Dec 17, 2007
On December 13, about 4,500 desperate homeowners flooded into an enormous ballroom inside Detroit’s Cobo Hall, hoping to stave off foreclosure. Carrying bags and briefcases filled with mortgage documents and correspondence, they waited in long lines to plead their case before a representative from the mortgage company or banks.
These same mortgage companies and banks have profited enormously by steering working people into crooked subprime mortgages, trumpeting low introductory teaser rates, while hiding and lying about the rate hikes, outrageous fees and penalties. Financial companies fed the housing bubble, which has now begun to burst, leaving millions of people across the country with negative equity, and thus at risk of losing their homes.
The Detroit area has been especially hard hit, with more than 70,000 filings in the metropolitan area.
After the Cobo Hall event, the news media carried some feel-good stories. A couple mortgage companies agreed to lower a few homeowners’ mortgage payments, stop several foreclosure proceedings or rescind the date of a Sheriff’s sale.
But almost none of the 4,500 desperate homeowners, who lined up at Cobo Hall in Detroit, will get relief from the mortgage companies and banks. The entire event, set up by Michigan Attorney General Mike Cox and the banks, was only a spectacle. And floor shows like this won’t stop the tidal wave of foreclosures.
The big banks are not going to let anything call in question the values of the securities based on these mortgages which they sold. And the mortgage companies and banks, which profited so much from the housing bubble, are today covering their losses by throwing people out of their homes, reselling the homes, and creating new mortgages.
This is true not just for Michigan, but the entire country.
At the same time, no government agency is doing anything to interfere with or reduce the profits of the big financial companies behind the foreclosure crisis.
On the contrary, the U.S. government has intervened massively – in order to bail out the same big mortgage companies and banks which profited from all the crooked sub-prime mortgages. For example, it was revealed at the end of November that the government-sponsored Federal Home Loan Bank in Atlanta provided 51 billion dollars in financing to Countrywide Financial, one of the biggest specialists in those tricky mortgages that milked homeowners. If Countrywide Financial goes bankrupt, the taxpayer will foot the bill. Fannie Mae and Freddie Mac, two other government-sponsored companies, are losing money because they bought tens of billions of dollars in subprime mortgages from the mortgage companies and banks, that is, took them off their hands. If either Freddie or Fannie go bankrupt, they too would be bailed out by taxpayers.
The big U.S. banks are getting constant financial support from the U.S. Federal Reserve. The Federal Reserve has loaned them tens of billions of dollars at very low interest rates which the banks then lend back out at much higher interest rates. The U.S. Federal Reserve has also “injected” tens of billions of dollars into the financial system at least four times since August. All of these loans and “injections” come with a cost. Either the money came from the U.S. Treasury, that is, the U.S. taxpayer. Or else, the Federal Reserve simply created the money, thus contributing to higher inflation, which is paid for by the consumer. In both cases, ordinary people foot the bill.
Total outrage. Instead of thousands of people lining up to plead and beg the mortgage companies and banks to save them, tens and hundreds of thousands of people should be confronting the banks and politicians, demanding that the foreclosures stop, demanding that the outrageous variable mortgage rates be stopped.
People have a right to stay in their homes. Let the banks and mortgage companies pay for the mortgage crisis that they themselves created.