The mortgage fraudsters are back, but this time they’re preying on people struggling to keep their homes out of foreclosure. In her commentary, Kelsey VanOverloop looks at how the “Foreclosure Rescue” come-on works and what homeowners can do to avoid the serious consequences of dealing with an unethical lender. VanOverloop describes the fraudulent schemes:
Read more on Acton Commentary: The New Mortgage Fraud — Kick ’Em When They’re Down…
What is the root cause of the sub-prime crisis shaking the global economy? We need to know so we don’t allow it to screw up our economy even worse.
Many point to dishonesty and poor judgment on Wall Street. There was plenty of that leading up to the near-trillion dollar bailout, and even now the stock market is busily disciplining stupid, dishonest companies.
Others point to the many people who falsified loan applications to get mortgages beyond their means. That too played a role.
But dishonesty and poor judgment are as old as Adam and Eve. Something more was at work in the present crisis, a crisis of unprecedented scope. Why didn’t profit-minded loan companies run thorough credit checks? Why did they keep pumping out low interest loans to high risk borrowers, ignoring the risks?
It’s as if somebody spiked the financial system’s punch bowl with stupid juice, driving normally prudent financiers to dash, en masse, over the cliff.
It seems that way because it is that way. The brewers of the stupid juice were largely (if not exclusively) politicians in Washington who sought to redistribute wealth from the rich and middle class to poor people with bad credit. These politicians fostered various laws and institutions that directed, cajoled and legally bullied mortgage companies to extend big loans to people with little credit.
A case in point is a group called ACORN—Association of Community Organizations for Reform Now. Stanley Kurtz explains in an Oct. 7 essay at National Review Online:
“You’ve got only a couple thousand bucks in the bank. Your job pays you dog-food wages. Your credit history has been bent, stapled, and mutilated. You declared bankruptcy in 1989. Don’t despair: You can still buy a house.” So began an April 1995 article in the Chicago Sun-Times that went on to direct prospective home-buyers fitting this profile to a group of far-left “community organizers” called ACORN, for assistance. In retrospect, of course, encouraging customers like this to buy homes seems little short of madness.
… At the time, however, that 1995 Chicago newspaper article represented something of a triumph for Barack Obama. That same year, as a director at Chicago’s Woods Fund, Obama was successfully pushing for a major expansion of assistance to ACORN, and sending still more money ACORN’s way from his post as board chair of the Chicago Annenberg Challenge. Through both funding and personal-leadership training, Obama supported ACORN. And ACORN, far more than we’ve recognized up to now, had a major role in precipitating the subprime crisis.
Read more on The Credit Crisis: Who Brewed the Stupid Juice?…
Dave Ramsey’s got a three step plan to “change the nation’s future.” He’s calling it “The Common Sense Fix” (PDF). Here’s Dave’s prediction:
Whichever presidential candidate or political party that champions this plan from their leadership down will likely become the next president. That is because this plan fixes the crisis while going along with the wishes of the vast majority of Americans.
Check out the plan and share what you think about the nation’s economic future.
Last week an email newsletter from Sojourners featured a quote from U2 rock star and activist Bono (courtesy the American Prospect blog):
It’s extraordinary to me that the United States can find $700 billion to save Wall Street and the entire G8 can’t find $25 billion dollars to saved 25,000 children who die every day from preventable diseases.
The quote is pretty striking given the current shape of the debate over the Wall Street bailout. Bono’s insight is instructive: Once the government takes upon itself tasks that fall outside its regular purview, how do we rightly adjudicate between all the different needy causes? It simply becomes a game of which special interest can hire the most lobbyists.
I don’t think government ownership is what President Bush had in mind when he talked about his vision for an “ownership society,” which had ostensibly included a plank focused on “expanding homeownership.” But it looks like that’s where we’re headed in an era of government takeovers and bailouts.
Congress is debating a number of measures designed to “rescue” homeowners facing foreclosure as the housing and credit crisis grinds more and more financial and real estate assets to dust. Much of the reporting on the credit crisis, in the tradition of objective journalism, strains to explain the problem objectively, as if what was happening in the markets was somehow an act of nature, something unguided by human action. Thus, people “fell” into the problem as if pulled by a gravitational force:
In college I wrote a paper for a Latin American Politics class titled, Barnum & Bailey Circus bailouts. The paper took the position that another financial bailout of Mexico would be a huge mistake and would not be money well spent. The paper was probably a little flippant because I interwove within the framework of the paper some characters with top hats, traveling bands of political circuses, and other outlandish theatrical symbolism. I was trying to make light of what I thought was a circus-like proposal, as well as rely on smoke and mirrors to downplay my lack of reading for the course.
Mortgage foreclosure rates soared 53 percent in August, compared with a year earlier, and many people who were eager to buy a house with low “teaser” interest rates and creative financing are in trouble. Acton Senior Fellow in Economics Jennifer Roback Morse expects new calls for goverment oversight of the mortgage industry, which is already highly regulated. A better idea, she suggests, would be for buyers to examine their motives for acquiring real estate with gimmicky loans and take some responsibility for their actions.
