It's Time to Treat America's Homeowners as Well as We've Been Treating Wall Street's Bankers

[earth mom]

Arianna Huffington

It's Time to Treat America's Homeowners as Well as We've Been Treating Wall Street's Bankers

If you were to make a pie chart showing the amount of attention given to the banking part of the financial crisis -- both by the government and by the media -- and the amount of attention given to the foreclosure part, the catastrophe being faced by millions of American homeowners would barely rate a sliver.

But we are facing nothing less than a national emergency, with 10,000 Americans going into foreclosure every day and 2.3 million homeowners having faced foreclosure proceedings in 2008.
When we put flesh and blood on these numbers, the suffering they represent is enormous and so is the social disintegration they entail.

<snip>

"The banks are too big to fail" has been the mantra we've been hearing since September. But when you consider the millions of American homeowners facing foreclosure, aren't they also too big to be allowed to fail?

<snip>

This conflict between the banks' interest and the public interest is why the Wall Street-centric focus of Tim Geithner, Lawrence Summers, Ben Bernanke, etc. is so troubling. This focus has included the marginalizing of Sheila Bair, the chairman of the Federal Deposit Insurance Corporation (and a Republican) who has been ringing the alarm bell about the foreclosure crisis for two years now. She was ignored by George Bush and Henry Paulson -- and there are worrisome Washington whispers that Tim Geithner is following in their footsteps.



http://www.huffingtonpost.com/arianna-huffington/its-time-to-treat-america_b_167429.html

[Oregone]

1. I need a catchy line for government to consumer financing...

Which would solve this whole fucking mess before you can say "foreclosure". Not to mention, it would drastically change our society and shift wealth to the people immediately.

[onethatcares]

2. we also need to have the banks submit a plan as to what they are

going to do with any of the funds they get from any bailout, TARP, or bakesale that they take to stay in business. Just like they are doing with GM and Chrysler. Let's have the bankers give up paid for medical care and insurance to prove they are serious.

BTW, thanx for the heart, finances are tight right now at onethatcares house.

[earth mom]

3. Interesting reply to this article on Huffington post:

"Of course Geithner is following the same course he's from the Federal Reserve Board, the very root of this whole problem. I heard some very good sources say that since October the Fed has received $9 trillion and that that amount of money would totally pay off 90% of all mortgages in this country and they not about to tell anybody what they did with it. This collapse I believe was an orchestrated plan to destroy the middle class of this country and around the world, not for New World Order but to revive the Old World order of masters and slaves. Way back in Jefferson's time the bankers were trying to seize control over this country's currency so they could inflate it and deflate it at whim buying up everything or worth with basically worthless money and Jefferson predicted that if they succeeded the children of this country would wake up homeless. Jefferson was on to these guys a long time ago."

[exboyfil]

4. Any sugar for the responsible home owners who

bought what they could afford, studied the market before buying, pulled together 20% equity to buy a house, got a fixed rate mortgage, and have made every last payment on time (in some cases after they lost their job).

Guess not.

[Ilsa]

5. I hear you. I talked my husband out of overbuying 12 years ago.

He wishes we had a bigger house now. I don't want one of those large McMansion homes. They are very pretty, but are a mixture of various styles. While they are much more energy efficient than they used to be, they don't try to save or recycle water, don't use solar panels, etc. I'd rather build a bigger house, less fancy junk, and make a really energy efficient home that is easy and fun to live in. But we won't be getting any special treatment from the government, just peace of mind that we aren't going to be kicked out onto the streets.

[earth mom]

6. So only help people if there is something in it for you?

Your post screeches the rethuglican mentality of "ME ME ME" and "personal responsibility". :eyes:

FYI-I'm not in the position of the many homeowners in this country who are close to losing their homes, BUT I do feel compassion for them because I know that the majority of them who bought ARMs or overpaid for their homes were duped by unscrupulous mortgage brokers and real estate agents and the bullshit from Wall Street.

[exboyfil]

8. No I don't anything from the Federal government

and if externalities are involved (ie homeowners who behaved responsibly are being hurt by the crash) then the government should do something.

What I am concerned about is that we are becoming a nation of uneducated children that will not take responsibility for any of our actions (I was against the bail outs as well - if the stockholders were not responsiblie enough to watch their companies then they deserve to be wiped out).

When you say duped do you mean fraud happened? Whenever I have gotten a mortgage I received a mountain of paperwork that describes exactly what the loan is. Even before the closing when I got my one ARM I knew exactly what the worst case scenario would be, and I planned for it.

The stupid banks who bought the paper from the brokers should go out of business. I am not sure what particular hell to assign to the brokers, but, if fraud can be proved, they can be gone after as well.

What I saw in my area are people with family incomes around mine buying houses 2 to 3 times more expensive. I have no sympathy for them. Just like I don't have any sympathy for those in the equity market (like me) who got clipped last year. Life is full of risks. Equity holders got caught in an asset bubble just like the homeowners.

How is this for a proposal on the bailout. Determine how much actual cash came out of the borrowers pocket for the home and impute a rent to the house for the amount of time the homeowner was in the home at 10%/mo of the value at that time. The difference is the amount that the homeowner overpaid and hurt their position for purchasing in the future. The Federal government could then make that cash available to pay down the mortgage and refinance at current fixed rates (assuming the homebuyer has any potential to actually make the payments - they can use the dollars as part of a renegotiation with the bank as well to adjust their principal down). If the renegotiation does not work, then the homeowner should just walk away. I would be in favor of all states eliminating the law on deficiency judgements so that mortgage holders cannot go after any other assets of the homeowner (California already does this). This would also prod the lenders to deal.

Attached is a definite pro-bailout story with some human interest stories inside it. I am sorry, but I don't have sympathy for either couple in the story.

http://www.americanchronicle.com/articles/view/91431


The way I say to deal with an asset housing bubble is to move. Don't buy a house at five times your annual income. Common sense should tell you that you have no conceivable way of ever servicing that debt. Salespeople sweet talk you in every transaction (be it cars, appliances, stocks, clothes etc). When you understand where the compensation comes from for that person, then you know who is on your side.

[MadHound]

9. No, that's not it. Many of us simply having a problem in rewarding greed and stupidity

When you are purchasing your house, you are generally making the biggest investment of your life. You need to treat that with the gravity that it deserves. Do your research, go through the paperwork before hand. Make sure that you understand what you're getting into, make sure that it will fit your budget, don't get greedy. Millions of people have done just that, they did their homework, bought a house they could afford, put a good down payment on it, did all the right things.

Despite your assertion that these people were duped, sorry, but at worst they allowed themselves to be duped. They didn't do their research, they didn't get anybody to help them if they didn't understand what they were getting into, possibly they bought a house too large for their budget, they jumped before looking into a nothing down, ARM. This isn't my fault, this isn't the banks' fault, it is the fault of the borrower for not doing their due diligence before signing that paper.

Yet you, and others, think that we should either bail them out or reward them? There are proposals out there that these people could get their mortgages restructured to where they get better interest rates than I do. Is that right? Is that fair? Why should we be rewarding greed and/or stupidity, when the simple fact of the matter is that this will be more money that we, those of us who did do the right thing, coming out of our pockets to prop up and reward those who were greedy and/or stupid. Sorry, but especially in times like this when my money is tight, I have a real problem with that.

You balk at bailing out the rich and well off, stating that they're a victim of their own greed and stupidity, but when it is ordinary people who were greedy and stupid, you want to reward them? Hmmm.

[earth mom]

7. Kick!

:kick: