption period, an order for eviction is issued.

Little is being done to remedy the causes of home foreclosures.  Republicans are balking at re-instituting effective regulation of the banking/investment industry. Democrats, and especially the Obama Administration, are dragging their feet if not shielding these lending institutions from criminal prosecution.  The recent $25 billion settlement was hardly a slap on the wrist considering the trillions of dollars of financial devastation the banks caused (along with the trillions they profited)!

We’ve got to bring this corrupt financial industry back under strict regulatory control, despite the yammering from the ideological Right about “freedom,” “liberty,” “less regulation” and, for certain, “no increased taxes on the Rich”! This on-going financial crisis is but another glaring symptom of what is fundamentally wrong with our economic system, a system that is rigged to favor an ever-widening disparity of wealth, income, and well-being!

> The article above was written by Vern Simula of Project Save Our Homes

1 comment:

  1. This was a good suggestion that you put up here...dude…..hope that it benefits all the ones who land up here. 

    REO Rockstar