Friday, October 9, 2009

If it's FHA Socialism, What's with All the Foreclosures?

read this on Mike Synan's blog today, and ended up belching up a response far in excess of the comment section limits:

"Oh how we all laughed at the naievety [of an unsophisticated Obama supporter in the wake of the o8 election expressing a feeling that she's now got a President who seems to actually give a shit about the problems of average people...the you tube clip is classily titled "Obama is going to pay for my gas and mortgage!!!!"], but almost a year later what's happened? Looks like President Obama is going to pay a lot of morgtages. It's not something that's going away either. According to FHA guidelines, the program will run at least through 2011. Ever met a prgram the government started and then wanted to get rid of?
People obviously made fun of this woman for saying Obama would pay for her gas, but is that so far fetched? The home heating oil assistance program has been in effect for a long time now. Heck, we even allow Hugo Chavez to pay for our heating oil! It may seem like a stupid thing then and now, but President Obama is paying people's mortgages. Will he pay for our gas too at some point?"

Synan's not usually so out on the ragged wingnutty edge. Must've been driven a little off-rocker by Obama's having won the Nobel Peace Prize (Atrios; "Henry Kissinger Peace Prize") this morning.

The woman in the YouTube clip said no such thing, naturally. Her exact words were, "I won't have to worry about putting gas in my car, about paying my mortgage...if I help him [get elected] he's going to help me". I read that as an off the cuff way of saying Obama isn't driven by the Bushie "Fuck You Buddy, I've Got Mine" right wing school of governance and political economics. My reply was as follows, and in my Walter Mitty delusion, it would've brought my fellow commenters to tears, would've brought them to Michael Moore's 1950s pro-union Jesus (no time to pretty up the links just now):

I missed the memo that local homeowners had woken up on socialist easy-street. Wonder if the google will back up that story. just today says "Orlando-area mortgage delinquency and foreclosure rates doubled in August compared with the previous year" Hmm.

Just over 10% of area homes are formally in foreclosure. And just shy of 1 in 5 area mortgages are more than 90 days delinquent. Sounds like an awful lot of folks are missing this socialist gravy train.

A local public affairs radio program from late August {} had on First Florida Home Loans President Grant Simon and a bankruptcy atty from the OC Legal Aid Society. Lemme tell you, they sure didn't paint a rosy picture on this hilarious topic of local foreclosures, and said nothing about any FHA money trees.

An excerpt that goes right to the heart of the silly suggestion that some army of O-town welfare queens are laughing all the way to the FHA:

"I've got to tell you, the loan modification process is not an easy process, and many times within my sphere of influence, and with some friends and acquaintances...they'll bring their paperwork in to me and I'll review it for them and quite frankly it takes me a little bit of time to wade through the paperwork and say 'this is what you're really being offered'...".

That's the President of a realty & mortgage company speaking right there. Not Hugo Chavez. Or Hitler.

Add to that a BusinessWeek article from TODAY making the following point:
"the nation’s housing market [has for a year] becom[e] ever more dependent on the Federal Housing Administration and yet some of the same scoundrels who made risky subprime loans [have since moved to] originating new loans, this time with the federal government’s backing." This has meant that, according to a similar story in yesterday's LA Times, "The percentage of FHA loans that are delinquent or in foreclosure climbed to nearly 8% at the end of June, from about 5.5% in early 2006". Both articles say this is leading the Agency to ratchet up lending criteria, even as a bailout or new-wave housing market collapse (take your pick) looms in the near future.

Ratcheted up loan criteria will put the FHA back in black, but it also means struggling housing markets like Orlando's get a fresh kick in the crotch.

We're looking here at the wreckage of working people suckered into crazy balloon mortgages by predatory lenders...lenders who themselves were meeting a Greenspan-created demand of institutional investors...who we should never forget were and are the ones having ACTUALLY gotten their chestnuts pulled out of the fire by gummint bailouts. The little people with the mortgages were gullible, but were also goaded by bad 'expert' advice.

We're also looking by now at the wreckage of fiscally conservative people of modest means losing everything to a burst housing bubble's knock-on effects: a hobbled consumer economy and labor market...with Florida's famously inadequate tax structure as an added anchor. All the while unemployment points toward depression-era levels, and the Sentinel runs stories about a state budget "in shambles" and a new round of savage cuts on tap, even as welfare, food stamp, medicaid and prison rolls are at all-time highs. I'm not seeing any giggling lucky duckies here.,0,3776024.story

The mortgage broker/realtor Grant Simon mentioned above takes the view that none of this local foreclosure bleeding will stop until the unemployment crisis turns around...but here's the worst of the worst:

Lots of smart, market-savvy people are saying that were looking at a 'new normal'. That, in the words of a WSJ article from monday, "It Will Be Years Before Lost Jobs Return -- and Many Never Will". {} Economic development expert Richard Florida has made this same point, with sunbelt cities like our own particularly in mind.

Struggling homeowners of ALL political stripes are more likely to fall into the waiting (& radio advertising) arms of "foreclosure rescue" sharks than will ever successfully negotiate a hard-to-qualify-for FHA maze. Attorney General McCollum's office describes these as "unscrupulous companies...taking advantage of the desperate situation our state’s homeowners are facing. These companies promise they can help save homes, then take outrageous up-front fees...often keep the fees, take no additional action, and let the homes fall into foreclosure."

Sure, Synan. This all sounds like a complete laugh riot. Especially the part about upside down mortgage-holders living on easy street.


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