Freezing Foreclosures Will Help No One
October 25, 2010
(ChattahBox Op/Ed) – Foreclosure – it may be the one word that perfectly frames where we are at as a country. It has it all really. It is affecting all of America. It is a leading indicator on where the economy is at. It has political intrigue. It has scandal. What more could we need from a good story. And sadly, as we continue to experience massive foreclosure rates all over the country, the recent controversy that these “sweat shop” foreclosure attorney offices have somehow managed to create a new level of less than legal stewardship adds to the growing anxiety of the problem and it looks as though it will help to extend the problem further.As if it weren’t enough that people are having such difficulty dealing with paying their mortgages in an upside down real estate market, the news that major lenders and the attorney’s who do their legal bidding have been less than thorough in their due diligence is bothersome at best. And although some hail recent decisions by lenders to place a moratorium on foreclosures while this all gets sorted out, that may not be the good news some are thinking it is.
I would suggest there isn’t a one of us that doesn’t know someone who is either in foreclosure or on the brink. It’s a terrible situation to be in and although we can go on and on about how this problem was created, it doesn’t change the reality one bit. Even the reality that these sweat shops where foreclosures are processed have been error filled doesn’t change the reality that your mortgage is in trouble no matter how much the process has been shut down. All this recent mess really does is delay the process and that will help very few, except to maybe allow people a little more time in a home they will lose anyway.
There is no winner here in any scenario.
The national foreclosure nightmare has created new industries and made some people very wealthy, and I’m not talking about real estate investors or realtors. I’m mostly talking lawyers and law firms that represent mortgage companies. In other words, the people who are responsible for the recent mess. As if it weren’t bad enough that people have mortgages that are under water and even if they are able to make their monthly payments it may take as much as ten years before they will begin to see their investment break even, if they can hold out that long.
The real estate market nationally is in the dumps and will be for the foreseeable future. The foreclosure mess doesn’t help in any way, and the recent paperwork fiasco only further harms the process.
Now that lenders are freezing and slowing the foreclosure process you may think this is an opportunity for those who are trapped in the process to maybe get some needed help. It won’t in any real way. And, in fact, the greatest problem may be that those who have the capital and are buying homes will see a slowing of closings on new sales as the process is being dragged to a screaming halt, further hurting the process.
Some might suggest that there is good news in that; that by delaying the sales of homes it may actually drive up the cost of said homes which would be a good thing for the real estate market, but I’m not buying it at all. What we have here is a real problem without a real solution.
The foreclosure epidemic is ruining America. It is ruining the American Dream and it is ruining and eliminating what was once an important and for some the only investment they could ever afford. Not to mention what this mess has done to every municipality in this country as property values have plummeted.
Property taxes have been severely affected by the foreclosure problem. More and more cities and states are having to make surgical cuts in budgets and services to accommodate for the lack of income. And as a direct result, more and more cities and states have reduced their workforce whether through layoffs or attrition, further deepening this problem. In fact, I cannot image an issue that is affecting us more then this issue is right now and yet we seem to be spending little or not nearly enough time trying to correct it.
So, what is the answer?
In the short term, I don’t see anything changing until we put more people back to work at living wage jobs. In the long term, maybe some kind of reform of the system, and to some degree that has been done, but is it enough and when we will know if it’s enough? These are all very difficult questions to answer and I certainly don’t have the answers today.
We can debate for days who are responsible for this mess and how we got here but it doesn’t change the fact of where we currently are. The reality is if you are in the middle of this problem yourself, either by being in foreclosure or are in a mortgage that is under water, you need solutions much sooner than they will come.
The days of being able to sell our homes upon retirement and living off that investment are fading memories for most people. The days of dreaming about owning our home are becoming dreams deferred. So among the many challenges we are faced with as we attempt to move beyond the myriad of crises, it may be best to keep your bags and boxes packed until someone figures this out, and if I were you I wouldn’t hold my breath.
Tony Trupiano is a former national syndicated progressive radio talk show host, author, and a former candidate for Congress. He is also a nationally recognized media trainer. He can be reached at firstname.lastname@example.org.