Meanwhile, back in Washington: The politics of foreclosure
My column this week, which I’ve reprinted below, continues the lonely drumbeat against the bipartisan stimulation-palooza disaster and the victim politics of foreclosure. Would that we had a GOP presidential candidate who would stand up for personal responsibility and limited government on this issue. Again: It’s too much to ask.
There’s a small glimmer of hope to dispel the thick cloud of gloom. Jon Fleischman points out that there were 25 Republicans (and 10 Democrats) who voted against the Bush-Kennedy stimulus package. The roll call vote is here.
The Republicans who voted against the bill:
Broun (GA)
Burgess
Campbell (CA)
Coble
Cubin
Davis, Tom
Deal (GA)
Flake
Forbes
Gingrey
Gohmert
Goode
Hunter
Johnson (IL)
Kingston
Linder
Paul
Poe
Price (GA)
Rohrabacher
Royce
Sensenbrenner
Shadegg
Tancredo
Westmoreland
Watch the floor speech of GOP California Rep. John Campbell. He gets it. We do have a voice in Washington. I’m sending my thank you note this morning!
Rep. Campbell’s contact info is here.
***
Who says bipartisanship is dead? From President Bush to Hillary Clinton, Barack Obama and John Edwards, to Mitt Romney and John McCain, virtually everyone in Washington agrees: The government must Do Something to stop home foreclosures across the country. These leaders agree on the total presumption of homeowner innocence. The borrower-as-victim and lender-as-predator storylines are etched in stone. Can’t let reality get in the way of election-year pander-monium.
Special guests at the State of the Union address are usually extraordinary heroes, entrepreneurs or citizens who’ve gone above and beyond the call of duty. On Monday night, one of those guests was an Indiana woman whose claim to fame is that she called a 1-800 number and was assisted by the “Hope Now Alliance,” a group Bush convened, which, according to him, “is helping many struggling homeowners avoid foreclosure.”
Subprime victims are the new heroes. Welcome to the politics of foreclosure.
Housing Czarina Hillary immediately jumped on the president’s address and on news that foreclosure rates skyrocketed 79 percent over the last year. She reiterated her call for “a 90-day foreclosure moratorium on subprime mortgages and a 5-year freeze in rates on subprime loans.” Borrowers who knowingly bought more house than they could pay for have no place in Hillary’s world. “It is indisputable that brokers and mortgage companies lured families into mortgages that were designed to end in foreclosure,” she stated in a Denver Post questionnaire this week.
Continuing the theme of duped borrowers, Sen. Chuck Schumer is crusading for more federally subsidized “mortgage counseling.” He wants $200 million more, in addition to the $180 million for “Housing Counseling Assistance” that he helped stick into the omnibus spending bill last year. A significant portion of that will go to government-approved counselors affiliated with left-wing activist groups such as La Raza and ACORN.
I certainly have sympathy for borrowers who may have been misled. But for every “predatory lender” out there, you can find a predatory borrower. For every fraud-minded loan officer or mortgage broker, you can find a homeowner who secured financing and bought a home he knew he couldn’t afford with little money down and bogus or no income verification. Washington is silent about this reckless behavior, which it is encouraging both tacitly and explicitly.
Now comes word from California that some of these homeowners Washington is rushing to rescue are simply walking away — abandoning their mortgage commitments and contractual obligations. Poof: “Foreclose me. … I’ll live in the house for free for 12 months, and I’ll save my money and I’ll move on,” one homeowner blithely told the Los Angeles Times this week.
The stigma of default is gone. Political rhetoric absolving borrowers of their responsibilities — and encouraging them to spend, spend, spend even more — has made it possible. And so has federal legislation intended to “help.” The omnibus spending bill passed last year prevents the IRS from taxing mortgage forgiveness as income up to $1 million for a two-year period.
Finance blog Calculated Risk reported last week that increasing numbers of homeowners are walking away from their homes by choice. A Wachovia executive noted during a conference call that they are “people that have otherwise had the capacity to pay, but have basically just decided not to because they feel like they’ve lost equity, value in their properties…” Some are bailing for cheaper homes in the same neighborhoods. There’s even a term that’s become popular over the last couple of years — “Jingle Mail” — that describes when homeowners cut loose and mail in the keys to the bank. Ho, ho, ho.
The true victims in this “crisis” are those who paid for homes within their means and those who waited to enter the housing market. A reader in New York City wrote me last week:
“My husband and I patiently sat back and watched while our friends made a killing in real estate over the past six years. … Now, after several years, we are ready to move to the ‘burbs, and we feel it is responsible people like us who are going to get hurt by this mortgage mess. We’re the ones who have to sit back and wait for housing prices to fall, while our government, looking to protect only the homeowners, keeps prices artificially high with bailout programs and artificially low interest rates.
“What about programs to help out renters who didn’t make any money in this bubble because we were responsible? What about government intervention to lower the still-high housing prices so we aren’t locked out of the market? A natural correction in the housing market is in order, but the government seems hellbent to prevent it from taking place. In the meantime, we are priced out of the market because we aren’t willing to get in over our heads financially (unlike some of these revered homeowners).”
Sorry, responsible Americans. There’s no seat at the next State of the Union address, or the next Hillary Rescue roundtable, for you.
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- WHY ARE WE DOING THIS AGAIN? « D=S
- Michelle Malkin » Letter of the day: A closer look at foreclosures
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- Michelle Malkin » Another massive mortgage boondoggle–and one lone dissenting vote
- Michelle Malkin » The left-wing mortgage counseling racket
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- Michelle Malkin » Latest subprime trend: Burnin’ down the house
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- Michelle Malkin » Another massive mortgage bailout is on the way
- Michelle Malkin » A Democrat congresswoman bails on her half-million-dollar-plus, second-home mortgage
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He is the only reason I have hope for Wisconsin – and American – politics.
The rest of our Senators and Congressmen are too busy pandering to give a rat’s behind about our opinions.
Thank you, GOP members who voted against bad policy.
Two comments.
MM has the issue slightly wrong. The stimulus is supposed to prevent a recession that will hurt all of us. Help with mortgages is supposed to help banks and prevent a liquidity crisis (banks unable to lend money -> businesses unable to borrow).
Suck it up does not project the kindler gentler form of conservatism. OK people made what in retrospect were unfortunate financial decisions. OK we can’t bail them out. But don’t taunt them on the way down.
Great column Michelle. I also left a message for Congressman Campbell (but his congressional website required a Calif. zip code).
lgm, “Suck it Up” should be considered tough love… no one is taunting, it is a call for personal responsibility. No more, no less.
On January 30th, 2008 at 9:19 am, lgm said:
I wouldn’t call it “taunting.” I call it tough love. As adults, we all have to live with the decisions we make, and those who are responsible have no issue with being told to “suck it up” when things don’t go their way. They don’t look for others to blame, nor do they expect others to bail them out when the tide turns in a different direction.
Ahhh… Zorro — you beat me to it!
Wonder if these same people will have to pay income taxes if any additional amount will be due.
Free pass on that too?
Campbell makes a good point, several of them actually. I would argue that the Democrat party should examine the truth of their program. In order to stimulate the economy, they say in effect, ” We took too much money from you in taxes, so we have to return that money and thereby stimulate the economy by lowering taxes on business, investors and earners.” And just for good measure they are throwing in some “bread and games” for the drones. They should say to themselves,”Our tax policy is toxic.”
Just lower the taxes and the economy will forge ahead.
Many if not most of these foreclosures have to do with people who overpaid for their house and are now upsidedown on the loan. These people decide that it is a “poor business decision” to make any more payments. They then stay payment free for a few months till the bank repossesses the house.
How did the politicians let the housing/mortgage industry send the economy right down the tubes?
well, one good thing. I finally found a way to be a victim too. I’m a renter. I demand help! Hello..(echo)…hello?…(crickets).
Good question, Mister P. A good part of the irresponsibility here was not personal, but institutional, governmental and political. The big players in Washington are all rich and don’t give a damn. Besides, politicians are cowards. The last one who scolded us over impecunious conduct during a recession was Jimmy Carter. Look at where that got him.
This is a classic example of something that the government should stay out of. Whatever they do will probably make the situation worse and drag out the recovery. Extending the rebates to groups that don’t pay taxes is nothing but “income redistribution” at its worst, but heck, it is an election year.
You never have to tell responsible people to suck it up (because they take care of their own problems) – in fact, I’d bet plenty of them are right now and nobody knows.
My congressman sent out an email to people in his district and asked what we thought of the bailout. I guess he got an earful, because he voted against it.
I’m writing to thank him!
Maybe if we don’t prop up this market, real people will be able to afford a house again.
I look at it like this, If I’m living in a neighborhood where houses all around me are being foreclosed on, it brings down the value of my house so this bail out has a positive effect even on those who feel superior in their responsible decisions and choices.
People will continue to live outside of their means, this isn’t about to change unfortunately.
Bad business practices run strong in both avenues, is my theory, and not having learned, the ‘tards in Worsington DeCrepit are trying to step in now…dumba$$es…
As much as I oppose this bail-out,and do believe that the ultimate responsibility lies with the borrowers,how can we expect someone to make financial decisions when most of them probably can’t make change for a one dollar bill.Yes,the lending institutions took advantage of the borrowers ignorance,and now they want us to bail them out of thier self-made crisis.Mr P and nbarry hit upon the real problem-our so-called leaders watched this problem grow for years and did not address it.Liberal economics-we want the world and you have to buy it for us.
I hope you have a supply of tissues handy when you read this story.
Awwwwwwwww.
A few things Michelle…first, while you may not have many allies in Washington, I would love to see some polling. I suspect that most of the folks, as your colleague Bill O’Reilly would say, would agree with you. I think that the majority of Americans are against all of this saving of homeowners from foreclosure. You are absolutely right when you point out that the narrative is that it was folks like me, the mortgage broker, that were the one and only villain.
Now, I frankly have no use for most of the folks in my business. I think the lot of them are nothing but scum, however we are the same scum we were five, ten, fifteen and twenty years ago. We haven’t changed, and yet the mortgage crisis is two years old. That means other things changed. The politicians refuse to find out what really happened and rather they go about creating legislation that fits the narrative you describe.
I can also tell you with certainty that most of the borrowers that are in trouble did over buy. I know this because most of the borrowers I worke with always wound up buying property that was more than what they initially told me they would buy.
Furthermore, mortgage brokers don’t find homes for people and we come in after a property is found. The idea that we put people into mortgages they couldn’t afford is the same kind of fairy tale as what Bill Clinton described vis a vis Barack Obama.
The mortgage broker found a loan that would be approved for a property someone couldn’t afford. Many times that was in fact an ADJUSTABLE RATE MORTGAGE. Anyone that claims that they are surprised when their ADJUSTABLE rate mortgage ADJUSTS is lying or frankly not smart enough to be getting a loan.
The roots of this crisis are complicated and symbiotic and there is enough blame to go around. The mortgage brokers aren’t innocent, but by no means the only guilty party and frankly I am sick and tired of having my colleagues and I being the only ones blamed.
Here is my analysis of the roots of this crisis and how each party combined with all the other parties to create it.
One thing I left out of the analysis is the role of Alan Greenspan. He dropped the fed funds rate to .75% and that was irresponsible and frankly caused loose money. The banks began to borrow because it cost them almost nothing to do so, and with all this new money it turned into irresponsible lending.
You know, I wonder if we would have still had this whole housing bubble thing if we had just addressed the problem that we are having with illegals and built the damn fence. I mean how would all of those houses that saturated the market place have been built without all the illegals here in the first place to build them?
Something that is beginning to bug me is how the Fed Res seems to be constantly devaluing our money with rate cuts. As I’ve said before, it’s been a long time since I’ve had any courses in economics so I’m hardly in a position to know anything about such matters, but aren’t prime rate reductions supposed to be a stop-gap measure against total financial calamity and, as such, used very sparingly? I mean at what do they bottom out and our money becomes worth less than the paper on which it is printed?
DB, I think the Fed was trying to raise rates, slowly. But it seems they hit some unexpected gaps. Granted, I’m not sure HOW they were unexpected… I recall a mortgage broker in the D.C. area telling people to get out of adjustables, and into a fixed-rate, and that was over two years ago.
I think the idea, though, is to do it slowly enough that you don’t create a panic. Which, given the right conditions, would be a good idea. But the market is so bollixed up right now, that, in the words of MacBeth, “If it were done when ’tis done, then ’twere well it were done quickly.” That is, if the economy is going to be in an uproar, then you may as well get it over with, so we can get down to the business of recovery.
I do find it amusing that many of the same people who cried when we had a trade imbalance, are the same ones now complaining about a weak dollar. Which is it going to be?
Someone asked about the forgiven debt and tax implications… frankly, I don’t think those should be considered income, any way. Especially if the consumer doesn’t keep the goods. It seems to be just another step closer to imputed income.
Here’s a “Suck it up” guy – and *gasp* he’s still running for president, and has pulled in 1 million votes.
We don’t need to destroy our currency to fix our trade imbalance, nor do we need to balloon our debt to fix our dollar. These two things are not the inverse of each other, otherwise China’s currency would be almost worthless. The US used to have a strong dollar and a trade surplus because we had an economy based on producing goods, not consuming them. We also had a gold standard and most legislation *intended* to benefit this country.
The reason the economy is so ‘bollixed up’ isn’t a bunch of separate issues manifesting themselves at one time. It’s one issue that manifests itself as many separate issues.
Let’s make sure we put the blame where it needs to be placed – on the Federal Reserve. Inflation of the money supply is what is ‘bollixing up’ the economy, and it manifests itself as a weaker dollar, higher commodity prices (including oil, food, and basic materials), destruction of wealth, and inflation of market ‘bubbles’.
Don’t buy into the propaganda of the MSM here. The Federal Reserve is the root of these problems, and shouldn’t be absolved simply because it’s so easy to obfuscate where the problems originate.
We have mortgaged our nation’s productive and economic power for massive unsustainable consumption.