As Halloween neared in 2006, the looming mortgage crisis was already apparent and now two years later the horror of it all hasn’t gone away. It keeps getting worse. We’ve spent the last few months talking about the possibility that two million people might lose their homes by early next year. Now it turns out the total for this year and the next could turn out to be more than six million.
BY CARL BLOICE
Posted by Bulatlat
As Halloween neared in 2006, the looming mortgage crisis was already apparent and now two years later the horror of it all hasn’t gone away. It keeps getting worse. We’ve spent the last few months talking about the possibility that two million people might lose their homes by early next year. Now it turns out the total for this year and the next could turn out to be more than six million. August saw a record number of homeowners in distress, over 300,000 homes were at some stage of mortgage default and 91,000 families or individuals lost their homes, Further, about 12 million homeowners – one out of every six – are reported to have zero or negative equity in their homes.
An estimated 7,000 people are losing their homes every day.
The number are scary enough but it’s not hard to imagine the fear and anxiety that grips the individuals and families that have lost, or are about to lose, their living space and with it – for most – their financial resources built up over their working lives. Millions of people who have never missed a mortgage payment are threatened with the loss of the value of their homes. As economist Dean Baker recently noted, ‘A whole cohort of workers is now facing retirement with no wealth.’
‘The landscape looks like the Roman Empire after being attacked by Attila the Hun,’ Alan Mallach, a senior fellow at the National Housing Institute and former visiting scholar at the Federal Reserve of Philadelphia, told The Washington Independent earlier this month. ‘It’s really bad out there.’
It was Alan Greenspan, the former head of the Federal Reserve and someone who played a major role in getting us into this mess, who said increasing, home ownership was a way of giving people a stake in the economy and to secure their loyalty to it. Home possession has been touted as a key element in the Bush Administration’s supposed ‘ownership society.’ Today, many of those caught in the vise of the ‘credit crunch’ are feeling left out of the economy, abandoned as the powers-that- be scamper around trying to save the banking system.
And, it’s not just homeowners that are affected.
When the sheriff in Chicago recently announced he was suspending evictions of people being ordered out of their dwelling it was mostly renters he was concerned about, people living in apartment buildings that had been foreclosed upon. ‘You can decide who is right
or wrong here, but the fact is things are getting desperate out there for a lot of people,’
commented CNN anchor Campbell Brown, referring to the sheriff’s decision’ but ‘families are being literally kicked to the curb. And our national leaders, our politicians in Washington and our presidential candidates don’t seem at all close to figuring this out.’
Without question, everybody – homeowners, renters and the dispossessed –has a stake in the efforts to stave off a further deterioration in the country’s economy. Still, we must look on with dismay as official Washington turns a blind eye to this burgeoning foreclosure catastrophe. ‘Between the Fannie and Freddie rescue and the Paulson Plan,’ one official told me, ‘we probably own two-thirds of the mortgages in America,’ wrote Robert Kuttner, co-editor of the American Prospect magazine October 8. ‘But `we’ in this case is the Treasury Department, peopled by former officials of Goldman Sachs, who demonstrate far less concern for the distressed homeowners than for the bondholders.’
As the powers-that-be steadfastly fail to summon up the political will (courage) to effectively confront the foreclosure crisis, efforts are being stepped up to divert attention from its actual cause and direct blame away from those responsible. The most pernicious of these efforts is the assertion that working class people of color are responsible for the situation.
‘A funny thing has happened on the way to the forum,’ wrote Sasha Abramsky in the Guardian (UK) last week. ‘As the institutions of super-capitalism continue to implode, a number of conservative commentators have started to lay the blame for the mess on poor people. Now, that might seem strange given that poor people control approximately no major financial institutions. And it might seem unfair in light of the unprecedented redistribution of wealth away from the working and middle classes and toward the wealthy these past several years.’
‘It might even seem bizarre given the fact that millions of desperate men and women signed onto utterly manipulative, usurious, `creative’ mortgages during the sub-prime gold-rush years, and, as a result, ended up losing what little capital they had accumulated over lifetimes of hard work as well as losing the roofs over their heads. To stretch a point, one could even view such a suggestion as offensive, since so many banks got into trouble by bundling mortgage securities that only preserved their value and generated profits so long as enough poor people signed on for the ride and agreed to be screwed.’