Foreclosures Are a Good Thing, Doncha Know?
By Pat Racimora on November 7, 2010 at 2:00 PM in Current Affairs
Well, golly gee. Who knew? The Obama administration says that foreclosures are helpful to our economy. The banks just have to get their knotted paperwork unwound and then pounce on the millions of homes already being taken or in danger.
Carey Mulligan of the New York Times writes:
Phyllis Caldwell, chief of the Treasury Department’s Homeownership Preservation Office, recently told a Congressional panel that the administration was making progress on preventing foreclosures — a claim disputed by some panelists. She also said that “an important part of assuring long-term stability in the market is to enable properties to be resold to families who can afford to purchase them.” [emphasis mine]
The trouble with her statements, which echo those of other officials, is that they gloss over the question of whether families who were foreclosed upon were given a fair shot at keeping their homes…Some Americans, no matter what, cannot afford to keep their house. But mass foreclosures are a huge drain on the economy, crushing home values for everyone.
Although we are not vulnerable, we just refinanced our home for 3.8 percent (10 year fixed, very low cost paperwork) which suggests that money is there and it isn’t all that expensive. But banks appear to turn their backs on Americans who actually need a break.
Mulligan continues with a disappointing observation on the Administration’s progress to date:
We assume the White House’s stance is an attempt to keep the markets calm in the face of ongoing revelations of chaos in the foreclosure process. That would make sense if the White House had a more aggressive policy to prevent foreclosures. But in a year and a half, its signature antiforeclosure effort has permanently modified fewer than 500,000 loans. That’s far short of the need — 4.2 million loans are now in or near foreclosure.
The Obama administration totally rejected Hillary Clinton’s sane notion of putting a 90 day moratorium on foreclosures so that other options could be carefully considered.
Why did Obama’s people dump on Hillary’s plan? According to Dana Milbank of the New York Times, because they thought that Hillary’s plan would reinforce bad behavior.
One has to wonder if anyone in the Obama administration knows anyone who lost a home. My own count is up to five. These are not greedy people who jumped into something clearly beyond their means, hoping to turn a fast profit two years down the road. These are friends who had lived in their homes for years, had good jobs, but whose fortunes took an abrupt spiral downward for reasons ranging from failing health to job losses.
There may well be some who hoped to game the system, but so many cases revealed realtors and loan officers purposely and vigorously convincing potential but weak buyers that they could afford to buy, that they would make money down the line and finally live the American Dream. Then they took their commissions and ran. Shame!!!
In the meantime, Milkbank reminds us of one of Obama’a lofty promouncements gone bad:
Back in April 2008…Hillary Clinton called for action: a freeze on foreclosures. Barack Obama said ‘no.’ . . . People are hurting. It’s time for a president who’s ready to take action now.” Obama survived the challenge then. But times changed, and the president, feeling “removed” from the people, asked in the East Room how he can give Americans “confidence that I’m listening to them?”
Milbank’s recommendation? “The answer is simple: Do what Hillary would have done.”
Dana, you finally got it right!
by Ronald Scott
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