A rally at the South Carolina State House to honor Dr. Martin Luther King Jr. is being held today. At the same location just four days ago, hundreds attended another rally in support of an issue surely Dr. King would have approved—the promotion of homeownership for all Americans.
Last week’s rally sponsored by the Home Builders Association, S.C. NAACP, Urban League and others organizations including the South Carolina Small Business Chamber of Commerce was to support homeownership through keeping the mortgage interest tax deduction and easier access to mortgages for qualified loan seekers.
Unfortunately, one reporter for a national publication mischaracterized those attending as “anxious homeowners” demanding “greater attention to housing problems, particularly the expected surge in foreclosures.”
But while the reporter got it wrong, he did point out a major obstacle facing homeownership today—the glut of present and future foreclosures due to the great recession that are standing in the way of a revitalized economy and a reinvigorated housing industry.
The administration and Congress have failed to take adequate steps to address this terrible problem. Now this same reporter says that the administration is looking at the issue again.
We don’t need more talk. We need immediate action by our elected leaders to take the same crisis-mode style steps that they did with TARP to bail out the banks. Those are the same banks that are giving lip service to helping struggling homeowners stay in their underwater homes.
The answer is not to just rush all the millions of homes yet to be foreclosed through the process as quickly as possible as one prestigious local home builder told me the other day. To do so would result in property values falling through the floor making today’s prices look good. This is what Mitt Romney has advocated to help all those who want to invest in cheap rental property but the human and economic toll on the rest of us would be catastrophic.
At a Bank of America conference last month featuring President Bill Clinton talking about the housing crisis among other issues the New York Times reported the following:
“We’ve got to do something to clean these books up, and to do it in a hurry, in my opinion,” Mr. Clinton said. Stabilizing housing and dealing with foreclosures is vital for the entire economy, he contended. “I still think that’s the single most important thing we could do to loosen everyone up, go back to a free-market, full-employment economy and have the normal transactions occurring again,” he said.
Anne Finucane, BOA’s top image-maker, was on stage with Mr. Clinton and according to the story made this response, “Sounds like we need a workout deal.”
Really? BOA and the other big banks are already trying to work out a deal with the state attorneys general for their bad subprime mortgage lending practices. But all we’ll probably get is some homeowners getting their principals reduced. That’s some punishment for an industry that as a whole is doing quite well thanks to the American taxpayers.
The workout deal we really need is for the entire country. Forget about “punishing” certain banks for past deeds. We need to tell all the banks to take their mortgage losses on the front end of every homeowner in trouble by keeping people in their homes at all costs to avoid foreclosures. If that means additional government help, so be it.
If we make this a national priority, property values will stabilize, demand for new homes will go up and our economy will revive quickly.
And American families will keep their homes, their investments and their dignity. Now wouldn’t that be good way to honor the life of Dr. King.