"Homeowners: Drop Dead!" is a pretty apt summary of the message Hank Paulson and the Bush administration have sent to the American people this week.
Taxpayer purchases of "distressed assets," we'd been told by every administration figure still standing, was the only way to stabilize the nation's economy and help homeowners threatened by foreclosure keep their piece of the American Dream. And I believed them.
Absent consultation with Congress and without coordinating with the other 19 G-20 countries coming to Washington tomorrow for a conference on the global financial crisis, a brand new program is being rolled out -- one that has nothing to do with the problem that most believe created the current crisis.
Addressing homeowner woes is apparently too complicated, so Hank wants to move on to massive infusions for big banks and help for student loans and consumer credit.
Paulson's strategy is mystifying.
My constituents want to stay in their homes. There were 57,000 foreclosure filings last month in California, and 100,000 in August. (The only reason numbers have gone down is because of a wise state-imposed 30-day moratorium on foreclosures.) The recovery package I voted for twice was supposed to help homeowners, not fund a bank consolidation program.
Then there is the related Detroit auto bailout. Torrance, CA is North American headquarters of Toyota and Honda -- two automakers that are profitable, innovative and employ thousands of Americans. So as we talk about Detroit, let's remember that there are better business models that operate in America.
What to do? I think that Sheila Bair -- head of the FDIC -- has the best ideas (it usually takes a woman to figure these things out). For $40 billion, she would reach millions of homeowners by guaranteeing fifty percent of the loss on the mortgages being renegotiated. The funds would come out of the $700 billion already appropriated.
I remember Hank saying he knew how to do this. His team said toxic mortgages are like cancer. Once they were removed, the liquidity problem would be solved and banks would lend again.
Anxious homeowners are asking, "When is this $700 billion bailout going to reach us?" Fair question.
Your post ends with: "Anxious homeowners are asking, "When is this $700 billion bailout going to reach us?"
Why wasn't this YOUR QUESTION before voting AYE on the bailout?
You promote yourself as an advocate for the people. Right now you're being considered for Secretary of Homeland Security, CIA Director, and Director of National Intelligence in the Obama administration. You identify here as concerned with Americans' welfare, but you fail to identify as the Congresswoman who authored and covertly pushed through Congress the "Violent Radicalization and Homegrown Terrorism Prevention Act of 2007," which endangers Americans' freedoms. I refer you to:
http://www.huffingtonpost.com/linda-milazzo/pres-elect-obama-no-to-wa_b_142569.html
You use this forum to promote as a hero, but your record in Congress, including your AYE on the bailout, tell another TRUTH. Here's an excerpt from YOUR website addressing your AYE vote on the bailout:
"Recklessness on Wall Street and fecklessness in Washington have brought the American economy to the brink of disaster... But passage of this bill... is urgent and necessary to reassure the American people and global financial markets that our economy is secure and major reforms are coming."
"RECKLESSNESS ON WALL STREET"??!! You gave 700 billion taxpayer dollars to Paulson, a Wall Street INSIDER. Do you understand why we question your judgement?
I closed loans for three years and seen some good and some bad from it. The difference between the two outcomes was the amount of prudence from the homeowners. I remember conducting closings on homes that the borrowers where just taking all the rope that the market could offer them to hang themselves with. I had one borrower that I visited three times in one year and on each visit they had dug themselves deeper into a lifestyle of conspicuous consumption. The first visit was a boat, the second a pair of jet skis and the the final was rims for their SUV. And these people were not alone.
Believe it or not, it was possible to survive this housing bubble without going into foreclosure. In fact, it was even possible to not only survive but also end up in a favorable financial position - as did the majority of homeowners. So the question remains is how do we separate those that deserve to be helped from those that need to deal with their own issues of greed? Without answering this question, these "victims" will used again by the next group of charlatans offering something for nothing.
How dare they be part of the American economy using their refinance to buy cars, jet skis, paying their children's college tuition, and home improvement!
They should've all at least taken a few classes in law like you to understand the legalese of those lending docs and their rights under the Truth In Lending Act, and do some CPA classes to make sure they knew 100% what they were getting into before they had the unmitigated temerity to refinance. It's all their fault. ALL of it, those greedy buggers.
They took advantage of those creative but philanthropic sub-prime lenders that only wanted to help us. Right?
Secondly, I would also like to make the point that this isn't just a sub-prime issue. There are probably more borrowers with AAA loans that they cannot afford. They will be able to maintain a little longer because they have more fake credit to burn through. The bottom line is that if you lived outside your means then you are probably in trouble.
Lastly, I think there has to a point in which consumer responsibility becomes and issue. This bubble was two-fold: poor lending models along and those people who were wiling to exploit them. Thus, the market needs move through and punish both. This is the only way that this vicious cycle will stop. If not, these people will only enable the next bubble.
In South Florida we are inundated with inventory of homes on the market. Try and negotiate with a mortgage company before you're behind on the payments, while there's still a chance for survival, no way. Let's wait til more people's credit is shot to hell try and negotiate then. Let's wait un til they have exhausted every asset right down to the broken gold earrings to cash in and pay for our mortgages.
http://saturdaymorningpost.com/2008/10/31/home-sweet-home/