Kucinich – Forsaking Foreclosures – NY Times

Dennis has an op-ed in the NY Times today!

WE need a plan that is big enough, bold enough and fair enough to deal with the nation’s foreclosure crisis.

The foreclosure rate in the US last month was one in every 534 homes. This is hard for the homeowner, obviously, but hard on the banks and the local communities. An empty house brings in no revenue and there’s no added economic impact by a family buying items in the local community.

For starters, federal aid should be directed toward those communities with the heaviest concentrations of foreclosures and homeowners at risk. Aid should help cover public safety costs imposed by vacant homes. It should help defray budgetary shortfalls for public schools that lose property tax revenue.

The communities are being hurt, and there are many homeowners who are on the edge of foreclosure.

Second, a federal loan modification program for struggling homeowners should prohibit the replacement loan’s principal balance from exceeding the property’s appraised value. It should convert the terms to a long-term, fixed-rate and fully amortizing loan. It should limit monthly mortgage payments, including taxes and insurance, to an amount based on the homeowner’s ability to repay.

It’s important that the homeowner be able to make payments. The banks may have thought that foreclosures would just open up more homebuying opportunities, and that may have worked. It’s not working now. The country has to make a decision as to whether it’s more important to have someone living in the house or trying to over charge for that house. While it is the owner’s fault for having overbought their house, it was at the same time the bank’s fault for having oversold the house to the homeowner. There should be a happy medium in trying to solve this crisis.

Dennis then writes that if the homeowner is not able to afford refinancing that there should be a federal home loan bank which buys the house and re-rents it to the current owner. This would have the effect of keeping someone in the house insead of boarding it up. The economic impact on the community would be lessend if this was done.

The foreclosure crisis is a calamity for individual homeowners and a worry to financial markets. And what’s worse, if lenders and investors are allowed to profit from their predatory lending without bearing the full costs, they’ll do it again.

This is most important. When something doesn’t work, there’s no reason to believe that it’ll work in the future. The lending institutions have messed up on this. They shouldn’t be allowed to get away with it just to make the same mistake again.

If you support Dennis, his primary for the OH-10 House seat is this Tuesday, March 4. You can visit his campaign site to see what he stands for. If you agree with him, you can donate to his campaign and you can even volunteer for the campaign! If you prefer, you can donate via my ActBlue page for Dennis’ congressional campaign.

As always,

Go Dennis!

http://kucinich.us/

http://integritynow.org/

For those of us on the Left, Dennis is OUR Congressman!

Originally posted here: http://rjones2818.blogspot.com…

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  1. Homes which have people in them, or homes which are boarded up.  That seems to be the question.

  2. foreclosure.  Everyone loses.

    It is sensible that banks should cooperate with homeowners and offer them fixed mortgages at payments that are affordable to them.

    I can’t help but to interject this from Bush here:

    Hey Homeowners, Bush Blames You — Not Iraq — for Our Tanking Economy, Feb. 29, 2008

    George W. Bush and Laura Bush were being interviewed by NBC’s Ann Curry when the subject turned to the war in Iraq. Curry reminded the President that his wife had once said, “No one suffers more than their president. I hope they know the burden of worry that’s on his shoulders every single day for our troops.” The conversation continued thusly:

    “Bush: And as people are now beginning to see, Iraq is changing, democracy is beginning to tak[e] hold. And I’m convinced 50 years from now people look back and say thank God there was those who were willing to sacrifice.

    “Curry: But you’re saying you’re going to have to carry that burden … Some Americans believe that they feel they’re carrying the burden because of this economy.

    “Bush: Yeah, well —

    “Curry: They say — they say they’re suffering because of this.

    “Bush: I don’t agree with that.

    “Curry: You don’t agree with that? Has nothing do with the economy, the war? The spending on the war?

    “Bush: I don’t think so. I think actually, the spending on the war might help with jobs.

    “Curry: Oh, yeah?

    “Bush: Yeah, because we’re buying equipment, and people are working. I think this economy is down because we built too many houses.”

    In other words, in honor of the soon-to-arrive fifth anniversary of his war without end, the President has offered a formula for economic success in bad times that might be summed up this way: less houses, more bases, more weaponry, more war. This, of course, comes from the man who, between 2001 and today, presided over an official Pentagon budget that leapt by more than 60% from $316 billion to $507 billion, and by more than 30% since Iraq was invaded. Looked at another way, between 2001 and the latest emergency supplemental request to pay for his wars (first in Afghanistan and then in Iraq), supplemental funding for war-fighting has jumped from $17 billion to $189 billion, an increase of 1,011%. At the same time, almost miraculously, the U.S. armed forces have been driven to the edge of the military equivalent of default.

    What a GD liar — or is he on LSD?

     

  3. it’s not really the local banks.  In the old days, you went to your local bank, you put down your 20% on the house, you got your fixed-rate mortgage.  No, who holds this unsecured debt now is corporations like Countrywide, which got bailed out last year from almost-certain bankruptcy.  At the same time,  the profit-firsters were eroding the regulations enacted after the Great Depression, including those allowing financial institutions to package and resell debt.

    So the newly deregulated companies bought, repackaged, and resold those mortgages.  Over and over and over again.

    That’s a big part of the problem right now: when homeowners try to renegotiate their escalated mortgage payments, they are having trouble tracking down the legal entity which owns the debt.  In all likelihood, their mortgage could be in your Uncle Henry’s pension fund.

    So, no, your local bank isn’t in trouble from too many bad loans, unless your local bank is Citi, Credit Suisse, or other world banks like that.  The problem is that these bad loans had been rated AAA+ until the emperor was revealed in all his nakedness, sometime last summer.  Since then, investors around the nation and around the globe have discovered that their AAA+ leveraged paper might be worthless.

    Your local bank might be in trouble over the liquidity crisis, but that’s another comment.

    • plf515 on March 3, 2008 at 3:33 am

    but they need to be protected from being lied to and manipulated.

    Therefore, the penalties should be assessed on those who did the manipulation – the real estate people who wrote contracts no one can understand, and the financial companies that package mortgages so that no one person is responsible.

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