Democrats push 'ownership preservation' agency

A couple of news items today at the intersection of politics, government and the foreclosure crisis. Bloviation at no extra cost.

News item from LATimes.com: "Senate Democrats today demanded a much more forceful response to the crisis of home foreclosures, including the possible creation of a new government body that would purchase failing mortgages and help troubled borrowers refinance into new loans."

More: The idea "prompted criticisms of a government 'bailout' that would put taxpayers on the hook for costs that should be borne by speculators and unwise lenders. 'I am concerned that further government action will expose taxpayers to excess risk or be a bailout,' said Sen. Jim Bunning (R-Ky.)," who is pictured at left.

Bloviation: The man from Kentucky is right, this is a big-time bailout. There's a reason no one -- not even the Chinese -- wants to buy these failing mortgages: They are bad investments. Why should the government bail out lenders by stepping in to buy a $500,000 mortgage backed by a $350,000 home? Especially when the home will probably be worth about $320,000 a year from now.

News item from Sacramento via LATimes.com: "Legislation aimed at slowing residential foreclosures in California failed by a single vote in the state Senate on Wednesday, after Republicans balked at requiring lenders to talk personally with borrowers before they start the default process."

Bloviation: An intriguing idea but completely unrealistic. Lenders and servicers are barely capable of answering their phones and their mail -- this is one of the main reasons the Bush administration told them to hurry up and make decisions on large groups of loans rather than individual loans. It's unrealistic to expect them to suddenly get organized and start reaching out to homeowners. If I had a nickel for every story of incompetent lenders and servicers that has been e-mailed to this blog, I could buy Lefty the most expensive drink at Starbucks.

What can government do? For starters, it would be wonderful to see a local government that's facing a foreclosure problem -- say, the city of Los Angeles -- stop complaining and instead start playing hard-ball with banks and lenders regarding the upkeep of foreclosed houses. Mosquitos in the pool? Tagging? Broken windows? How about a city ordinance calling for heavy fines against the (corporate) homeowners who fail to keep up these foreclosed properties? And how about a city website that names names of corporate owners who let houses and neighborhoods go to seed?

Enough of my thoughts. Yours? E-mail story tips to peter.viles@latimes.com.
Photo credit: www.bunning.senate.gov

Comments

[Rob]

Seriously trying to control my anger, but not my humor!

You poor misguided clowns. Smart money is out so let use the taxpayers.

[mark g]

this will strain the LA Times servers... anyways, this is the "bailout" we responsible homeowners/renters really fear... wasting our money to create another bureaucracy, and sustaining inflated prices possibly... they really need to "let it go" and let the foreclosures/walk aways happen... Dems should be wary of this during an election year, even though it happened under Repub watch...

[Jess]

WOW! that just pisses me off! I think I am getting punished for being responsible! My savings are declining in value cuz the interest rate I get is way below the inflation rate! now I'll pay taxes for the dumb a$$es who were reckless! I didn't think I would ever say that, but I don't think I want to vote for democrats! This is one dumb move move after another! Why don't they take my taxes and "invest" them in education or something! How about a real fix!

[Westside Renter]

I like your idea Peter. Why don't you float it to Villaragosa.

[Laker]

What would you expect from the democrats? Raise taxes, bail out all stupid homeowners and banks, freeze foreclosures, reward greed, help people stay in their homes rent free for 6-12 months.
On the other hand, punish the responsible Americans, the true middle class. increase their taxes. Reduce their savings accounts rates.
What a bunch of bull.
The funny part is the Giulliani that according to bankrate was against federal intervention is out of the race now, and people the Hillary are still there...
"ownership preservation" What is that? what kind of ownership are they talking about? Maybe them mean mortgage ownership! But certainly not home. When you own (a lot) more on your house than its worth, it means you own nothing, you are just renting and paying over priced rent. Moreover, the mortgage (bank) actually owns you!
Home owners should be renamed to Mortgage owners! because that's what they are.

[left of lefty]

here is another reason to buy real estate in metro la now! no need to worry about being forced out of your home, because our government will be here to protect us. once everyone realizes they can all get a home, the prices will shoot through the roof and you'll never be able to afford one! the democrats control congress today, and chances are good we'll have a democratic president in november. so get in on the ground floor before congresses passes this bill!

[sunsetbeachguy]

Stupid, STUPID, STUPID...

Why don't they just give everyone a million dollars!

All of the Govt intervention floated to date, is subject to the law of unintended consequences, that will make the housing bust worse.

[Lou]

George W. Bush did everything possible in the last 8 years to make me not vote Republican, now the Democrats are trying to do the same thing to me.

[Tombstone Realty]

This...is the dumbest....thing....ever....proposed.

Where will they get the money.
What does this do to Freddie/Fannie.
Who is responsible for the supervision of this fund/agency.
How will they be able to maintain these homes from Washington, D.C.
Who will they enlist to sell them - the same banks, agents, brokerages that got us into this mess?
Who will they get to buy them? How would they be able to remove conflict of interest as a government agency selling houses?
What will be the resulting effect on the SIV, bond markets? The dollar?

Really, did the person who first float this idea have *ANY* thought process behind it at all?

The only consolation I have is that by the time the government cobbles together some so-called Homeowners package, everyone would have lost their home already.

Now, I'm going to off and seethe in a corner for a while.

*seethe*seethe*

[F Dibble]

Peter--Thanks for the great idea..If these financial institutions had to maintain these foreclosed properties to neighborhood standards, they wouldn't be so quick to make these bad loans and they might be more willing to wheel and deal with the homeowners in danger of foreclosure. Not that I have any sympathy for most of them. Both of these parties drove up prices to an unsustainable level. Maybe you could run for mayor!!!
FD in TO

[William E. Jones]

Lemme get this straight...people borrow more money than they can afford to ever repay in order to own a home. Then the government comes along and enables people to stay in a home they can't afford. Markets decline...

Next step? The government will step in to buy the house so that the people who bought it don't lose any money.

Don't laugh...some politician will suggest it.

[MyLessThanPrimeBeef]

Senator - the word came from 'senex,' Latin for old dude (also see 'senior').

So, what do you expect from old doddering dudes but old doddering ideas?

[mattress man]

Palmdale PD needs to send it's officer OT bill to
the holders of foreclosed properties. I hear they
have a special detail which goes around evicting
squatters and fixture vandals. It's costing those
who actually pay property taxes in this desert kingdom.

[amir]

I always support the Democrats... until they open their mouths...

A horrible idea all around.

[Chris Pepper]

It seems like the government is going for the bail out. But, I don't think they are sophisticated enough to execute it. Good luck.

[Bots]

Welcome to the USSR... the United States Socialist Republic

This thing was just barely voted down??????????
Are you absolutely kidding me!!!!!!!!!!!!!!!!!!!!!!!!!!!
Excuse me while I go puke for 20 minutes. My god, they'll try anything to keep housing unaffordable and rescue these banks. I've had enough of this Communist crap! I think I'm going to have a brain aneurism

[CaptHowdy]

I am fine with this...

that is, as long as the fed govt will also cut me a check for amount of an average starter home in my neighborhood (about $600,000).

If they're not willing to do this, and they go ahead with this plan which is an affront to families like mine that did not borrow more money than we could repay, then I will not be voting for a democrat for the foreseeable future. And I'm a lifelong democratic voter.

What do I think the fed govt should do? They should help people who are going to lose their homes transition back to the housing arrangement they had before they bought the homes they couldn't afford, i.e. renting. They could ease the pain, I guess. Maybe offer a tax deduction equal to first and last month's rent. A one-time deduction for moving expenses. Maybe offer landlords an incentive of some sort to rent to people whose credit was damaged by foreclosure.

But this bailout plan is an outrage.

[ed]

"Suppose you were an idiot and suppose you were a member of Congress. But I repeat myself." Mark Twain

[farinhite_451]

Everyone,

Grab a marker and bring your NO BAIL OUT signs to the Kodak Theater for tonight's Debate!

This outrage needs to be stopped dead in it's tracks!!!

[JohnnyB]

As this housing collapse intensifies it will become clearer and clearer that our "elected" officials will seek to legislate and implement “solutions” that benefit the financial industry under the guise of benefiting individuals and supposedly “empowering” their constituents while reaching into their very pockets (duh un)... spinning catch phrases like "ownership preservation". Give me a frickin’ break. “Debt preservation” is more like it.

Does anybody really still believe our government is promoting home ownership? Home equity by any measure is declining… home debt is already into the stratosphere.

These interests are completely ENTRENCHED and our “leaders” are basically bought and paid for (duh deux). They rely on the fox’s advise and contributions (duh trois) for safeguarding all the hen houses.

Predictable, but still very sickening. And it will get worse and more costly as these bailouts, freezes, moratoriums, rate locks and related artificial props persist.

NONE of our political leadership (current or aspiring) seem to be getting this right.

What lovely times we live in.

Excellent double-whammy bloviation…

[Bots]

Everytime I turn around, I see this Dodd dude proposing some new scheme to save the banks under the guise of rescuing these poor families. What's he been shut down... like 20 times? The guy's a regular Wile E. Coyote. Can't he just go away. I hear Gary Watts needs a drinking partner at the Little Knight dive bar.

[Mortgage Rescue Blog]

The government shouldn't have to bailout the companies but it should help the individual homeowners if they were misled by the companies.

[Kung Fu Grip]

To Mortgage Rescue Blog: No homeowners were misled. If you know differently, give us a specific case with details. Nobody wants to admit that these loans were not "bad" but actually made perfect sense -- provided home prices continued to rise. Home buyers made a bet that the bubble would continue and they simply lost. Again, nobody was misled. Had they won their bets, would knucklehead pols like Dodd bail the rest of us out?

[tew]

Dodd, Clinton, and Schumer come from NY & CT, the home of most of the country's investment banks, hedge funds, and old money. Of course they want to push a wealth transfer from taxpayers to their moneyed backers. The rhetoric of this issue is irresistible to these Senators - helping out unfortunate everyday folk who were bamboozled by evil big corporations.

Their bailouts will have the side effect of ultimately straining the middle class as taxes and debt rise. This, they hope, will push more voters into their clutches.

[ShameandScandal]

Another shoe drops as the 'full faith and credit of the United States of America' continues to come under attack from those who have sworn to protect same.

As the world's appetite for dollars continues to decline, as debt service on the over $9 trillion of outstanding national debt demands an ever-larger proportion of the federal budget (thats the budget that includes Social Security, Medicare-Medicaid, DoD), as the balance sheets of the big banks continue to cough up hundreds of billions of worthless 'investments,' and the growth of developing countries pressures U.S. corporate profit margins downward and the price of raw materials upward, the question gets closer to the surface,...who is the lender of last resort ?

Just imagine the '09 version of Bozo and the Clowns, suggesting in a few years that it's their 'patriotic duty' to require all Americans to 'invest in America's future' through the 'Saving for the Future Bonds' (SFB) program. Acronym suitable for other interpretations.

Just replace 10% of the value of all 401k, Roth, and IRA accounts with a like amount of SFB bonds. No special forms to fill out !! 3% interest !! Fixed for 30 years !! SFBs redeemable upon written request to brand new (NEW !!) federal bureaucracy, after 3-year waiting period !! No risk of loss of capital !! SFBs printed on special shiny paper !! Stored right next to those IOUs in the Social Security Trust Fund, which is very close !! Everybody pays, everybody plays !! Simple as pie, which is delicious, because I've tasted pie !!

Pray for a return to sanity in these darkening days.

[Dr. JwB]

My personal "big issues" have always been socialized medicine, education, and funding for scientific research. And I'm for all of those things. Thats right I'm a damn liberal. I'm a craaaaaaazy liberal!

Yet I am offended by the talk of a bailout. Not just cause I suspect that it's really the banks who will benefit (as many have pointed out before me), but rather because I see a difference between (for example) socialized medicine and socialized housing subsidies. Poor people generally don't choose to be sick, but people did choose to get these loans.

So now I'm looking at the candidates and asking myself, which candidate will stand up for me and my right to a home, and say no to a bailout?

I know the answer.

[Hugo Chavez]

That candidate is Ron Paul. He is the anti-bailout candidate and the only person I can support.

orale'

[Condor]

Time to organize a demonstration of "Responsible People of America" against the democrazies and their republican henchman! How about it Peter! To think, after 8 years of Bush-ite (read it how you want) in the White House and this is now our alternative. Can we at least demonstrate to scare those senators and congressmen?

[mark g]

cue the "Bono travels the globe to encourage other countries to forgive the U.S. debt"...

[Bots]

The one thing we do have in our arsenal is free speech. And where are you guaranteed to have at least one nitwit listen to you?... Youtube.
Even my 68 year old computer illiterate dad has navigated his way to Youtube. That's where I saw the 60 minutes "House of Cards" segment. I'll see what I can put together. If anything, somebody might get a laugh out of it.

[Michael Snyder]

Lessthenprimebeef,
In case you hadn't noticed; California's senator's are named Diane & Barbra...

[No bailout]

It is simple really.

Do you people feel sorry for someone making 40K a year facing repo of "his" Ferrari that he got with a 1/29 0% teaser loan because he can't make the payment?

How are people who bought more houses than they can afford any different?

Or should we also bailout people who can't pay their credit card bills because they have Cognac taste and Miller Lite budget?

This is moral bankruptcy at its finest.

[Jane]

I am a life long Democrat and will vote for that party at election time. But when I hear such BS come out of there mouthes it make me want to puke on there complete lack of common sense. Hey propose what you want but rooted it in application of facts. This is a sound bite that is never never ever going to happen. But if they really believe this is remotely possible I'm sacred to death of them being in charge.

[Aaron Kramer]

Don't worry after Obama is president he has stated he will eliminate the Mortgage Interest Deduction for individuals who make over $150,000 and families that make over $200,000. If you think it is bad now wait until this moronic moves compounds the problem and Congress comes to rescue us again.

[jeremy R]

"the possible creation of a new government body that would purchase failing mortgages "

housing bubble -> credit bubble -> subprime mortgage crisis -> credit crunch -> mortgage and recession crisis -> federal reserve pressure -> international credit crisis and global recession pressure -> Government exposure ->Sustained Global Economic Crisis

My solution is simple. Screw the soft landing, lets crash this plane hard, get it over with, and then lower taxes and increase interest rates. This will attract businesses, grow the economy, and encourage saving. Housing will naturally increase in "value" but not necessarily price (depending how overpriced the individual market is). Increasing real value and real savings is always good, no matter how much fake money and fake value lose.

The government should know not to meddle too much with free markets.

[Confused]

I guess the one thing I can take solace in is that I am not the only one screaming and barfing at the same time.

Thanks to all being here for me to commiserate with.

[la voce bella]

No one has mentioned that chilling solution Hillary proposed last night:

"I would call for a moratorium on all forclosues for (I think) 3 months AND

"I would FREEZE INTEREST RATES FOR FIVE YEARS."

Forget the ramifications of these "solutions" for the US...the PLANET would be "solutioned" back into the Stone Age.

[PeonInChief]

Unfortunately two provisions of the law were very important to tenants. The first would have required that tenants receive a 60-days' notice, rather than the 30-days' notice allowed under the law. The second would require that tenants receive notice of the foreclosure by mail. In those parts of California not covered by "just cause" eviction, these protections are very important.