That's how many families are losing their homes to foreclosure. More than 8 million families are at risk.[2]
And, this is no accident. In Brave New Foundation's provocative new film on the housing crisis, a California mortgage broker admits on tape that he was "trained to mislead borrowers" and get them into the most expensive loans.
Check out the video:
Click here to tell the Mortgage Brokers Association to back off and get out of the way of solutions to our housing crisis.
Big and bold. That's Mike Lux's recipe for sweeping transformative change. That's the way for progressives to achieve a Big Change Moment, as Lux calls it in his new book, "The Progressive Revolution: How the Best in America Came to Be." Lux likens progressive ideals to American ideals, and calls for progressives to pressure cautious Democrats hesitant to spend political capital.
I'm not talking about President Obama specifically. As Lux wrote here yesterday, Obama has taken tremendous strides to get past the hurdles of centrist cabinet picks and stay on the progressive track. You could hear calls for a Big Change Moment in Obama's congressional address last week, and you can see audacious ambition in his economic recovery bill and budget. While Lux is right when he says we shouldn't hesitate to disagree with the President on everything from the banking crisis to the war in Afghanistan--particularly when Obama respects plurality of opinion--this ought to go double (or I guess increase exponentially depending on your math skills) for every Democrat in Washington right now.
by Zach Carter, Media Consortium MediaWire Blogger
President Barack Obama unveiled his administration's plan to fight foreclosures on Wednesday. Unfortunately, the most important element of the program will require Congressional action—and the banking and business lobbies are already on the attack. The Homeowner Affordability and Stability Plan has three chief components:
President Obama unveiled his $75 billion Homeowner Stability Initiative today, which could be a start to ending the foreclosure crisis that plagued 2.3 million Americans last year. While Obama acknowledged his plan won't be able to save every home, he claimed it would stop "the worst consequences of this crisis from wreaking even greater havoc on the economy."
To that end, Obama's plan will help those homeowners facing mortgages more costly than the price of their homes, along with borrowers on the verge of foreclosure. That would be key to enabling 4-5 million Americans currently "under water" refinance their mortgages, and another 4 million people avoid foreclosure. The plan also "will provide forward-looking confidence" for Fannie Mae and Freddie Mac, as Treasury Secretary Timothy Geithner said.
But the question still remains how soon this money will get to the people who need it most, considering 10,000 Americans go into foreclosure every day. As Arianna Huffington recently put it, "'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?"
It is good to be back here at OpenLeft. Thanks to the site's editors, I will be posting from time to time on ACORN's major campaigns and the work being done by progressives to push for the kind of policies we need to get America back on its feet and back to work. I'm starting with the work we are doing to address the foreclosure crisis at the heart of the economic meltdown. -- Bertha
Yesterday President Obama signed into law the economic recovery package that is a firm first step forward in getting America back on its feet in the midst of the economic devastation we are experiencing.
Today, President Obama announced his Administration's $75 billion plan for addressing the foreclosure crisis engulfing the country. This is a welcome initiative, especially in the wake of the 2 years of inactivity and neglect from the Bush Administration.
I would argue that in terms of addressing the specific genesis of our present crisis - the toxic assets crippling the financial sector - the announcement today is of greater magnitude. For without a plan to address the predicted 8-9 million foreclosures over the next 4 years, that's in addition to the 2.3 million that occurred in 2008 with a total estimated cost to the economy of over $850 billion, attempts to spur an economic recovery will fail. There can be no long-term solution without addressing the immediate foreclosure crisis.
I talk about the problem and what we can do about it in the extended entry.
We have already heard too much from bailed out banks. Their corporate greed clearly knows no bounds as they continue predatory lending practices after taking tens of billions from the government, which they failed to use to jump-start economic recovery. And now we've heard from Treasury Secretary Timothy Geithner, who rolled out his controversial Financial Stabilization Plan today that will devote $50 billion to help dam up the flood of foreclosures drowning our economy. Who have we not heard from?
How about the 2.3 million Americans who faced foreclosure proceedings last year? How about the 860,000 people whose homes were repossessed by lenders? How about the millions more out there right now struggling to renegotiate their mortgages with banks bent on reducing lending, restricting loans, and lying about conditions? Those are the heartrending stories we haven't heard yet, but that's about to change.
Today, Brave New Foundation is unveiling its newest campaign: Fighting for Our Homes. The website enables anyone affected by the housing crisis to tell their tale in their own words, either by recording it on camera or writing it down and submitting it with a photo of the house in jeopardy. Watch as people from around the country give accounts of their nightmarish ordeals. These stories fill up an interactive Google map symbolizing the toll this economic meltdown has taken on Main Street homeowners, reminding us of the consequences of irresponsible lending and corporate malfeasance.
How do you know when your bank is standing in the way of economic recovery? Well, take the following quiz. Your bank took $45 billion in bailout funds and:
a) Blew it on an overseas bank investment, DC lobbyists, corporate jets, executive bonuses, and a lavish Super Bowl party worth $10 million alone.
b) Announced it would lay off 35,000 workers while refusing to provide adequate health care for the rest of its 212,000 employees.
c) Asked participants on a conference call to donate large sums of money to vulnerable anti-union Senatorial candidates in order to defeat the Employee Free Choice Act.
d) Blamed the financial crisis on dead mothers.
e) All of the above.
Sadly, for Bank of America, the answer is "e" as in "egregious." TPMMuckraker had a story Friday about Theresa Hatt, a Bank of America customer who died of cancer last month at 52. When her son, Paul Kelleher, called Bank of America to let them know, an estates representative asked if Kelleher intended to pay off the balance of his mother's credit card. When he said he wasn't obligated to, the representative said, "I know that if it were my mother, I'd pay it. That's why we're in the banking crisis we're in: banks having to write off defaulted loans."
Apparently, Bank of America instructs representatives from its collections unit to deceive customers intentionally, both about the legality of paying off balances and obviously about the morality of it as well. Not only that, but the bank also rewards its reps who do bring in "collectible money" with fat bonuses of upwards of $5,000 a month. This is a business practice so sickening it ought to have every Bank of America customer shredding their ATM cards in disgust.
A note of introduction: I am the editorial director of Brave New Films, and I'll be blogging about all things related to the economic meltdown, foreclosure crisis, and the war in Afghanistan, as those issues represent our biggest campaigns right now.
The GOP and Fox News have been ganging up on the Association of Community Organizations for Reform Now (ACORN) like a couple of bullies picking on the scrawniest kid in the schoolyard--and they can only push that kid so far until he gives them a well-deserved bloody nose. Last week, House Minority Leader John Boehner (R-OH) unjustly accused ACORN of receiving a $4.19 billion bailout from President Obama's economic stimulus package. His false claims were echoed by Sen. David Vitter (R-LA) on Fox, who claimed this money was a "payoff" for ACORN's activism in the last election. That was all it took for bloviators Rush Limbaugh and Michelle Malkin to resuscitate allegations of ACORN's voter fraud. They even blamed the low- and moderate-income advocacy group for the subprime meltdown, rather than discuss the banks actually caused this mess and have subsequently received tens of billions in bailout funds they continue to squander.
These cries amount to nothing more than fearmongering in the name of obstructionism, what ACORN CEO Bertha Lewis called "a complete fabrication of overheated partisan fever dreams." As Congress Matters noted, the $4.19 billion was actually set aside for "neighborhood stabilization activities related to emergency assistance for the redevelopment of abandoned and foreclosed homes." In other words, any non-profit housing developer could bid on this money.
Here comes the bloody nose. On Monday, the organization sent a letter to Boehner's office and media in Ohio shooting down each and every accusation and attacking Boehner on his home turf, a district where more than 4,800 families faced foreclosure in 2008 alone. They also went after Boehner's record of voting against the Foreclosure Prevention Act of 2008 and the Mortgage Reform and Anti-Predatory Lending Act. Simultaneously, they're asking everyone to contact their Senators and tell them to support the American Recovery and Reinvestment Act, a version of which passed in the House last week despite the GOP's partisan rancor.
While including mortgage modification powers in bankruptcy court to prevent foreclosures sounds like a great idea, here are a couple other bills introduced last week to address economic stress points and help Americans rebuild their lives faster once the economy gets better.
Both of them were sponsored by Dianne Feinstein in the Senate and referred to the Senate Banking, Housing, and Urban Affairs Committee. I have to give her major credit for putting out what sound like smart, forward-thinking bills on a first read. Both of them also make use of the (I think rightly) maligned TARP appropriation such that the rest of it might not be a total waste.
Unfortunately, she doesn't presently sit on the Banking Committee, so I review this legislation with somewhat limited expectations that it will see the light of day.
I'm in New York City now, having flown out of Minneapolis earlier this evening. And I suppose it's fitting that my last experience in that city was to tour foreclosed houses in St Paul with ACORN, a group of community organizers. I'm watching the Republican line-up, just getting done with Giuliani, and what strikes me is the utter sense of hatred and contempt for ordinary people emanating from this Christian white group.
Steve Clemons says that Palin added some sizzle to the convention, and I'm sure that's right. When I left, this was a deadened and frustrated group. But now I see on TV an air chopping Giuliani dripping with hatred in a symbiotic relationship with a lustful and excited crowd. This hatred, this anger, this rage is what they love. This is who they are.
This party is aroused by a raw primal screeching bitterness. I don't know if independents see Rudy's prime time speech like I see it, but what I see is a vicious white mob who laugh and sneer at people losing their homes in the name of small town American values and who hate community organizers standing up for those people.
I just took a tour of frogtown in St Paul, an area hit incredibly hard by the foreclosure crisis. ACORN had their organizers bring about six or seven of us to look at the homes, many of which were boarded up. There was a squatter in one of them, his fingers peaking out of the closed windows, and we passed vacant lots where houses had stood before they burned down due gas explosions.
I don't mean to dismiss the political pageantry, it actually is very important. You'll notice that 'real problems' in our political system are couched under the really irritating banner of 'issues', even though every one of the houses I saw tells the story of someone evicted from their house by an impersonally evil set of lobbyists, bankers, and political elites.
Politics is a zero sum gain. If someone wins, someone else loses. These people are the losers, and the people we see on TV in Denver and in Minneapolis are the winners. Joe Biden has a great line, which is 'don't tell me what your values are, show me your budget and I'll tell you what your values are'.
What I want to know is who the next President is going to make pay for the debt run up by Bush. Because someone is going to. And I hear a lot of sob stories from the Democrats, but not a lot of anger at the thieves who caused them.
Over the last two weeks I've been documenting the abuses endured by workers and residents within the Atria assisted living chain, while Bruce Wasserstein, CEO of the Lazard investment house (and controller of Atria through an affiliated real estate fund) makes millions in bonuses even as the investment itself tanks. You can read my collected posts here.
What's happening at Atria--the gouging of seniors' meager disposable income to ensure profit margins are met, even while services and benefits are cut and rents are increased dramatically--is an extreme, but all-too-real example of what's happening all over the globe...the systematic transfer of wealth and the power to create wealth from the larger mass of the human community to a select class of uber-wealthy players at the top of the social scale. It's worth looking at the issue in a larger context, if only to reiterate what I think most of us already know...that we're being robbed, cheated, gouged, and nickel-and-dimed to death to make others rich.
This post is by Mark Winston Griffith, Senior Fellow of The Drum Major Institute for Public Policy.
If there is one thing that distressed homeowners need right now is smart, forward thinking legislation that can help slow down the wave of subprime mortgage inspired foreclosures, and establish strong anti-predatory lending measures.
Unfortunately, the Foreclosure Prevention Act of 2008 which the Senate is poised to vote on, is not the one. Commentators on both the ideological right and left have plenty to complain about. It's the kind of bipartisan, patchwork Frankenstein monster that only a politician's mother could love.
Let's be fair. It's not all bad. In fact there is alot about the bill that is promising. It includes much needed FHA modernization provisions, monies for foreclosure prevention and housing counseling, and Community Development Block Grants for state and local governments to purchase foreclosed properties and turn them into affordable housing.
But ultimately, in an effort to satisfy Senate conservatives, none of whom are particularly interested in helping out distressed homeowners, it's filled with unnecessary tax breaks and measures designed to serve the interests of homebuilders and, bizarrely enough, perhaps even speculators. Even the "enhanced" mortgage disclosures are a cruel joke for those hoping for full-scale, subprime mortgage era, anti-predatory lending provisions.
And of course, it wouldn't be a real piece of patriotic American legislation without a nod to veterans. Fine, but quite a few civilians could use the 9 month stay on foreclosure proceedings too.
Perhaps most conspicuously absent is the bankruptcy reform that many progressives were advocating for, which would have given bankruptcy judges the ability to make mortgages more affordable, the way they already do with other kinds of debt.
Is this the best that this senate could salvage given opposition to more meaningful proposals? Perhaps. Bush is announcing weak measures of his own which are designed to do an end-run around this bill.
Nonetheless, the Senate has missed a real opportunity to create a broad mechanism for modifying mortgages destined for disaster, or to put in place landmark public policy that could help prevent abusive lending practices. The most enduring legacy of this bill could be that it serves to preempt stronger congressional measures, like those introduced by Durbin and Dodd for example. To add insult to injury, it lends credence to critics of foreclosure prevention efforts who have been warning against bloated government bailouts.
Another classic example of government action. By aiming too widely, it misses the mark.
(This piece is by Drum Major Institute Senior Fellow Mark Winston Griffith)
It's hard to imagine that there could be a serious presidential candidate who would declare a "no-action" position on the subprime loan and foreclosure crisis. John McCain, however, holds that dubious distinction.
Not a day goes by that we don't hear another grim announcement about the downward spiral of the economy, or how homeowners with subprime loans are losing their homes in record numbers. Estimates of likely foreclosures over the next few years related to subprime mortgages have ranged between two and three million. In some parts of the country, foreclosures are outpacing home sales. Recession looms and the National Association for Business Economics recently declared the subprime foreclosure crisis as the greatest threat to the American economy.
The scariest part is that hundreds of thousands of subprime loans are scheduled to re-set in the latter part of this year and into 2009, which means that the economic policies of the next president will have a profound impact on the lives of ordinary working- and middle- class Americans.
How has John McCain responded to this call to leadership? By essentially saying that nothing should be done. In his remarks at a conference in Santa Ana, California on Tuesday, McCain rejected any broad policy response and actually staked out a far weaker role for the federal government in addressing the foreclosure crisis than even the Bush Administration has offered. Although he was quick to blame homeowners and "rampant speculation", there was scant recognition by McCain of exhaustively documented predatory lending practices or the scandalous oversight failures of federal regulators, legislators and a president who arguably encouraged abusive lending practices through his ownership society".
To the extent that McCain offered any specific "solutions" at all, it was to encourage mortgage lenders to reach out to distressed borrowers - something that banks working with Secretary Paulson under the Hope Now alliance are supposedly doing already. His other bright idea was "to convene a meeting of the nation's accounting professionals to discuss the current mark to market accounting systems."
Great. Just what homeowners and the economy need: The formation of a committee of accountants.
McCain has buried his head in the sand all along about the role of the federal government in the foreclosure crisis. In December 2007 he told the editorial board of New Hampshire's Keene Sentinel that he is "not smart enough" to offer a "specific solution". While this might qualify in McCain's book as "straight talk", it's also shockingly weak-kneed and irresponsible.
In comparison, Clinton and Obama have presented specific proposals that have been subjected to intense scrutiny. Clinton has called for billions in government assistance, a foreclosure moratorium, and rate freezes. Obama has proposed a universal mortgage credit, the establishment of a mortgage refinance fund, and greater loan disclosure. While critics on the left and right may take issue with these approaches, Clinton and Obama have at least acknowledged the severe financial distress confronting homeowners and would offer Americans specific plans to address it.
But a different legacy is in store for McCain if he is elected president. As a member of the Keating Five, that notorious group of Senators accused of currying favor for Charles Keating, chairman of the failed Lincoln Savings and Loan Association, McCain became a face of the Savings and Loan crisis of the eighties and nineties. With breathtaking irony, McCain is poised to associate himself with another banking meltdown by sitting idly by, in Herbert Hoover-esque fashion, as working class Americans and communities are devastated by the effects of homeowner displacement, property devaluation, family asset depletion, and the loss of real estate tax revenue.
One possible explanation for McCain's hands off approach is that some of the biggest names in the subprime mortgage industry, Citibank, Goldman Sachs, Merrill Lynch and Lehman Brothers, for example, have been among McCain's largest campaign contributors.
But these Wall Street giants have figured just as prominently in Clinton and Obama's campaigns. And unlike during the S&L; debacle, McCain, now the presumptive Republican presidential nominee, has gained the moral authority and opportunity to actually intervene.
So the issue isn't whether John McCain is "smart" enough to propose government actions and market reforms that could relieve some of the nation's financial pain while attempting to make predatory mortgage lending a thing of the past. The question is; does he care enough to bother.
Scratch one more item from the Bush Administration's already short list of accomplishments: by the time President Bush leaves office, about 700,000 fewer Americans will own their own homes than when he entered office.
The foreclosure rate is already the worst it's been in at least twenty-five years, and soon may be the worst it's been since the Great Depression. Lehman Brothers estimates that 30 percent of the subprime mortgages entered last year will end in foreclosure.
Perhaps 2.2 million American families will lose their homes to foreclosure in the next couple of years. When a family loses their home to foreclosure, they lose their life's savings, and they lose their membership in the middle class, probably forever. Millions more will see the value of their homes collapse when neighbors lose their homes to foreclosure.
