I just read a Village Voice article explaining that the Occupy Wall Street Movement was going to move from courthouse to courthouse to stop foreclosure sales in the five Boroughs of NYC. Noble - but misplaced.
Here is a press release, written by someone who purports to be an attorney, stating the reason for the mortgage meltdown. Below, you'll see some slight differences between her 'opinion' and the facts.
First, as I didn't even mention in my note to the editor of the Village Voice - It's a Referee who sells a foreclosed piece of real estate. Auctioneers sell co-ops at foreclosures as they are non-judicial sales.
This letter is so asinine it is sad it was written by an attorney. Does anyone remember the 1980s when mortgage rates were in the high teens? Well, guess what helped them to plummet - right - collateralized debt obligations. The fact that a bank could make a loan, and the sell it, allowed them to make additional loans. It is perhaps the greatest innovation in finance and the most beneficial one ever made to homeowners. It provided liquidity in a market that had historically been illiquid. Further, areas such as Bedford-Stuyvesant had, in the bad old days, been 'red-lined' meaning that banks made them off-limits for loans,mostly due to racism. The same is true in hot-spots like Cobble Hill and Carroll Gardens. Back when, because many of the area residents were dock workers, banks thought they were bad risks. Now they are million dollar houses. Do you want to know why? Because people can get loans on them. What would the same houses be worth if all buyers had to pay in full in cash or take an 18% loan?
We ran into trouble when our government - Barney Frank and others, decided everyone should own a home. Everyone should not own a home. They first brought Fannie and Freddie into this industry with their implied (and later made good upon promise) of government backing. Then they forced them to make loans to those who weren't qualified. Thereafter, S&P and other rating agencies whored themselves to give these loans high ratings anyone with 1/2 a brain knew they didn't deserve. The problem was - it was a runaway train and a race to the bottom.
The mortgage brokers and lending officers were mainly local people taking cruel advantage of their own neighbors. I could cry seeing a house that hadn't had a mortgage on it in 80 years, and had stayed in one family, lost because some sneaky bastard tricked the owner into taking a loan and 'cashing in' on the equity in the house.
In addition - many homeowners were greedy for cash. Mortgage brokers were greedy for 'points' on every note they wrote. The rating's agencies were greedy because the one willing to provide the highest ratings to these bonds got the jobs.
Overall, "Wall Street" was a place where these bonds were traded - not originated. Look in your own backyard and find the mortgage broker who was selling these loans and you'll find he looks like everyone else in his or her neighborhood, but has had his $50,000 Mercedes repo'd because he couldn't make the payments after the industry came to a halt.
Fools with no knowledge of this industry write the dumbest GARBAGE and it all leads to dumb people following them and saying and doing dumber things. Get your heads out of the sand.
Finally, what do you see as a solution to the problem? If I lent you $300,000 and the collateral was your house - should I have the right to take the collateral if you don't make good on your loan? If not, we'll be back to the 1970s and 80s (and we are close) because banks will not lend when they know they cannot enforce a contract.
If that's what you want, you better start saving today, because 100% down-payment is pretty steep when it comes to buying your first house. Or, an 18% loan will again become the norm as banks charge excessive interest rates to cover their massive losses from being unable to foreclose when the payments stop.
Finally, buyers at auctions aren't bad people (though some of them are - and we have a nickname for those that are at our local sales which is 'the 40 thieves'. They serve a purpose, just in the same way the person does who takes the cans from your recycling bin and brings them to the store for nickels. They risk their own time and money (and they can lose a lot of it as a lot of these guys have gone bankrupt), restore houses, and sell them for a profit. How are they different from anyone else?
Isn't the underlying foundation of this great nation capitalism and a belief in God? You'd never guess that today. We should make our Occupiers take a field trip to Berlin and ask which side they like better - the former communist one or the always capitalist one. Better yet, let's drop them in Iran and let them protest.
The foreclosure process and liquidations are the only way a community can get to the fourth stage of its life cycle which runs from birth, to development, to decline, to RENEWAL.
By the way, they may be thinking that the government could fix this by giving these houses to people who could use them who make no money. This has worked really well in public housing throughout the country. In fact, putting public housing in place is one of the only ways to guarantee a neighborhood will never recover.
Bed-Sty will recover because there are many strong homeowners there and a beautiful housing stock, one of the best in Brooklyn. But, the areas in Bedford Stuyvesant that have the lowest prices (now and at the peak of the market) are the ones that surround the 'public housing' near Bainbridge Street. Yes, because people don't have to spend their money on housing - so they spend it on other things. You can probably guess what they might be.
Hang the mortgage originator, who was the true criminal in this whole charade - and Barney Frank while you are at it - and Franklin Raines - who walked with millions, but nobody seems to mind. Remember - they're all Democrats - so it's OK! It's still the Republicans fault - thought nobody has given me a clear answer to how that is true as of yet.
PS - My sympathy goes out to anyone in foreclosure. In addition, I've always reminded others who complain about people fighting their foreclosures that, if I were in their shoes and had a mortgage and might lose my family's house, I'd do everything I could to try to keep it. But, this is a horse of a different color. These are the ignorati protesting something about which they don't know the first fact. And, the proof is in the pudding. If they protested the foreclosures, that would be one thing. But, when they post their rationale for it, and it is so factually incorrect, it serves to, as always, diminish the entire group's net worth, which is now far into the negative as far as I'm concerned.
PPS - I love the comment about the difference between Tea Party rally and an Occupy Wall Steret rally is that people attending the former a) use soap and b) clean up after themselves. I think that only touches the surface in the actual differences, but its good for a laugh,
