Washington Post: Jim Rokakis connects the predatory dots
A really important op-ed today, in exactly the right place.
Rokakis writes:
“A flurry of legislative proposals has come before Congress, including bills by Rep. Keith Ellison (D-Minn.) and Sens. Charles E. Schumer (D-N.Y.), Robert P. Casey Jr. (D-Pa.) and Sherrod Brown (D-Ohio).”
These bills prohibit brokers from steering home buyers into higher-priced loans and require borrowers to prove that they can make their monthly payments, not only at the low teaser rate but also at the higher rate that follows. Helpful steps, but too late.
Unfortunately, none of these bills addresses the costs to cities associated with maintaining, policing and, in the most dire case, demolishing neighborhoods such as Slavic Village. One bill introduced in Congress would allocate $100 million over the next three years to help with demolition costs — a number that met with peals of laughter at a conference on vacant properties that I attended in Pittsburgh last week. “Add a zero,” one participant suggested.
Democratic legislators from Ohio and other subprime lending hot zones have been aware for years of the foreclosure tsunami drowning their communities. Stephanie Tubbs Jones has been introducing her Predatory Lending Practice Reduction Act since two Congresses back. Betty Sutton has gotten a nice publicity hit from her association with proposals to create a national bipartisan commission (!) on foreclosure prevention and require consumer notification of imminent ARM resets, as has Zack Space for proposing to limit the income tax liability on mortgage principal forgiveness arising from bankruptcy (an idea with numerous proud parents, it seems). Kucinich has held Oversight subcommittee hearings on the foreclosure crisis, complete with a tour of Slavic Village, and is a cosponsor of various bills including one to get banks out of the realty brokerage and management business. All these bills, as well as Senator Brown’s, are being touted by their sponsors as responses to the foreclosure crisis.
As Rokakis says: Helpful, but too late. I’d add, and way too little.
The subprime foreclosure crisis is no longer something that can be “prevented”, in any real sense. It has already happened and continues to happen, a disaster in progress, every day. The monster has been loose in the streets of Cleveland for years now, chewing through hundreds of additional houses every week, with tens of thousands of equity-stripped properties lying in its wake and billions of dollars of value already destroyed. To talk about “preventing” it is like talking about “preventing” the Iraq war.
What we need is an imposed cease-fire, followed by a tough-minded negotiation of peace terms that include both a new mortgage regulation regime and funding for reconstruction and reparations. As in any war, the force that’s winning will continue to take everything it can from the weaker force until it’s forced to stop by a stronger power. The only power stronger than the predatory lending industry is the Federal government. Therefore, the crucial goals for our Federal lawmakers should be 1) to slow or stop the residential foreclosure rampage long enough to bring the parties — mortgage bankers and damaged communities — to the negotiating table, and then 2) to empower those communities to negotiate terms that give us a fighting chance of recovery.
It’s really a mystery to me why Democrats from Ohio aren’t trying to legislate a residential foreclosure moratorium, as the Leadership Conference on Civil Rights, the Center for Responsible Lending and the National Council of La Raza proposed in April.
How about legislation to forbid HUD, Fannie Mae, other secondary mortgage holders, and persons engaged in interstate mortgage transactions from proceeding with foreclosures against owner/occupants for a full year — or until the foreclosing party has:
- clearly identified the mortgage-holding entity and its legally responsible agent; and
- demonstrated to a Federally authorized consumer protection agency that the original mortgage was not the product of fraud or deceit, and that a good-faith effort has been made to work out the delinquency and/or restructure an
unreasonableimpossible payment requirement; and - demonstrated its readiness to bring the foreclosed property up to code prior to resale, or the existence of an alternative plan acceptable to the local code authority?
And why aren’t our Democrats calling for an “impacted communities fund” of, like, $20 billion to help communities deal with the terrible damage they’ve already sustained? Let’s see, maybe Congress could give mortgage bankers a choice between ponying up for such a fund — or retroactive civil liability for any and all capital losses suffered as a result of their collusion or negligence in originating loans based on fraudulent representations or appraisals, including losses to nearby property owners. That would lead to some interesting class action suits, don’t you think?
If these ideas seem radical to you, well, forgive me but I don’t think you’ve quite grasped what’s going on. That’s understandable — the mortgage crisis is so big and complex and scary and radical that hardly anyone can see it whole, and nobody really wants to be responsible for confronting it. (Which is why having Jim Rokakis in countywide office is an unbelievable stroke of good luck for us.)
The truth is, a national foreclosure moratorium, “prior accountability” for the foreclosers, and emergency financial help for impacted communities wouldn’t be radical surgery. They’d be no more than tourniquets, bandages, sutures and antibiotics for emergency treatment of a disaster site full of bleeding victims — our communities.
Seems to me that if you’re a Democratic Congressman, a member of the Majority, from one of those bleeding communities — from Cleveland, Akron, Youngstown, Toledo — or a Democratic Senator from the most foreclosure-ridden state in the Union, fighting for this kind of emergency intervention is the least your voters should be able to expect from you.