When the gods dance...

Monday, January 23, 2012


The Foreclosure Crisis: Urgent as Ever and Could Get


By Carl Bloice
BlackCommentator.com Editorial
January 19, 2011


Noting that a Federal judge in California was slated to
soon okay the "largest residential fair-lending
settlement in history" ever reached by the Department
of Justice in a bias case," Attorney Anita Hill
commented in Time magazine last week that in putting
together the deal the U.S. Attorney's office is to be
lauded. She added "without Countrywide's admission of
fault for overcharging and steering minorities into
high cost loans when they qualified for conventional
loans, it's uncertain whether the agreement will stave
off future unlawful behavior. Moreover, it certainly
won't be enough to repair the damage that has been done
to those individuals and the communities in which they

The agreement requires Countrywide Financial
Corporation - now part of Bank of America - to pay $335
million to African American and Latino homeowners who
have been found - in Hill's words - "victims of
Countrywide's racially motivated fraud and deceit. To
begin with, the $10,000 compensation some of the
200,000 Countrywide customers covered in the settlement
are entitled to is likely not enough to put them back
in their homes, let alone rebuild their neighborhoods,"
Hill wrote. Hill, author of Reimagining Equality:
Stories of Gender, Race, and Finding Home, is a
professor of social policy, law and women's studies at
Brandeis University.

That some of the nation's leading banks and mortgage
lending institutions were engaged in fraudulent,
predatory and discriminatory lending practices was
obvious over four years ago - before it was clear
public knowledge that the distortion they created in
the housing market was central to the country's
continuing economic crisis. The devious ways that major
financial institutions went about trading, hiding or
escaping responsibility for the mortgage mess they had
created lay at the heart of the "great recession" in
the U.S., but were also instrumental in the economic
difficulties that show no signs of abating in Europe.

The unemployment problem in the country today means
depravation and hardship for millions of people. So,
too, does the plague of housing foreclosures. So long
as it persist, economist say, there is next to no
possibility of anything approaching an economy

"It was 35 years ago that US president Jimmy Carter
declared the energy crisis `the moral equivalent of
war.' His use of martial language might not have
galvanized Americans in the way he hoped, but it still
is useful to think of economic struggles in military
terms," wrote the Financial Times Lex column January
10. "Today's enemy is the housing crisis and the fight
is going badly. Prices are down by a third and there is
a glut of foreclosures, with another wave coming.
Allowing more foreclosures not only further depresses
this pool of wealth but makes it tough to normalize
interest rate policy," the column said.

On January 11, the Federal Reserve said the country's
housing market remains stagnant. The word it used was
"sluggish." Or, as political commentator and for New
York governor Eliot Spitzer put it: ". the mortgage
crisis continues, depressing the middle class."

There are an estimated 3.5 million seriously delinquent
mortgages out there. There were nearly 2.7 million
foreclosure filings on about 1.9 million homes last
year. That's down from 2007, but it's still about one
out of every 69 homes in the country.

Those tracking the data have suggested the number will
be higher this year. The reason? The process Atty. Hill
described: "The lack of clarity regarding many of the
documentation and legal issues plaguing the foreclosure
industry means that we are continuing to see a highly
dysfunctional foreclosure process that is inefficiently
dealing with delinquent mortgages, particularly in
states with a judicial foreclosure process," Brandon
Moore, the CEO of RealtyTrac, told the McClatchy

And yet, neither the Congress nor the Obama
Administration has come up with any measures that would
seriously stem the tide of foreclosures. Nor, as Hill
pointed out, result in justice or relief for those
conned by the financiers, or guarding against the
process resuming.

Last year, there were nearly 2.7 million foreclosure
filings - which included default notices, scheduled
property auctions and bank repossessions - were
reported on roughly 1.9 million properties last year.
That works out to about one filing for every 69 U.S.
homes. That rate and total foreclosure activity in 2011
were at the lowest annual levels since the housing
market imploded in 2007. But the decline may be short-
lived, as lenders work their way through the backlog of
delayed filings stemming from "robo-signing" scandals.

"We expect that trend to continue this year, boosting
foreclosure activity for 2012 higher than it was in
2011, though still below the peak of 2010," Moore said.

"The Foreclosure Crisis: A Nation in Denial," is the
title of a commentary by Bruce Judson on Huffington
Post January 9. "As we start the New Year, the
executive branch and Congress continue to pretend the
gravest risk to our economy and social stability does
not exist: the ongoing foreclosure crisis," wrote
Judson, entrepreneur-in-residence at the Yale
Entrepreneurial Institute and author of It Could Happen
Here: America on the Brink. "The financial crisis began
with the housing crisis and it will not end until we
resolve housing. Government policymakers who seemingly
ignore this basic fact are leading the nation to
another potential catastrophe."

In 2007, only a few observers were warning of the
devastating effect all this was having, especially on
African American and Latino communities from one end of
the country to the other.

"Today, an estimated 29 percent of all homes with
mortgages are underwater. In addition, at least one
respected analyst estimates that a total of 14 million
homes will be foreclosed on from 2007 to the end of the
crisis," Judson wrote. "This represents a hard-to-
imagine one in every four mortgages. With foreclosures
increasing, there is now such a looming imbalance of
supply and demand that, as the Fed notes, further
decreases in home prices are likely. Some believe home
price reductions of another 20 percent are likely. This
would, in all likelihood, have disastrous consequences
on at least three fronts - and ripple effects that are
impossible to predict."

Judson wrote, "What is shocking is the almost total
lack of attention the administration has paid to
suffering homeowners. It's hard for me (and apparently
Chairman Bernanke) to understand how the administration
can possibly hope to revitalize the economy without
seriously addressing the overhang of consumer housing
debt. Moreover, the failure to address the risk this
poses for a broader economic catastrophe borders on the

"If President Obama is serious about saving the middle
class and reducing income inequality, the
administration needs to be far more aggressive in
developing policies to keep homeowners as homeowners.
As I have written before, this was one of FDR's central
goals in the New Deal. Detailed proposals for
addressing this extraordinary risk do exist. However,
they will require a determined effort. There are
solutions, but they are not simple."

"What is most important right now is that we recognize
we are in a lifeboat that will not reach land," wrote
Judson. "We need to focus on implementing a meaningful
solution to the problem. A clock is ticking and
Washington needs to acknowledge that a witching hour is

Three years ago, with much fanfare, the Obama
Administration launched the Home Affordable
Modification Program with a target of assisting over 3
million distressed homeowners. As of the end of the
year, it is said to have aided somewhere in the
vicinity of 750,000. One problem is that it's voluntary
and the bankers aren't in a voluntary mood.

Oh, and those other guys running for office?

In their debate, most ignore the problem. For the
presumed front-runner it's apparently a piece of cake,
something "the market" can handle all by itself.

Nevada leads the nation in both joblessness and
foreclosures. One out of every 16 homes in the state
was subject to some type of foreclosure filing in 2011,
according to RealtyTrac, an online foreclosure data

"Frontrunner Mitt Romney hasn't pandered to struggling
Nevada homeowners," Arthur Delany wrote on Huffington
Post last week. "He told the Las Vegas Review-Journal
in October he supports the government stepping aside:
"Don't try to stop the foreclosure process. Let it run
its course and hit the bottom."

"It's not likely Romney will have much more to say on
his next visit," wrote Delany. "The candidates didn't
talk foreclosure policy in Iowa, even though the state
attorney general is leading national foreclosure
settlement negotiations with the country's biggest
banks. Only Jon Huntsman, who didn't bother to campaign
in the Iowa, has taken a position on the settlement."

The Huntsman website says the candidate, if elected,
would "direct the Department of Justice to take the
lead in investigating and brokering an agreement to
resolve the widespread legal abuses such as the robo-
signing scandal that unfolded in the aftermath of the
housing bubble. This is a basic question of rule of
law; in this country no one is above the law."

"Because if we actually believed the lie so often told
that if we just worked hard and put our noses to the
grindstone that we could be Just like Mitt then it
wouldn't be so bad," wrote Pamela Hilliard Owens on the
Black Liberal Blogger last week. "But, see, we're not
stupid. Because being broke and poor and being stupid
are not synonymous.

"Just as an example? We see things like the Countrywide
scandal where a huge corporation ripped off thousands
of African American and Hispanic homeowners (my guess
is none of them were multi-millionaires), charging them
more for mortgages than similarly qualified white
folks, just because they could. Sure they got dinged
$335 million as a penalty, and congrats to US Attorney
Eric Holder for at least getting something out of the
bastards, even it wasn't near enough. But what about
all those families whose lives are now ruined because
of Countrywide? Who is going to put them back together
and make them whole?"

"These are the kind of things that happen when the deck
is stacked, which are the kind of things that gave rise
to the Occupy movement and many more similar movements
around the world that explode when people get fed up
with inequity and injustice. But God knows if we could
all just live the Life of Mitt?"

"All would be right with the world, wouldn't it, kids?"

"Ultimately, after the financial market collapsed, the
government bailed out the banking industry, including
Bank of America, which now owns Countrywide," wrote
Hill in Time. The banking industry rebounded because
the government concluded that a secure banking system
was in the public's interest. Yet, the playing field
won't be level as long as American communities pay for
the corrupt decisions made by lenders. A federal effort
targeted at restoring blighted neighborhoods is needed
to clean up the mess left behind by such egregious
predatory practices as those alleged in the
Department's reports and pleadings."

". Funding to restore the neighborhoods Holder's team
of attorneys, economists and mathematical statisticians
have identified would enhance the DOJ's effectiveness
as well as assist state and local governments currently
dealing with costs associated with these sites. As
importantly, it would show our federal government's
commitment to the protections enshrined in our
Constitution and laws."

"The greed and fraud of Wall Street banks caused the
loss of millions of homes and billions of dollars in
the housing crash," read a recent statement from
MoveOn.org. "Now we need President Obama to take a
strong stance for homeowners, and for accountability,
by opening a federal investigation into big bank

"This is something the president can do on his own
right now, without fighting Congress. And millions of
Americans can be helped if banks are held responsible
and forced to compensate homeowners for their

"Wall Street gets investigated for the misdeeds that
led to our financial collapse, they're very worried
about what we'll find," read a recent statement by Russ
Feingold, founder Progressives United. "That's why
they're eager for a sweetheart settlement deal that
would give them broad immunity without an
investigation. Thanks in part to the pressure thousands
of fellow progressives put on state attorneys general,
that deal is on hold."

"But we don't just need to stop a deal that will cut
off an investigation - we need President Obama to take
the lead and launch the investigation. That's why we're
joining with our friends at Move On to petition the
president to investigate Wall Street now."

". For far too long, Wall Street has received a blank
check from Washington. They got bailed out after they
gambled our economy into a recession, and they lobbied
hard to make sure that regulation was too weak to
prevent another crash."

"So without an investigation, we can't hold the big
banks truly accountable for the $7 trillion they cost
the global economy, homeowners can't get fair
compensation, and Wall Street will have no reason to
stop skewing the playing field against the 99%."

On Monday, the New York Times called upon the Obama
Administration to provide leadership on the matter by
appointing "an interagency task force to investigate
and pursue potential civil and criminal wrongdoing by
institutions and people whose conduct in the mortgage
chain had the greatest economic impact," led by "a
leader with the impulses of a crusading prosecutor"
that would focus its attention on "the large banks and
their top echelons."

"Bankers should not be allowed to walk away from the
economic havoc they wreaked upon the country," says
Robert L. Borosage, co-director of the Campaign for
America's Future, "They should be held accountable, so
that no one on Wall Street even thinks about playing
roulette with people's lives again."

BlackCommentator.com Editorial Board member Carl Bloice
is a writer in San Francisco, a member of the National
Coordinating Committee of the Committees of
Correspondence for Democracy and Socialism and formerly
worked for a healthcare union.


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