CINCINNATI (TDB) -- Democratic Congressional candidate Vic Wulsin says the foreclosure crisis is so serious that 75 homes are on the market over defaults in Loveland, an affluent Cincinnati suburb. Republican U.S. Rep. Jean Schmidt, who now holds the OH-02 seat, lives in that community.
Wulsin says Schmidt is out of touch and voted against the Mortgage Reform and Anti-Predatory Lending Act that passed the House by a 291-127 margin last week. There were 64 Republicans who supported the bill, which establishes lending standards.
Overall, according to Wulsin, there are 2,103 foreclosures pending in Cincinnati. Ohio has the third highest foreclosure rate in the nation. Wulsin says she would have supported the bill, HR 2915. The Wulsin campaign pointed to this Yahoo link as its source about foreclosure activity in Loveland. Wulsin contends Schmidt has had support from builders and bankers over the years, and favors real estate lenders over borrowers now struggling to hang onto their homes.
"I support this bipartisan, common sense effort to rein in an industry that has spun out of control, and would have voted for it. I believe we must protect all Americans from unfair and predatory lending practices.
"We need to stand up for our hard working families, not the Wall Street insiders who made billions when times were good and are now looking for a government bailout. Maybe she's listening to the developers who have supported her political career. . . I have one question for Jean Schmidt: Isn't it Congress' job to protect families who save up and buy a home in good faith, and then lose it because the system was rigged from the start against them."
"Isn't it Congress' job to protect families who save up and buy a home in good faith, and then lose it because the system was rigged from the start against them."
ReplyDeleteI help Vic out with this simple question. The answer is NO! The people being foreclosed on pretended to be responsible adults when they signed the mortgage papers. If mommy government swoops down and takes care of everything then it would affirm to the irresponsible that their way works (just like bankruptcy breeds more crooked behavior). We've had historically low interest rates and yet these people were so greedy they had to get ARM's with lower rates so they could buy a home they had no business buying. This problem in no small part was created by people who entered into the largest purchase most of us will make in our lives with no fear. Ridiculous! Anyone who signs mortgage papers without fear is an idiot.
Hi LargeBill --
ReplyDeleteA very good point when you say that "anyone who signs mortgage papers" without fear is an idiot. That would include both sides of the deal, I assume?
So what are we to do. Should Congress bail out the lenders? Should Congress try to help the borrowers. Should we all sit and wait for this to pass?
This lending/mortage crisis appears to be turning into a high level financial crisis. If it erodes the value of the dollar, the confidence of investors in the greenback, tightens credit, halts consumer spending . . .
Well, you get the picture. I'm afraid there is plenty of blame to go around, lenders and borrowers together. But the lenders were by far the more sophisticated parties in these transactions, and if they were aided and abetted by crooked appraisals (a value higher than the property was worth) and etc. then the borrowers may not be as totally culpable as some may think.
LargeBill,
ReplyDeleteMaybe these responsible adults listened to Fed Chairman Greenspan’s remarks of February 23, 2004 when they chose variable-rate mortgages over fixed.
Remember? Greenspan said, “Indeed, recent research within the Federal Reserve suggests that many homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade, though this would not have been the case, of course, had interest rates trended sharply upward.”
Greenspan later said, “American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage. To the degree that households are driven by fears of payment shocks but are willing to manage their own interest rate risks, the traditional fixed-rate mortgage may be an expensive method of financing a home.”
http://www.federalreserve.gov/boardDocs/speeches/2004/20040223/default.htm
Anon,
ReplyDeleteGreenspan was famous for his statements that seemed to say one thing while leaving room to claim another. Both of the sections you mentioned include the word "might." I might have saved money with a ARM, however, with historically low interest rates the potential savings did not outweigh the potential cost.
Bill,
I don't have a specific answer to what should be done. I do know that if congress is trying to fix a situation it likely will get worse after their involvement.
I could be wrong but I think (hope) the end result will not be as bad as the worst case scenarios being laid out in hysterical fashion by CNBC, FOX news etc. The dire projections I've seen are predicated on all subprime mortgages defaulting which I don't to be the case. We'll see a financial institution or two (CFC ?) go bankrupt, we'll see some people sell at a loss when they realize they can't afford the home they bought, etc. After it looks its worst some smart investors will get richer buying loans/homes or companies at the bottom. Is November 2007 to bottom? Or is it March 2008, January 2009, etc? Who knows?