Owning a home used to be the American Dream.
When we were young, just married and thinking about starting a family, putting together money for a down payment for a home was at the top of the list.
Now that dream is an nightmare for too many Americans as more and more face foreclosure and plans to allow homeowners to renegotiate mortgages to lower payments are stalled by paperwork backlogs and home prices that continue to fall.
Many Americans now owe more than their home is worth. Hundreds of thousands of homes sit empty -- decaying, foreclosed shells with no buyers and a questionable future. Another million or so homeowners are seriously delinquent in their mortgages and could face foreclosure this year.
So much for the dream.
The collapse of the housing market is generally blamed for the current recession that grips America and the world. Too many questionable loans put homeowners into homes they couldn't afford. Mortgage brokers put together packages of "no document" loans, often financing homes for more than their face value from the start.
Now many Americans walk away from their dream home, knowing they can't afford to live there. To make matters worse, the scam artists have moved in, preying on those in trouble.
Reports The Los Angeles Times:
Even with the Obama administration's loan modification and refinancing programs moving forward, the end of the foreclosure glut is not around the corner, a panel of government officials and consumer advocates told attendees of the recent National Assn. of Real Estate Editors conference.
Among the factors slowing progress are loan servicers still gearing up for the task, the recession, re-defaults and for-profit foreclosure prevention firms handing out misinformation.
With about three-quarters of mortgage servicers onboard, the loan modification program "is not performing up to expectations yet," Deputy Treasury Secretary Seth Wheeler said. About 150,000 trial modifications have been completed and, as servicers work to beef up their staffing and training, tens of thousands are in the works. The goal is to rework 9 million mortgages over the next several months, Wheeler said.
Economic conditions, however, are working against refinancing, said John Walsh, chief of staff of the Office of the Comptroller of the Currency.
"The continued decline in home prices of course makes refinancing more difficult," Walsh said. And unemployment is "only beginning to take its toll now."
The agency is tracking data and will report on progress at the end of the month. A 52% failure rate was reported in the fall for mortgage modifications.
David Berenbaum, executive vice president of the National Community Reinvestment Coalition, called on the media to stop running ads by "for-profit racketeers who charge on average $2,900 to consumers for poor advice." Examples he cited included counsel to not pay the mortgage or contact the service provider. HUD-approved counselors will help consumers for free.
Many need help now but the federal programs designed to help them aren't working.
According to The Washington Post:
A growing number of American homeowners are falling into financial limbo: They're badly behind on payments, but their banks have not yet foreclosed.
The backlog of seriously delinquent mortgages, which so far affects about 1 million borrowers, is a shadow over hopes for a rebound in the nation's housing markets. It masks the full extent of the foreclosure crisis and threatens to depress prices even further just as some parts of the country are hinting at recovery. For lenders, it could portend even more financial losses tied to the mortgage meltdown.
"It just means foreclosure rates are going to keep rising," said Patrick Newport, an economist for IHS Global Insight.
Rising mortgage delinquencies were at the root of the recession, and many economists say an economic recovery will be difficult until the housing market recovers and home prices stabilize.
And even though a delayed foreclosure can be a blessing for some troubled homeowners, for others, it simply prolongs the financial distress, leaving them on the hook for the condition of the property. Even if they move out, they cannot move on.
"I have even begged them for a foreclosure," delinquent mortgage-holder Charlotte Jensen said. When she realized she couldn't save her Glen Allen home last year, she filed for bankruptcy, packed up her family and moved out. Nearly a year later, Bank of America has yet to take back the home.
During the first quarter of this year, the share of all homeowners seriously delinquent on their mortgage but not yet facing foreclosure more than doubled to 3.04 percent, or about $227 billion in loans. There was a total of $97 billion in such loans during the same period in 2008, according to Inside Mortgage Finance. In more prosperous times, the rate is much lower -- it was less than 1 percent in the first quarter of 2007, according to the industry publication.
Some of the backlog reflects the inability of lenders to keep up with the swelling rolls of delinquent properties.
Meanwhile, the federal government racks up enormous deficits pumping money into a failing economy and we still do not see results. America's largest auto company is in bankruptcy. Another now belongs to Italian automaker Fiat. Republican governors, determined to see a Democratic President's economic stimulus plan fail, refuse federal funds even if it means bankrupting their state governments.
Once again, partisan politics replaces the need for unity in a time of crisis. If this continues, the one-time American Dream will be far more than a nightmare.
It will be the epitaph on the tombstone of this nation.
Technorati Tags: Doug Thompson
Being a very "liberal" Democrat, I draw the line on some things and credit is one of them. I cannot understand how a financial institution could even consider making a loan to a person knowing full well that the loan will never be repaid. And on the other hand, how stupid can a person get when they borrow money that common sense tells them that they cannot pay the loan off?? So! We have "stupid" on both sides of the table and that certainly doesn't add up to "intelligence", stupid and stupid only comes out stupid!!
My first wife passed away when I was 51 years old and I remarried. This was 23 years ago. My present wife did not want anything that belonged to my first wife, so I gave my son the house and all the belongings. My present wife and I started out as two teen-agers, without a pot to pee in. I sold the tractor-trailer that I owned, went to work for a freight company, took the money from the sale of the truck and we made a down payment(20%) on a house and took out a 30 year mortgage. In 9 years, we paid off the 30 year mortgage, every year I would send the mortgage company an amount to be applied to the principal only and in 9 years we had the house paid off. In those 9 years, we paid off two new cars, new furniture for the house and since '96 we have been debt free. You know how we did this?? BY WORKING OUR ASSES OFF! Every time Overnite Transportation asked for workers on week-ends, I would sign up.
I said all that to say this, I worked my ass off to pay off our mortgage and other debts and I certainly don't feel good about taking my tax dollar and helping the "stupid" of this nation!!!!!!!
I'm sure many of these people didn't count on losing their jobs either. Can't really pay a mortgage when you're forced to work at McDonalds.
Jobs Jobs Jobs is why this crisis is worse than it should be. On average, we're losing half a million jobs each month in this country.
Point the finger directly at the Federal Reserve, Wall Street, and Government.
"Point the finger directly at the Federal Reserve, Wall Street, and Government."
Correcto-mundo, Griff...
These folk are doing every thing in their power to divert us from what is genuinely going on by play the adverserial game between the parties...but these asses are in it together...and they're all guilty as hell.
Gregg
The Federal Reserve needs to be put under a very large microscope as well as its ties to Wall Street. Our government is nothing but a puppet of the corporations and big money, and one needs to ask how all of the jobs ended up in China and Mexico. The US worker was never intended to compete slave and child labor. It was Henry Ford that realized he could increase his sales by paying workers enough that they could afford his product. This was the start of the middle class American Dream.
Very true, Griff.
There are many ways the federal government makes housing unaffordable. First among these is the Federal Reserve, which manipulates interest rates and the money supply, creating ridiculously high prices. But with all the new fiat money flooding the system, prices get bid up ever higher. The little Los Angeles GI home I grew up in, which my father bought in the 1950's for $15,000, was "valued" at almost a million dollars before the crash. This, for a 1,200 square foot home on a standard sized lot.
Then, there are the alleged "building standards" that are really make-work programs for politically connected companies and unions. It is possible to build a perfectly fine starter home for well under thirty thousand, if such requirements were suspended. (As evidence, you can price manufactured homes and find many in that range.)
Then, there are zoning ordinances that restrict where you can and cannot put residences. On top of that, huge chunks of very usable land remain undeveloped because governments at all levels refuse to allow development. The excuse for this is the prevention of that horrid thing known as "urban sprawl," a codeword for lots and lots of nice homes that people want to live in, with plenty of space between them, rather than the sardine-like, overcrowded conditions of the central cities. The real reason, though, is to restrict the supply of housing so that politically connected companies and unions can demand and get higher prices.
Eventually, the whole rotten system had to collapse.
In a free society, quality homes at affordable prices would be readily available.
You and I were both fortunate to experience long periods of personal full employment at a good wage. Many have not been so fortunate. You and I both obviously benefitted from a pretty good education back in the 50's and 60's. Many have not been so fortunate, and may have fallen for the glib sales pitch of a not so ethical mortgage broker. We must fight the urge to feel superior to those who have, through little or no fault of their own, not been so fortunate as you and me. Are we, humanity, all in this together or is it to be every man for himself? There, but for the grace of an imaginary supernatural being, go you and me.
Kent Shaw
Hi fellow liberal democrat. I share your views and how you lived your life. Like you I came from nothing worked hard and by the time I was 46 I owned everything including our house free and clear. No debt at all, zero zip.
Why the banks didn't care if the people couldn't pay back the loans was that they had no intention of holding the mortgages long term. They just bundled them up as securities and sold them as "investments" to clueless investors, and we all know what happened as a result of that fine "innovation".
On the other hand why people would take out mortgages they knew they couldn't pay back is beyond me. Probably fast talking loan officers were part of the problem, and buyers that were clueless about finance was the other part.
I never thought debt was a good thing so we were always careful when we took out mortgages. We made sure we could easily make the payments, and like you paid extra toward the principle so we could get out of debt ASAP.
As I look around at the mess this country is in I am very glad we got of debt when we did.
Doug,
It's hard to deny the any of the comments you made.
Over the past three decades the framework of partisan politics dynamics have become more pronounced, aggressive, and in the end, has shown little to no regard for the public welfare than any time in history.
The unraveling of the American Dream started in the Reagan years with massive deregulations affecting utility companies, mainstream corporations, environment, and the introduction of the "Least Restrictive Environment Laws" that has forever changed the way medical services are provided and more importantly it allowed for an untold number of mentally ill to be dumped into the streets by state hospitals and institutions.
In 1994 Clinton began his quest to overhaul the Communities Revitalization Act...which he used to force other government agencies into pressuring lending institutions to give mortgage loans to those way under qualified...and to make the Fed dump a huge amount of money into the banks and such to accommodate the loans.
Wealth in our type of economy is only created by the loan system. So Clinton created his new and improved wealth system by modifying the basic economic system and thus was the beginning of the "SUBPRIME" lending schemes.
In 1999 came the Gramm -Leach-Bliley Act, which was an repeal of the Glass-Steagall Act of 1938, which prevented banks, insurance companies, and wall street from competing. BAD MOVE. This legislation hit the reset button and started a business practice among these entities that went totally out of control. The politician in 1938 had learned a valuable lesson from the previous 10 years that played a significant role in the creating the serious problems before and during the Depression era.
In 2000 came the nail in the coffin legislaton by Congress. The Commodities and Futures Modernization Act that allowed mortage lenders (and other types of loans) to be bundle up into "securities" to be trade in the market place...thus creating the demand for "derivatives", which in affect are default insurance policies for covering all of these mortgage bundles.
The worst part of this legislation is that it removed most of the oversight feature by the SEC and the CFTC to maintain legal control over these mortage bundles turned into securites, which in essences a securites is the closest thing to cash that we have in our monitary system. But the mother bummer of it all was the alteration of control over derivatives markets.
This became a serious problem because those lending institutions who were creating these bundles failed to keep in tact the underlying collateral documentations that went along with the individual mortgage notes.
When the mortgage/securities industries realized that the false economy practices of the previous near 30 years was sliding into a major default...and then every swinging bank and insurances company who were selling derivatives..."Couldn't Payoff the Defaults".
It is estimated that we have $85 Trillion in bad derivatives (now called toxic assets). And world-wide it is estimated to be in the neighborhood of $500 Trillion.
All of the worlds market places and lending institutions are blaming the U.S. for sucking them into a fatally bad securities scheme. And rightfully so...we did, thanks to a group of very corrupt people in our government.
Now in the background of all this mess...the banking institutions, insurance companies, and Wall St. who have been paying off our Congregssional members and lord only knows the influence they have over the FED...they were Licensed Thieves. Our government sanctioned their right to steal $Trillions of dollars around the globe.
And at this date...they have been given untold billions more (so far without the need of accountability) by our corrupt government. These private lending, insurance, and market institutions own our elected official.
These modifications in our economic system were completely bipartsan. Regardless of party affiliation these life altering changes were supported by all.
They never counted on these changes to blow up in their faces.
All members of Congress, the Executive Branch, and the FED are all guilty...all of them. They did what they did in order to meet their obligations to the lobbyist and special interest who virtually bought them out lock-stock-and barrel...and out of their own ego-centric power lust.
Our government has moved beyond being merely being corrupt. They are now tryants addicted to power and will go to any length to sustain it. The only value the American people have to these collabortive dictators is to keep filling the Federal Reserve accounts to support their ongoing efforts to control every single resource available to our nation. That includes human resources.
So much for the American Dream. Welcome to our new roles as "Indentured Servants" rather than being "We The People". Enjoy your newfound enslavement.
"Wealth in our type of economy is only created by the loan system."
Actually, of course, this type of popular misperception is part of our problem. Loans create debt not wealth. An entry on the liability side of the balance sheet. In this case balanced by the (fully encumbered) house on the asset side - until the recession/depression deflation hits. Then we see the financial fallout. They're ain't no wealth, and never was. Just a place to send money every month.
Mike Whitney has a few more details:
http://www.counterpunch.org/whitney06262009.html
Stated with precision and eloquence. I wish to clarify, or expand upon, one issue.
"It is estimated that we have $85 Trillion in bad derivatives (now called toxic assets). And world-wide it is estimated to be in the neighborhood of $500 Trillion."
Those who purchased the credit default swap "insurance policies" need not have had an interest in the underlying asset, the actual mortgages to individual homes. Individual entities were allowed to, and consequently were, simply placing bets that mortgages they were not holding would default. This should NEVER have been allowed. And now taxpayers are supposed to cough up real cash to pay for these (I declare to be) fraudulent transactions.
I wonder if I would be allowed to take out an insurance policy on Henry Paulson's life. There is no logical difference from taking out a credit default swap on his mortgage.
Kent Shaw
I'll second that, Kent, the facts are well laid out. The question remains: will those we elect and pay, have the integrity to regulate their de facto masters?
I always find it amusing some will believe all that is said but still think they actually have some say in it via elections. Elections are all a part of the scam keeping us complacent. No person capable or willing to make the needed changes will ever even make it on the ballot. See Ross Perot or Ron Paul for evidence.
Sad, but true. Real populist candidates do not make it past ridicule by the 'press' which is owned by the 'five families'.
Kent Shaw
"It is estimated that we have $85 Trillion in bad derivatives (now called toxic assets). And world-wide it is estimated to be in the neighborhood of $500 Trillion."
Whence comes this figure. I see numbers like this bandied about, always preceded by "some say" or "it is estimated" or "some experts suspect".
I'd like to see some backup. From real sources.
These articles are full of data, sources, and analysis, AND they only scratch the surface. Otherwise YCLIU !
http://www.siliconvalleywatcher.com/mt/archives/20...
http://emsnews2.wordpress.com/2009/04/19/derivativ...
http://www.populistamerica.com/bring_light_to_dark...
My bad! i am at the beach, using a laptop i despise, and I was just flabbergasted at the big numbers. I tried to google earlier but it didn't work correctly.
I have been able to figure out most things having to do with finances, but I just cannot seem to wrap my aging brain around derivatives. My apologies forr asking a stupid question.
I'm still trying to figure out how we could so suddenly get into such astronomically huge numbers.
All of us are just as much in awe.
Don't get sun burned...
Ha. Just wait until they fire up the carbon credit derivatives game.
The topic came up again last night among our friends of various political persuasions. In our youth the neighborhood barber, the checkout clerk at the local market (not super), the guy down the street who worked on an assembly line were all able to buy decent homes. By the mid seventies, I noticed how ordinary people started talking about investing in the stock market and real estate. By the early eighties, even people who had “good” jobs could no long afford to buy a home without two person incomes. It seems everyone became real estate salesmen. Nobody ever talked about owning a home, it was always an investment. There was always a “bigger fool” who would buy your “investment” for a big profit. Everyone was a Capitalist, whoopee! Now, how many Americans are left with no home and no investment?
Clearly, there are corrupt and evil people, but I believe they have been facilitated by the amateur and professional speculators who seek profit without adding value. This is the indifference of conservative ideals, not American ideals.
The American Dream died with American Ideals. I can’t say it any better than George Lakoff: “For progressives -- who start with empathy for others and responsibility for both themselves and others -- markets should serve to make people free; free from want, free from harm, free from fear, free to meet one’s needs and fulfill one’s dreams. In short, the job of markets is to serve the common good; allow everyone who works to earn a decent living; help achieve freedom from want, illness, harm, ignorance, bigotry, and fear; preserve the natural world; and serve democracy.”
It's great to see so many finally coming around to see the light. Too bad it's probably too late to do much about it. The only thing that could break the grip these folks have over our country now is a violent revolution. Don't see that happening with so many unaware of what is even going on thanks to our lamestream media talking heads.
So many unaware has become the problem. The question now is how do you go about informing the uninformed.
The internet has started it, but I think we would need to take over the broadcast airwaves or perhaps disrupt everyday life enough in a non-threatening way to make any further headway. Violence would only serve the establishment by coloring any movement as a terrorist organization.
A Third Party? If a group of people was serious about forming a Third Party, now would be the time to start organizing it and forming a public information campaign.
Elections are a sham. A third party isn't an answer. Besides, we already have the Libertarian, Constitution, Socialist, Nazi, and many other parties. The Republicans and Democrats have a strangle hold over access to the ballot. And they control the voting machines and hence, the outcome every time.
There's no sense in voting third party. They knew which way the wind was blowing this last time, and they force-fed us Obama by offering up two of the most polarizing, disliked figures in national politics for him to "run" against.
They'll do the same next time, if necessary, and hijack any real movement and steer it toward their favorite. The Libertarians are the only real choice. They're the only party established enough to get on ballots.
But then again they can't win, so naturally those that would vote third party choose the lesser of two evils, thereby making it a self-fulfilling prophesy.
Remember back to 1992 and Ross Perot. Neraly 20 percent of the vote, and it scared the hell out of the Establishment. So Clinton went to work assuaging the fears and giving us a glimpse of prosperity. But what he was doing was setting the table for Bush, as Bush turned around and set the table for Obama.
What we need to do is stop waiting for others to do something and simply stop voting for this carousel of corruption. I don't care what promises they've made or what lies they spew. We should damned well know by now that their rhetoric is as useful as a one-armed paper hanger.
The only way to stop it is to cease supporting it.
You want a public information campaign, then here it is.
Unfortunately, you speak the truth. But, it isn't going to do any good to stop it unless you have something to replace it with. What would you replace it with?
I would start by suggesting that every incumbent Senator up for re-election this cycle be voted out of office. No if's, and's, or butts. I don't care what they promise or promote...Gone.
Vote for the guy or gal you heard the least about. Support third party or lesser known candidates in any way you can. Throw up a yard sign. Urge others to do the same.
They need to know that their jobs are no longer secure.
Change doesn't happen from the top down. Not in America anyway. It happens from the bottom up.
Break the Matrix.
I'd just like to add a tiny bit to Griff's posting.
If you really want to understand the gut workings of how elected officals get elected you have to understand how the primary system works. It's incredibly complex, following the money takes serious skills and resources.
But, the ordinary voter can peel away enough of the camouflage to obtain a much better understanding of how the very big money organizations will select, groom, and sell indiviuals of all political persuasions in just a way to meet their specific needs and future goals in various districts, states, and so on.
Do these folks always win against the public? I'd say the overall percentages are extremely high.
With the big money organizations they don't give a rat's ass about parties...EXCEPT where various areas are more served by one party over another...or they may want to manipulate a specific population to ultimately alter their political philosophies.
In other words...those affliated with a specific party are in service by design. But not by yours.
Primary elections are manipulated by powerful corporations and the sub-machines such as political action committees.
They hand taylor elections across the nation because we have one of the most screwed up primary systems ever known to human kind.
Our primary system's basic design is almost like a water ripple in a bath tub, which are are time based to fall on certain dates, which in effect allows for both real time strategies to be employed and upcoming strategies for primaries set off later dates.
It's a well honed science. The process that's been utilized for the past decades...these money machines have become Phd's at this. In fact, they hire the smartest of the smart in every discipline of human science to formulate tactics and strategies.
At least in Iran...the Supreme Leader says, "I don't give a billy damn if you like who I selected to win or not." We don't even get that...as we're covertly screwed out of our choices by very powerful money machines...before we get to THEIR CHOICES. Then they begin the game of manipulating the sell of their candidates to WIN OFFICE.
As Griff pointed out...there's only one real way to defeat these assho!es. Just cease to support them. That would clearly throw off the money machines efforts as they put so much into a concise outcome that it's really difficult to out maneuver the bastards. To just stop supporting these parties, or individuals within a party who has filled your head full of propaganda about the values and philosophies of there parties...it is the only means of defeating the big controlling money machines...OUR SUPREME LEADER.
What a hell of a mess our political system is in.
By the way...ever find a party name in the Constitution? What makes the Republican Party or the Democrat Party any less lethal or destructive than the Communist Party. If you genuinely believe that the first two are anymore loving, caring, and devoted to the voters...then think again. (Just my little ole opinion, of course.)
Nice. In other words, they play us like a fiddle. Our next president is being groomed as we speak, and so is the populace.
Interesting you should mention Iran. Their candidates are hand selected by the Guardian Council. See...Not that different from us.
In 2000 our winner was picked by his father's Supreme Court appointees against all precedent and essentially removed Federal election outcomes from State level control to the Federal level. Not much different at all.