My Comments:
I am cautiously optimistic, and have personally seen activity jump a lot. The numbers below are great, but they do not break down the numbers betwen condos and single family homes. Condos continue to sell, mostly cash, at large discounts on short sale. It continues to be extremely difficult to finance condos (I have a case of clients with 780+ credit being denied twice on a condo on the intracoastal with no COA problems, and $1.1 mill. in reserves), despite all the government efforts.
All the sales activity from the tax credit that expired in April is still in the process of closing, with the current deadline of June 30. This may be extended to September 30 for all people who were under contract by April 30, pending approval in the house. We are moving into the June - August summer months, which traditionally has been more active as families move during the summer vacations. Interest rates are still at hsitorical lows, and all this means is that I expect the numbers to be good for the next few months.
Foreclosures are slowing, but there are still record numbers every month, this pent up inventory will take 3-5 years to clear. Bankruptcies are at record numbers too, and most of these are the result of foreclosures, so expect those to impact the numbers too.
**********************************************************
ORLANDO, Fla., June 22, 2010 – Sales of existing homes in Florida rose 18 percent in May, marking 21 months that sales activity has increased in the year-to-year comparison, according to the latest housing data released by Florida Realtors®.
A total of 16,745 single-family existing homes sold statewide last month compared to 14,172 homes sold in May 2009, according to Florida Realtors. The statewide existing-home median price of $140,400 in May was slightly higher – by $300 – than April's statewide existing-home median price of $140,100. It marks the third month in a row that the statewide existing-home median price has increased over the previous month's median.
Across the state, a variety of housing opportunities continues to be available at attractive prices while mortgage interest rates remain historically low, said 2010 Florida Realtors President Wendell Davis, a broker with Watson Realty Corp. in Jacksonville.
"Favorable conditions like this spark buyers' interest," Davis said. "However, like the rest of the world, Floridians are deeply concerned about the long-term ramifications of the April 20th explosion of BP's Deepwater Horizon oil rig, which killed 11 people and triggered the oil spill disaster in the Gulf of Mexico."
Seventeen of Florida's metropolitan statistical areas (MSAs) reported higher existing home and existing condo sales in May. A majority of the state's MSAs have reported increased sales for 23 consecutive months.
Florida's median sales price for existing homes last month was $140,400; a year ago, it was $143,800 for a decrease of 2 percent. The median is the midpoint; half the homes sold for more, half for less.
Thenational median sales price for existing single-family homes in April 2010 was $173,400, up 4.5 percent from a year earlier, according to the National Association of Realtors® (NAR). In California, the statewide median resales price was $306,230 in April; in Massachusetts, it was $295,000; in Maryland, it was $244,943; and in New York, it was $197,000.
According to NAR's latest industry outlook, factors such as a return of buyer confidence, stabilizing home prices and an improving economy are supporting the market in the federal homebuyer tax credit's wake. "The housing market has to get back on its own feet," said NAR Chief Economist Lawrence Yun, "and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs."
In Florida's year-to-year comparison for condos, 6,779 units sold statewide last month compared to 4,845 units in May 2009 for an increase of 40 percent. The statewide existing condo median sales price last month was $98,700; in May 2009 it was $113,500 for a 13 percent decrease. The national median existing condo price was $171,000 in April, according to NAR.
Interest rates for a 30-year fixed-rate mortgage averaged 4.89 percent in May, close to the 4.86 percent averaged during May 2009, according to Freddie Mac. Florida Realtors' sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state's larger markets, the West Palm Beach-Boca Raton MSA reported a total of 887 homes sold in May compared to 737 homes a year earlier for a 20 percent increase. The market's existing home median sales price last month was $235,200; a year earlier it was $232,900 for an increase of 1 percent. A total of 877 condos sold in the MSA in May compared to 676 units sold in May 2009 for an increase of 30 percent. The existing condo median price last month was $99,600; a year earlier, it was $107,500 for a decrease of 7 percent.
© 2010 Florida Realtors®
Related NEWS:
Florida's Population growth hits a wall
Existing home sales in palm beach county up
Wednesday, June 23, 2010
Monday, June 7, 2010
Tax Hikes and the 2011 Economic Collapse
By ARTHUR LAFFER:
People can change the volume, the location and the composition of their income, and they can do so in response to changes in government policies.
It shouldn't surprise anyone that the nine states without an income tax are growing far faster and attracting more people than are the nine states with the highest income tax rates. People and businesses change the location of income based on incentives.
Likewise, who is gobsmacked when they are told that the two wealthiest Americans—Bill Gates and Warren Buffett—hold the bulk of their wealth in the nontaxed form of unrealized capital gains? The composition of wealth also responds to incentives. And it's also simple enough for most people to understand that if the government taxes people who work and pays people not to work, fewer people will work. Incentives matter.
MoreGay Couples Get Equal Tax Treatment IRS Nears Action on Church Pensions Complete Coverage: WSJ.com/Taxes .
People can also change the timing of when they earn and receive their income in response to government policies. According to a 2004 U.S. Treasury report, "high income taxpayers accelerated the receipt of wages and year-end bonuses from 1993 to 1992—over $15 billion—in order to avoid the effects of the anticipated increase in the top rate from 31% to 39.6%. At the end of 1993, taxpayers shifted wages and bonuses yet again to avoid the increase in Medicare taxes that went into effect beginning 1994."
Just remember what happened to auto sales when the cash for clunkers program ended. Or how about new housing sales when the $8,000 tax credit ended? It isn't rocket surgery, as the Ivy League professor said.
On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush's tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero. Lots and lots of other changes will also occur as a result of the sunset provision in the Bush tax cuts.
Tax rates have been and will be raised on income earned from off-shore investments. Payroll taxes are already scheduled to rise in 2013 and the Alternative Minimum Tax (AMT) will be digging deeper and deeper into middle-income taxpayers. And there's always the celebrated tax increase on Cadillac health care plans. State and local tax rates are also going up in 2011 as they did in 2010. Tax rate increases next year are everywhere.
.Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.
Also, the prospect of rising prices, higher interest rates and more regulations next year will further entice demand and supply to be shifted from 2011 into 2010. In my view, this shift of income and demand is a major reason that the economy in 2010 has appeared as strong as it has. When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe "double dip" recession.
In 1981, Ronald Reagan—with bipartisan support—began the first phase in a series of tax cuts passed under the Economic Recovery Tax Act (ERTA), whereby the bulk of the tax cuts didn't take effect until Jan. 1, 1983. Reagan's delayed tax cuts were the mirror image of President Barack Obama's delayed tax rate increases. For 1981 and 1982 people deferred so much economic activity that real GDP was basically flat (i.e., no growth), and the unemployment rate rose to well over 10%.
But at the tax boundary of Jan. 1, 1983 the economy took off like a rocket, with average real growth reaching 7.5% in 1983 and 5.5% in 1984. It has always amazed me how tax cuts don't work until they take effect. Mr. Obama's experience with deferred tax rate increases will be the reverse. The economy will collapse in 2011.
Consider corporate profits as a share of GDP. Today, corporate profits as a share of GDP are way too high given the state of the U.S. economy. These high profits reflect the shift in income into 2010 from 2011. These profits will tumble in 2011, preceded most likely by the stock market.
In 2010, without any prepayment penalties, people can cash in their Individual Retirement Accounts (IRAs), Keough deferred income accounts and 401(k) deferred income accounts. After paying their taxes, these deferred income accounts can be rolled into Roth IRAs that provide after-tax income to their owners into the future. Given what's going to happen to tax rates, this conversion seems like a no-brainer.
The result will be a crash in tax receipts once the surge is past. If you thought deficits and unemployment have been bad lately, you ain't seen nothing yet.
People can change the volume, the location and the composition of their income, and they can do so in response to changes in government policies.
It shouldn't surprise anyone that the nine states without an income tax are growing far faster and attracting more people than are the nine states with the highest income tax rates. People and businesses change the location of income based on incentives.
Likewise, who is gobsmacked when they are told that the two wealthiest Americans—Bill Gates and Warren Buffett—hold the bulk of their wealth in the nontaxed form of unrealized capital gains? The composition of wealth also responds to incentives. And it's also simple enough for most people to understand that if the government taxes people who work and pays people not to work, fewer people will work. Incentives matter.
MoreGay Couples Get Equal Tax Treatment IRS Nears Action on Church Pensions Complete Coverage: WSJ.com/Taxes .
People can also change the timing of when they earn and receive their income in response to government policies. According to a 2004 U.S. Treasury report, "high income taxpayers accelerated the receipt of wages and year-end bonuses from 1993 to 1992—over $15 billion—in order to avoid the effects of the anticipated increase in the top rate from 31% to 39.6%. At the end of 1993, taxpayers shifted wages and bonuses yet again to avoid the increase in Medicare taxes that went into effect beginning 1994."
Just remember what happened to auto sales when the cash for clunkers program ended. Or how about new housing sales when the $8,000 tax credit ended? It isn't rocket surgery, as the Ivy League professor said.
On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush's tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero. Lots and lots of other changes will also occur as a result of the sunset provision in the Bush tax cuts.
Tax rates have been and will be raised on income earned from off-shore investments. Payroll taxes are already scheduled to rise in 2013 and the Alternative Minimum Tax (AMT) will be digging deeper and deeper into middle-income taxpayers. And there's always the celebrated tax increase on Cadillac health care plans. State and local tax rates are also going up in 2011 as they did in 2010. Tax rate increases next year are everywhere.
.Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.
Also, the prospect of rising prices, higher interest rates and more regulations next year will further entice demand and supply to be shifted from 2011 into 2010. In my view, this shift of income and demand is a major reason that the economy in 2010 has appeared as strong as it has. When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe "double dip" recession.
In 1981, Ronald Reagan—with bipartisan support—began the first phase in a series of tax cuts passed under the Economic Recovery Tax Act (ERTA), whereby the bulk of the tax cuts didn't take effect until Jan. 1, 1983. Reagan's delayed tax cuts were the mirror image of President Barack Obama's delayed tax rate increases. For 1981 and 1982 people deferred so much economic activity that real GDP was basically flat (i.e., no growth), and the unemployment rate rose to well over 10%.
But at the tax boundary of Jan. 1, 1983 the economy took off like a rocket, with average real growth reaching 7.5% in 1983 and 5.5% in 1984. It has always amazed me how tax cuts don't work until they take effect. Mr. Obama's experience with deferred tax rate increases will be the reverse. The economy will collapse in 2011.
Consider corporate profits as a share of GDP. Today, corporate profits as a share of GDP are way too high given the state of the U.S. economy. These high profits reflect the shift in income into 2010 from 2011. These profits will tumble in 2011, preceded most likely by the stock market.
In 2010, without any prepayment penalties, people can cash in their Individual Retirement Accounts (IRAs), Keough deferred income accounts and 401(k) deferred income accounts. After paying their taxes, these deferred income accounts can be rolled into Roth IRAs that provide after-tax income to their owners into the future. Given what's going to happen to tax rates, this conversion seems like a no-brainer.
The result will be a crash in tax receipts once the surge is past. If you thought deficits and unemployment have been bad lately, you ain't seen nothing yet.
Tuesday, June 1, 2010
Chase’s Foreclosure Disgrace
News Article by: Greg Kaufman
If Big Banks Won’t Play by the Rules, Where Does That Leave Homeowners in Distress?
Here’s the problem with the Obama Administration’s approach to foreclosure prevention: it depends entirely on the banks voluntarily doing the right thing, even when homeowners have held up their end of the bargain to prevent a foreclosure.
Take the case of three homeowners in Queens, New York. Each one met the requirements for a “permanent” modification of their mortgages–which means a reduction of payments for five years–as laid out under the Administration’s Home Affordable Modification Program (HAMP). They did so by making three months of trial modification payments to JP Morgan Chase and verifying their incomes. They had contracts with Chase and fulfilled their obligations under those contracts.
So how did Chase reward them?
Permanent modifications denied. Delinquency reports to credit rating agencies issued. And the cherry on top–foreclosure.
These three homeowners-each working full-time, with at least one job, working up to six days a week–are fighting back. With the help of the Urban Justice Center, a non-profit legal services provider in New York, they filed suit last Tuesday against the bank in federal court in Brooklyn.
“We want Chase to live up to the contracts that they entered into and give permanent modifications to these homeowners,” said Ted De Barbieri, an attorney at the Urban Justice Center. “If you’re going to sign onto HAMP, you have to follow the rules. These homeowners followed the rules, and now it’s time for Chase to.”
A spokesman for the bank told the Wall Street Journal that Chase would be “happy to talk with the customers, review their situations and see if we can help.”
This official response stands in stark contrast to what the homeowners have experienced in dealing with Chase up until now. De Barbieri said that prior to filing the lawsuit, even with the help of community-based HUD certified home loan counselors and the Urban Justice Center, the homeowners had been unable to get an adequate response from Chase.
Three Life Stories
Here’s a little more information about these three citizens who Chase–post-lawsuit–suddenly says it will try to help.
Shanaz Begum lives with her husband and two sons–one of whom is headed to college in the fall–in a home they purchased in 2005. She fell behind on mortgage payments in September 2008 after she lost her job as manager of a retail business. Begum now works for the Department of Transportation on weekdays, and on weekends as a server at Boston Market. Her husband is a full-time taxicab driver. Begum has made trial modification payments of $1576 on time for eight months.
Tamara Williams lives with her two sons in a home she purchased in 2005 and has made three on-time trial payments of $1,274 this winter. She fell behind on her mortgage when she lost her job in November 2008, and went into foreclosure four months later. She now works doing post-renovation and demolition cleanup for a contractor and also attends school.
The lawsuit alleges that Chase instructed homeowner Alex Lam to deliberately miss mortgage payments in order to become eligible for a modification. Lam bought his house in 2002 and refinanced in 2005. Lam says he skipped payments in February and March of 2009 on the bank’s advice. Those are the only payments he has ever missed but he now faces foreclosure. Chase says its Net Present Value (NPV) test–required by HAMP to determine if the value of a modification is worth more to investors than a foreclosure–is the reason Lam isn’t receiving a modification. The infuriating thing about the NPV is that HAMP doesn’t require banks to disclose the data they use for their analysis. Banks don’t exactly have a stellar record for good behavior where transparency is lacking.
“The Obama administration’s program was supposed to give people like me a lifeline and a chance to save our homes. But if the banks won’t play by the rules, what else are we supposed to do?” said Williams.
That’s why more and more homeowners are turning to the courts. Reporter Paul Kiel of ProPublica writes that “at least 50 homeowners have recently filed lawsuits alleging the servicer foreclosed with a loan mod request pending or even while they were on a payment plan.” De Barbieri told me, “We’re part of an advocate community that’s representing homeowners who are in similar situations around the country. There are [similar] lawsuits in Massachusetts, Ohio, California, and Washington State. It’s one tool that advocates are using to do what’s right.”
As Kiel notes, there are still no penalties for servicers who don’t comply with the rules. According to the Wall Street Journal Treasury Secretary Timothy Geithner recently “threatened to crack down on banks that don’t ‘hold up their end’ of the bargain.”
But Treasury was whistling that same tune at a hearing in December. “We’re putting them on notice, and then we will exact penalties of them, and be publicly outspoken about who’s performing well and who’s not,” railed Herbert Allison, Assistant Secretary for Financial Stability. “We’re going to move to the point where we’re disciplining the banks if they don’t perform better than they are today.”
Move when exactly? I’m not sure which planet the Obama Administration is living on that they still believe the banks will do the right thing simply because they are being asked to–or because they are being offered a few carrots (a couple thousand dollars per modification–not even a garnish for the banks). Here on Earth, where the rest of us reside, we know that nothing will change until banks are forced to do the right thing.
Congressional Weakness
For that reason, the House passed legislation that would allow bankruptcy judges to modify the principal on people’s mortgages–known as a “cramdown”–for primary residences just like they are able to do for rich people’s vacation homes. It was defeated in the Senate. Why haven’t we seen one of President Obama’s virtuoso performances demanding that the weak-kneed Senate take it up again–perhaps even as an amendment to the financial reform bill?
Representatives Raúl Grijalva and Marcy Kaptur have also introduced legislation that would allow homeowners the right to rent at fair market rental value for five years once they receive a foreclosure notice. Not only would that allow homeowners time to find alternative affordable housing, or new employment, it would give them time to expose banks like Chase for any bad behavior. The right to rent concept was initially proposed by Dean Baker, co-director of the Center for Economic and Policy Research, and has been embraced by individuals across the political spectrum.
Grijalva and Kaptur also signed a letter to Secretary Geithner along with twenty-five House Democratic colleagues suggesting the establishment of “a new federal entity” modeled after FDR’s Home Owners’ Loan Corporation (HOLC), to be capitalized through remaining TARP funds. The letter notes, “During the Great Depression, the government successfully acquired, refinanced, serviced and sold more than a million mortgages, accounting for one in every five non-farm dwellings in the United States. Such actions prevented untold foreclosures, and even managed to return a small profit to the Treasury.”
Finally, in towns like Philadelphia, mandatory mediation has proven effective in foreclosure prevention. Rhode Island Democratic Senator Jack Reed has introduced legislation that would create an $80 million grant program to support those kinds of efforts.
A Treasury spokesman told me the Administration is very concerned about moral hazard–rewarding people for taking out loans they never should have taken. But clearly the most hazardous moral around is continuing to cater to the banks’ interests.
It doesn’t matter whether someone is losing their home because of a bad subprime mortgage, a lost job, or because they owe more on the mortgage than the home is now worth. Every foreclosure decreases the property value of a neighbor’s home. Every dollar lost in property value–and over $7 trillion in wealth has now been lost by American households–reduces local and state revenues. As revenues are lost, so are jobs and services. And the vicious cycle which devastates our communities continues. A HAMP program that was supposed to help three to four million homeowners has only made 230,000 permanent modifications. March set a new monthly record with 367,056 foreclosure filings, up nearly 19 percent from February, according to RealtyTrac, which has been tracking foreclosure filings since 2005.
As John Taylor, president and CEO of the National Community Reinvestment Coalition, recently put it, “Everybody has a dog in this hunt when it comes to these foreclosures.”
This week in Brooklyn, three Queens’ homeowners took action. They said to the banks, “No more,” and the court is giving Chase until the end of the month to respond.
The time for President Obama to show that kind of toughness with the banks is tragically overdue.
If Big Banks Won’t Play by the Rules, Where Does That Leave Homeowners in Distress?
Here’s the problem with the Obama Administration’s approach to foreclosure prevention: it depends entirely on the banks voluntarily doing the right thing, even when homeowners have held up their end of the bargain to prevent a foreclosure.
Take the case of three homeowners in Queens, New York. Each one met the requirements for a “permanent” modification of their mortgages–which means a reduction of payments for five years–as laid out under the Administration’s Home Affordable Modification Program (HAMP). They did so by making three months of trial modification payments to JP Morgan Chase and verifying their incomes. They had contracts with Chase and fulfilled their obligations under those contracts.
So how did Chase reward them?
Permanent modifications denied. Delinquency reports to credit rating agencies issued. And the cherry on top–foreclosure.
These three homeowners-each working full-time, with at least one job, working up to six days a week–are fighting back. With the help of the Urban Justice Center, a non-profit legal services provider in New York, they filed suit last Tuesday against the bank in federal court in Brooklyn.
“We want Chase to live up to the contracts that they entered into and give permanent modifications to these homeowners,” said Ted De Barbieri, an attorney at the Urban Justice Center. “If you’re going to sign onto HAMP, you have to follow the rules. These homeowners followed the rules, and now it’s time for Chase to.”
A spokesman for the bank told the Wall Street Journal that Chase would be “happy to talk with the customers, review their situations and see if we can help.”
This official response stands in stark contrast to what the homeowners have experienced in dealing with Chase up until now. De Barbieri said that prior to filing the lawsuit, even with the help of community-based HUD certified home loan counselors and the Urban Justice Center, the homeowners had been unable to get an adequate response from Chase.
Three Life Stories
Here’s a little more information about these three citizens who Chase–post-lawsuit–suddenly says it will try to help.
Shanaz Begum lives with her husband and two sons–one of whom is headed to college in the fall–in a home they purchased in 2005. She fell behind on mortgage payments in September 2008 after she lost her job as manager of a retail business. Begum now works for the Department of Transportation on weekdays, and on weekends as a server at Boston Market. Her husband is a full-time taxicab driver. Begum has made trial modification payments of $1576 on time for eight months.
Tamara Williams lives with her two sons in a home she purchased in 2005 and has made three on-time trial payments of $1,274 this winter. She fell behind on her mortgage when she lost her job in November 2008, and went into foreclosure four months later. She now works doing post-renovation and demolition cleanup for a contractor and also attends school.
The lawsuit alleges that Chase instructed homeowner Alex Lam to deliberately miss mortgage payments in order to become eligible for a modification. Lam bought his house in 2002 and refinanced in 2005. Lam says he skipped payments in February and March of 2009 on the bank’s advice. Those are the only payments he has ever missed but he now faces foreclosure. Chase says its Net Present Value (NPV) test–required by HAMP to determine if the value of a modification is worth more to investors than a foreclosure–is the reason Lam isn’t receiving a modification. The infuriating thing about the NPV is that HAMP doesn’t require banks to disclose the data they use for their analysis. Banks don’t exactly have a stellar record for good behavior where transparency is lacking.
“The Obama administration’s program was supposed to give people like me a lifeline and a chance to save our homes. But if the banks won’t play by the rules, what else are we supposed to do?” said Williams.
That’s why more and more homeowners are turning to the courts. Reporter Paul Kiel of ProPublica writes that “at least 50 homeowners have recently filed lawsuits alleging the servicer foreclosed with a loan mod request pending or even while they were on a payment plan.” De Barbieri told me, “We’re part of an advocate community that’s representing homeowners who are in similar situations around the country. There are [similar] lawsuits in Massachusetts, Ohio, California, and Washington State. It’s one tool that advocates are using to do what’s right.”
As Kiel notes, there are still no penalties for servicers who don’t comply with the rules. According to the Wall Street Journal Treasury Secretary Timothy Geithner recently “threatened to crack down on banks that don’t ‘hold up their end’ of the bargain.”
But Treasury was whistling that same tune at a hearing in December. “We’re putting them on notice, and then we will exact penalties of them, and be publicly outspoken about who’s performing well and who’s not,” railed Herbert Allison, Assistant Secretary for Financial Stability. “We’re going to move to the point where we’re disciplining the banks if they don’t perform better than they are today.”
Move when exactly? I’m not sure which planet the Obama Administration is living on that they still believe the banks will do the right thing simply because they are being asked to–or because they are being offered a few carrots (a couple thousand dollars per modification–not even a garnish for the banks). Here on Earth, where the rest of us reside, we know that nothing will change until banks are forced to do the right thing.
Congressional Weakness
For that reason, the House passed legislation that would allow bankruptcy judges to modify the principal on people’s mortgages–known as a “cramdown”–for primary residences just like they are able to do for rich people’s vacation homes. It was defeated in the Senate. Why haven’t we seen one of President Obama’s virtuoso performances demanding that the weak-kneed Senate take it up again–perhaps even as an amendment to the financial reform bill?
Representatives Raúl Grijalva and Marcy Kaptur have also introduced legislation that would allow homeowners the right to rent at fair market rental value for five years once they receive a foreclosure notice. Not only would that allow homeowners time to find alternative affordable housing, or new employment, it would give them time to expose banks like Chase for any bad behavior. The right to rent concept was initially proposed by Dean Baker, co-director of the Center for Economic and Policy Research, and has been embraced by individuals across the political spectrum.
Grijalva and Kaptur also signed a letter to Secretary Geithner along with twenty-five House Democratic colleagues suggesting the establishment of “a new federal entity” modeled after FDR’s Home Owners’ Loan Corporation (HOLC), to be capitalized through remaining TARP funds. The letter notes, “During the Great Depression, the government successfully acquired, refinanced, serviced and sold more than a million mortgages, accounting for one in every five non-farm dwellings in the United States. Such actions prevented untold foreclosures, and even managed to return a small profit to the Treasury.”
Finally, in towns like Philadelphia, mandatory mediation has proven effective in foreclosure prevention. Rhode Island Democratic Senator Jack Reed has introduced legislation that would create an $80 million grant program to support those kinds of efforts.
A Treasury spokesman told me the Administration is very concerned about moral hazard–rewarding people for taking out loans they never should have taken. But clearly the most hazardous moral around is continuing to cater to the banks’ interests.
It doesn’t matter whether someone is losing their home because of a bad subprime mortgage, a lost job, or because they owe more on the mortgage than the home is now worth. Every foreclosure decreases the property value of a neighbor’s home. Every dollar lost in property value–and over $7 trillion in wealth has now been lost by American households–reduces local and state revenues. As revenues are lost, so are jobs and services. And the vicious cycle which devastates our communities continues. A HAMP program that was supposed to help three to four million homeowners has only made 230,000 permanent modifications. March set a new monthly record with 367,056 foreclosure filings, up nearly 19 percent from February, according to RealtyTrac, which has been tracking foreclosure filings since 2005.
As John Taylor, president and CEO of the National Community Reinvestment Coalition, recently put it, “Everybody has a dog in this hunt when it comes to these foreclosures.”
This week in Brooklyn, three Queens’ homeowners took action. They said to the banks, “No more,” and the court is giving Chase until the end of the month to respond.
The time for President Obama to show that kind of toughness with the banks is tragically overdue.
Subscribe to:
Posts (Atom)