This morning, Wednesday, October 6, 2010, House Speaker, Nancy Pelosi is calling for a Federal inquiry into the practices of the major mortgage lenders:http://www.washingtonpost.com/wp-dyn/content/article/2010/10/05/AR2010100506639.html?referrer=emailarticle
Why now, what has Nancy and her cronies been doing about the mortgage foreclosure problem for the LAST THREE YEARS? Answer sad to say…silence and very little if nothing about this national crisis.
Let’s start at the beginning!
1. In 2004-2007, our Democrat controlled congress nudged the nations housing lenders to ease the restrictions for home borrowing to make home ownership more available to more people. (a noble thought).
2. Lender small and large (Countrywide etal) more than happy to accommodate Congress and provided tainted sub-prime loans with low teaser rates (as low as 1%) to attract the unwary low income potential customers. These lenders also hid under the covers, harsh loan documents which easily turned these loans into a hellish financial trap with any economic downturn or interest rate upward movement.
3. The tainted loans were packaged and sold as securities to investors all over the world. Financial firms further aggravated the situation by selling derivitives under the guise of insuring these loans. One company providing such loans was sold to Wachovia Bank and caused it’s demise.
4. China, Indonesia, India, Russia and Eastern Europe turn to capitalism during this time and a massive rebuilding begins in these countries causing building materials to rapidly rise and price.
Building materials become scarce in the USA and cause replacement values of existing homes to rise, causing refinancing (these mostly legitimate loans also sold as securities) and investor speculation in the US housing market.
5. The growth cycle of the world economy started to cool in 2007, interest rates nudged upwards and the first wave of US real estate foreclosures began, mainly those multiple properties owned by investors who could not afford the payments, taxes and maintenance. Many of these foreclosures were also for fraudulent loans by groups posing as home buyers and setting up real estate stings intended on cheating the lenders (it works both ways folks).
Now the fun begins! When President Obama began his first year in office (Jan.2008), the first foreclosure wave was well into it’s second year and was getting stronger as the economy weakened. The President and Congress were totally unprepared and ill advised as to the severity of this problem and except for token lip service, did very little to stop or ease the foreclosures. While it was understandable that lenders should and did foreclose on thinly capitalized investors flipping properties, it was not understandable as job layoffs and terminations skyrocketed, for the President and Congress to allow these lenders to foreclose on the homes of millions of recession affected Americans (many whom were given their loan portfolios by the same government (ie. Countrywide to Bank of America) for a token common stock issue and no cash, not a thin dime (Google it folks and laugh and cry).
Think of it this way! When Hurricane Katrina rolled over New Orleans and flooded the Gulf Coast, over 865,000 Americans to lost their homes to this catastrophe – these people were victims of an unprecedented national disaster and DID NOT ASK OR CAUSE THIS CRISIS TO HAPPEN. The US, State and local governments responded with massive help, housing and relief for the storm victims. In a Wall Street Journal article, dated April 24, 2010, it was stated that our nations lenders had a foreclosure inventory of over 1,100,000 homes and that 4.8 million other homes were in some stage of the foreclosure process. These numbers have increased greatly in the last five months and it should be strongly noted that job loss and loss of business in general is the cause of the payment defaults that have led to foreclosure. These people affected were victims of an unprecedented national disaster and DID NOT ASK OR CAUSE THIS CRISIS TO HAPPEN. Since the MAJORITY of foreclosures are from recession affected homeowners and many who have lived in the same home and paid their payments for periods of up to 20 years without a late charge, the Federal Government should have exercised more power and leadership in accessing the effects, problems and solutions of this crisis, rather than twiddling their thumbs as they have done over this entire crisis period.
Nancy Pelosi and the rest of her ilk should be ashamed of this congressional leadership failure. I only hope that the Republicans and the Tea Party DO NOT MAKE THE SAME MISTAKE, even though it is characteristic of the conservative side of politics not to interfere and usually side with big business. I’m a conservative in most politics but I am also human and look at the fair side of things and what is right for this country. There are JERKS and EGOMANIACS in both parties and just saying you are a conservative does not make you a wise, strong and heartful leader. Do not allow the same over generalization BS that elected President Obama, elect the wrong people in November. We need good leadership in this country more than at any time in history. The role of government is to ensure freedom, opportunity and PROTECT it’s people from harm regardless of the nature of the threat.