Noting
that a Federal judge in California was slated to soon okay
the “largest residential fair-lending settlement in history”
ever reached by the Department of Justice in a bias case,”
Attorney Anita Hill commented in Time magazine last
week that in putting together the deal the U.S. Attorney’s
office is to be lauded. She
added “without Countrywide’s admission of fault for overcharging
and steering minorities into high cost loans when they qualified
for conventional loans, it’s uncertain whether the agreement
will stave off future unlawful behavior. Moreover, it certainly
won’t be enough to repair the damage that has been done
to those individuals and the communities in which they reside.”
The
agreement requires Countrywide Financial Corporation - now
part of Bank of America - to pay $335 million to African
American and Latino homeowners who have been found - in
Hill’s words - “victims of Countrywide’s racially motivated
fraud and deceit. To begin with, the $10,000 compensation
some of the 200,000 Countrywide customers covered in the
settlement are entitled to is likely not enough to put them
back in their homes, let alone rebuild their neighborhoods,”
Hill wrote. Hill, author of Reimagining
Equality: Stories of Gender, Race, and Finding Home,
is a professor of social policy, law and women’s studies
at Brandeis University.
That
some of the nation’s leading banks and mortgage lending
institutions were engaged in fraudulent, predatory and discriminatory
lending practices was obvious over four years ago - before
it was clear public knowledge that the distortion they created
in the housing market was central to the country’s continuing
economic crisis. The devious ways that major financial institutions
went about trading, hiding or escaping responsibility for
the mortgage mess they had created lay at the heart of the
“great recession” in the U.S.,
but were also instrumental in the economic difficulties
that show no signs of abating in Europe.
The
unemployment problem in the country today means depravation
and hardship for millions of people. So, too, does the plague
of housing foreclosures. So long as it persist, economist
say, there is next to no possibility of anything approaching
an economy recovery.
“It
was 35 years ago that US
president Jimmy Carter declared the energy crisis ‘the moral
equivalent of war.’ His
use of martial language might not have galvanized Americans
in the way he hoped, but it still is useful to think of
economic struggles in military terms,” wrote the Financial
Times Lex column January 10. “Today’s enemy is the housing
crisis and the fight is going badly. Prices are down by
a third and there is a glut of foreclosures, with another
wave coming. Allowing more foreclosures not only further
depresses this pool of wealth but makes it tough to normalize
interest rate policy,” the column said.
On
January 11, the Federal Reserve said the country’s housing
market remains stagnant. The word it used was “sluggish.”
Or, as political commentator and for New York governor Eliot Spitzer put it: “… the mortgage crisis continues,
depressing the middle class.”
There
are an estimated 3.5 million seriously delinquent mortgages
out there. There were nearly 2.7 million foreclosure filings
on about 1.9 million homes last year. That’s down from 2007,
but it’s still about one out of every 69 homes in the country.
Those
tracking the data have suggested the number will be higher
this year. The reason? The process Atty. Hill described:
“The lack of clarity regarding many of the documentation
and legal issues plaguing the foreclosure industry means
that we are continuing to see a highly dysfunctional foreclosure
process that is inefficiently dealing with delinquent mortgages,
particularly in states with a judicial foreclosure process,”
Brandon Moore, the CEO of RealtyTrac, told the McClatchy
newspapers.
And
yet, neither the Congress nor the Obama Administration has
come up with any measures that would seriously stem the
tide of foreclosures. Nor, as Hill pointed out, result in
justice or relief for those conned by the financiers, or
guarding against the process resuming.
Last
year, there were nearly 2.7 million foreclosure filings
- which included default notices, scheduled property auctions
and bank repossessions - were reported on roughly 1.9 million
properties last year. That works out to about one filing
for every 69 U.S.
homes. That rate and total foreclosure activity in 2011
were at the lowest annual levels since the housing market
imploded in 2007. But the decline may be short-lived, as
lenders work their way through the backlog of delayed filings
stemming from “robo-signing” scandals.
“We
expect that trend to continue this year, boosting foreclosure
activity for 2012 higher than it was in 2011, though still
below the peak of 2010,” Moore said.
“The
Foreclosure Crisis: A Nation in Denial,” is the title of
a commentary by Bruce Judson on Huffington Post January
9. “As we start the New Year, the executive branch and Congress
continue to pretend the gravest risk to our economy and
social stability does not exist: the ongoing foreclosure
crisis,” wrote Judson, entrepreneur-in-residence at the
Yale Entrepreneurial Institute and author of It
Could Happen Here: America on the Brink. “The financial
crisis began with the housing crisis and it will not end
until we resolve housing. Government policymakers who seemingly
ignore this basic fact are leading the nation to another
potential catastrophe.”
In
2007, only a few observers were warning of the devastating
effect all this was having, especially on African American
and Latino communities from one end of the country to the
other.
“Today,
an estimated 29 percent of all homes with mortgages are
underwater. In addition, at least one respected analyst
estimates that a total of 14 million homes will be foreclosed
on from 2007 to the end of the crisis,” Judson wrote. “This
represents a hard-to-imagine one in every four mortgages.
With foreclosures increasing, there is now such a looming
imbalance of supply and demand that, as the Fed notes, further
decreases in home prices are likely. Some believe home price
reductions of another 20 percent are likely. This would,
in all likelihood, have disastrous consequences on at least
three fronts - and ripple effects that are impossible to
predict.”
Judson
wrote, “What is shocking is the almost total lack of attention
the administration has paid to suffering homeowners. It’s
hard for me (and apparently Chairman Bernanke) to understand
how the administration can possibly hope to revitalize the
economy without seriously addressing the overhang of consumer
housing debt. Moreover, the failure to address the risk
this poses for a broader economic catastrophe borders on
the inexcusable.”
“If
President Obama is serious about saving the middle class
and reducing income inequality, the administration needs
to be far more aggressive in developing policies to keep
homeowners as homeowners. As
I have written before, this was one of FDR’s central goals
in the New Deal. Detailed proposals for addressing this
extraordinary risk do exist. However, they will require
a determined effort. There are solutions, but they are not
simple.”
“What
is most important right now is that we recognize we are
in a lifeboat that will not reach land,” wrote Judson. “We
need to focus on implementing a meaningful solution to the
problem. A clock is ticking and Washington
needs to acknowledge that a witching hour is approaching.”
Three
years ago, with much fanfare, the Obama Administration launched
the Home Affordable Modification Program with a target of
assisting over 3 million distressed homeowners. As of the
end of the year, it is said to have aided somewhere in the
vicinity of 750,000. One problem is that it’s voluntary
and the bankers aren’t in a voluntary mood.
Oh,
and those other guys running for office?
In
their debate, most ignore the problem. For the presumed
front-runner it’s apparently a piece of cake, something
“the market” can handle all by itself.
Nevada leads the nation in both joblessness and
foreclosures. One out of every 16 homes in the state was
subject to some type of foreclosure filing in 2011, according
to RealtyTrac, an online foreclosure data firm.
“Frontrunner
Mitt Romney hasn’t pandered to struggling Nevada
homeowners,” Arthur Delany wrote on Huffington Post
last week. “He told the Las Vegas Review-Journal in October
he supports the government stepping aside: “Don’t
try to stop the foreclosure process. Let it run its course
and hit the bottom.”
“It’s
not likely Romney will have much more to say on his next
visit,” wrote Delany. “The candidates didn’t talk foreclosure
policy in Iowa,
even though the state attorney general is leading national
foreclosure settlement negotiations with the country’s biggest
banks. Only Jon Huntsman, who didn’t bother to campaign
in the Iowa, has
taken a position on the settlement.”
The
Huntsman website says the candidate, if elected, would “direct
the Department of Justice to take the lead in investigating
and brokering an agreement to resolve the widespread legal
abuses such as the robo-signing scandal that unfolded in
the aftermath of the housing bubble. This is a basic question
of rule of law; in this country no one is above the law.”
“Because
if we actually believed the lie so often told that if we
just worked hard and put our noses to the grindstone that
we could be Just like Mitt then it wouldn’t be so bad,”
wrote Pamela Hilliard Owens on the Black Liberal Blogger
last week. “But, see, we’re not stupid. Because being broke
and poor and being stupid are not synonymous.
“Just
as an example? We see things like the Countrywide scandal
where a huge corporation ripped off thousands of African
American and Hispanic homeowners (my guess is none of them
were multi-millionaires), charging them more for mortgages
than similarly qualified white folks, just because they
could. Sure they got dinged $335 million as a penalty, and
congrats to US Attorney Eric Holder for at least getting
something out of the bastards, even it wasn’t near enough.
But what about all those families whose lives are now ruined
because of Countrywide? Who is going to put them back together
and make them whole?”
“These
are the kind of things that happen when the deck is stacked,
which are the kind of things that gave rise to the Occupy
movement and many more similar movements around the world
that explode when people get fed up with inequity and injustice.
But God knows if we could all just live the Life of Mitt?”
“All
would be right with the world, wouldn’t it, kids?”
“Ultimately,
after the financial market collapsed, the government bailed
out the banking industry, including Bank of America, which
now owns Countrywide,” wrote Hill in Time. The banking
industry rebounded because the government concluded that
a secure banking system was in the public’s interest. Yet,
the playing field won’t be level as long as American communities
pay for the corrupt decisions made by lenders. A federal
effort targeted at restoring blighted neighborhoods is needed
to clean up the mess left behind by such egregious predatory
practices as those alleged in the Department’s reports and
pleadings.”
“…
Funding to restore the neighborhoods Holder’s team of attorneys,
economists and mathematical statisticians have identified
would enhance the DOJ’s effectiveness as well as assist
state and local governments currently dealing with costs
associated with these sites. As importantly, it would show
our federal government’s commitment to the protections enshrined
in our Constitution and laws.”
“The
greed and fraud of Wall Street banks caused the loss of
millions of homes and billions of dollars in the housing
crash,” read a recent statement from MoveOn.org. “Now we
need President Obama to take a strong stance for homeowners,
and for accountability, by opening a federal investigation
into big bank fraud.”
“This
is something the president can do on his own right now,
without fighting Congress. And millions of Americans can
be helped if banks are held responsible and forced to compensate
homeowners for their wrongdoing.”
“Wall
Street gets investigated for the misdeeds that led to our
financial collapse, they’re very worried about what we’ll
find,” read a recent statement by Russ Feingold, founder
Progressives United. “That’s why they’re eager for a sweetheart
settlement deal that would give them broad immunity without
an investigation. Thanks in part to the pressure thousands
of fellow progressives put on state attorneys general, that
deal is on hold.”
“But
we don’t just need to stop a deal that will cut off an investigation
- we need President Obama to take the lead and launch the
investigation. That’s why we’re joining with our friends
at Move On to petition the president to investigate Wall
Street now.”
“…
For far too long, Wall Street has received a blank check
from Washington.
They got bailed out after they gambled our economy into
a recession, and they lobbied hard to make sure that regulation
was too weak to prevent another crash.”
“So
without an investigation, we can’t hold the big banks truly
accountable for the $7 trillion they cost the global economy,
homeowners can’t get fair compensation, and Wall Street
will have no reason to stop skewing the playing field against
the 99%.”
On
Monday, the New York Times called upon the Obama
Administration to provide leadership on the matter by appointing
“an interagency task force to investigate and pursue potential
civil and criminal wrongdoing by institutions and people
whose conduct in the mortgage chain had the greatest economic
impact,” led by “a leader with the impulses of a crusading
prosecutor” that would focus its attention on “the large
banks and their top echelons.”
“Bankers
should not be allowed to walk away from the economic havoc
they wreaked upon the country,” says Robert L. Borosage,
co-director of the Campaign for America’s Future, “They
should be held accountable, so that no one on Wall Street
even thinks about playing roulette with people’s lives again.”
BlackCommentator.com Editorial Board member
Carl Bloice is a writer in San Francisco, a member of the National Coordinating Committee of
the Committees of Correspondence for Democracy and Socialism and formerly worked for
a healthcare union. Click here to contact Mr. Bloice.
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