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Wednesday, November 28, 2007

Help is on the way?


Harumph, harumph, harumph! This mornings Detroit Free Press had a big headline - Foreclosure help on the way - that one might have taken to be a story about helping out those who are facing foreclosure. The story came out of the recent meeting in Detroit about the foreclosure mess that was attended by a bunch of US mayors. Reading the story, it quickly became obvious that these folks were focused upon how to help themselves as much as anything. The "help" that was mentioned in the headline was a proposed database service that would allow residents to find out who actually owns the foreclosed eyesore next door, so that they will stop bothering city employees with calls to find out to whom they should complain. How convenient and self-serving is that? Harumph!

Of course there was also a nod towards letting the foreclosed homeowner use this same database to find out who to try to deal with about the foreclosure and lots of harumphing about credit counseling and workouts, but little in the way of programs to restructure the bad loans that most people facing foreclosure have been victims of - ahhh, the old I'm the victim defense. Everyone seems to agree that the majority of foreclosures are being caused by poorly structured loans (mostly adjustable rate mortgages) that have now ballooned out of control and put the homeowners at risk of loosing their homes. There seems to be no consensus however in how to work this all out. Harumph.

We appear to still be in the finger pointing and find someone to blame stage of this crisis, with many still pointing to the greedy, or stupid, homeowners and saying that it is their fault that they borrowed 110% against their homes; so, let them default and wallow in their own mess. Others, of course, blame only the mortgage companies for offering such loans without any controls and little concern for the ability of the homeowners to pay later. Both views have some merit; but, neither argument does anything to resolve the current crisis. I can't believe that the homeowners want to default and lose their homes; nor, that the mortgage companies want to take over more foreclosed homes and sell them at a loss. If that is true, it seems to be a no-brainer that the two sides should work together to restructure these loans and keep the homeowners who are able to pay a reasonable mortgage in the homes. That's just not happening widely enough right now. Harumph, harumph.

Perhaps the federal government should let FEMA take over this crisis. They have lots of experience with housing. After all, those are the clowns who bought thousands of trailers for Hurricane Katrina victims and never delivered them and then sold them off at a huge loss. They also carted several truckloads of ice around the country for months while never figuring out how to get it to Katrina victims (eventually they let the ice melt into a pond that needed some additional water, thus performing a valuable public service). If we put FEMA in charge of repossessing foreclosed houses the victims of the foreclosures would never have to leave. In fact, they might even get a lifetime supply of ice. Of course the FEMA folks would have to work under the over all direction of HUD, so that President Bush could appear on TV and say, "you're doing a heck of job Alphoso," to the HUD Secretary.

So, help is on the way. Harumph! The mayors have figured out how to get out of the way of this mess, so they can go home, now. Watch for the new foreclosure database in your area. Then, you too can look up who the deadbeats in your neighborhood are and sit out on your front porch going, "Tut, tut", when they walk by pushing their belongings in a shopping cart. Hey, I didn't get a harumph from you over there.

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