Stopping Foreclosure
In the last five years, home prices have plummeted by about 30%. This decline has taken an enormous toll on American homeowners and those on the verge of owning homes. Millions are facing foreclosure at some point in their future, and many others are struggling to keep up with payments on their current mortgages.
Foreclosure is a devastating event for all involved - from lenders and servicers, to homeowners and communities.
Stopping foreclosure is a complex challenge requiring a unified and comprehensive approach by stakeholders in all levels of housing. However, it is possible to prevent foreclosure and minimize foreclosures - but only if lenders provide the full funding for their mortgages. And only if servicers meet their obligations both to homeowners and taxpayers.
The following three steps are critical in providing lenders with the capital that they need to make any real difference:
1) Identify the number of sick loan pools; 2) Establish a fund with government partners to purchase these loans; and 3) Commit to purchase repurchased loans on an ongoing basis, without regard for potential losses or otherwise.
The mismanagement of the mortgage system and the impact of the housing crisis has tarnished America's reputation as the world's foremost economic power. The housing crisis cost taxpayers billions of dollars and resulted in a massive loss of human potential. But there is cause for optimism, and in a report released today, Attac (www.attac.org) makes recommendations to put this crisis behind Americans and to turn this negative into a positive for all involved.
For information: Jennifer Mathieu-López, jennifer@attac.org 415-259-6256 or David Goodman dg@attac.org These recommendations are part of the report Staring foreclosure: Securing the future for Americans and their homes , launched at a press conference at the National Press Club.
Author:, ATTAC-USA, http://www.attac-usa.org/?p=682
Date: September 30, 2010 05:15 AM EST
Title: Attacking Foreclosure on All Fronts (and Kicking Out the Clowns)
No more excuses for banks that aren't playing ball! The Attac report argues that to solve the crisis, homeowners should be able to renegotiate loans, and servicers should be taken over by municipalities or non-profits to protect public interest. (With the failure of various bailout and relief plans, there's also a case for nationalization.)
There's no need to revamp the whole mortgage system. The report is focused on mortgages that are going bad, in part because of the big bets and risky lending practices that fueled the bubble. "The system is mature enough that we can operate it more like a normal insurance company than what it was," Attac's David Goodman told me.
One way to attack the problem would be changed investor contracts. Goodman thinks that borrowing money to invest in mortgage-backed securities—where lenders take on loans from different originators—is inherently risky and should be rethought by exchange-traded funds or mutual funds. Another tack would be a bulk settlement fund where servicers and investors get together and decide how to divide up the losses. The details of this arrangement are fuzzy, but it could reduce the so-called moral hazard problem, since banks might be more careful if they have to worry about fixing bad loans; it could also make it easier for investors to structure their portfolios.
Attac isn't just interested in precipitating these changes; they want banks to actually pursue them. Banks have plenty of cash reserves—which they don't seem keen on using to avoid foreclosure when they should. "We argue that state attorneys general need to subpoena bank executives and demand that they do the right thing," Goodman says.
The banks' unwillingness to act is certainly problematic, but Attac's moves would be a big help as well. The announcement of the report comes after the launch of the Plumbers & Pipefitters Pension Fund, a public-private partnership that forces three troubled mortgage servicers (CitiMortgage, Bank of America and JPMorgan Chase) to pour some $4 billion into a pool of low-interest loans for energy efficiency and other green programs. While not perfect, this solution paves the way for more robust state action.
"It's a testament to the work that Attac and others have done," Goodman says. "People are beginning to recognize the moral imperative, and they're seeing that these markets have failed."
http://www.grist.org/article/2010-09-29-attacking-foreclosure-on-all-fronts-and-kicking-out-the-clowns
Organized by: Attac (association) http://en.wikipedia.org/wiki/Attac_(association)
Reply #1: Monday, October 4, 2010 at 10:30 am | IP Logged
Fantastic article. The crisis dates to the monetary system of fractional reserve, fractional lending, and fiat money. The root cause has been financial deregulation in which commercial banks were allowed to make huge gambles with depositor's money.
The IMF recently did an analysis of the banking system and made it's own recommendations including a banking tax and an end to off balance sheet investment vehicles that are hidden from regulators . What is interesting about the article is that it recommends nationalization of mortgage holders.
By nationalization they mean a government takeover of mortgage servicing companies. If a bank is not able to service its loans it should be put into receivership and the losses shared with the servicer. If a state needs more money for future needs they can use the old mortgages as collateral and sell them to investors. They might also be sold to investors who would use the tax dollars from these sales to pay for projects that benefit the public.
How do you think that this would restore confidence in homeowners? Those of us who are trusting while others are scammers have been betrayed by those we trusted. I'm talking about religious leaders, charities, churches, politicians, and other power brokers who promised us more than they could deliver because they were too afraid of what their fellow bankers might say or do.
Conclusion: You won't like what I have to say. The only way to restore confidence in the American people is for the government to give a blanket mortgage forgiveness scheme and put some of our financial idiots in jail. These thieves will never be able to live with themselves as long as they are free. They must be jailed so they can stew in their own misery.
We need a way forward before all of us are living on the streets, freezing in the winter and getting sunburned by the summer. The homeless problem is terrible and it will get worse until we start taking action.; I haven't lived under socialism, but I've lived under communism, fascism and what we have now, plutocracy (rule by the rich).
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Stopping Foreclosure