Mortgage Meltdown: State and Local Action Could Save Everyone


  • By slowing down the progression of foreclosures in the courts, judicial sales and bankruptcies, states can effectively bring the fall of housing to a point of equilibrium where at least the opportunity will arise for recovery. It is distinctly possible, particularly with the effect of inflation and devaluation of the dollar, that the numbers can work out even without a strong market. 
  • Borrowers, lenders, investment bankers and owners of CMOs might breathe a sigh of relief in a few years if they cooperate in these procedural mechanisms designed to slow down foreclosures. Kudos to Philadelphia Sheriff John Green who took the stand. That’s not just politics, it is courage. 
  • And it’s not socialism, it is reality: those people who would oppose these measures are arguing against their own interests. These measures are what Government is for — to step in and NOT let the the fabric of society get ripped apart and by the way, to prevent the precipitous decline in YOUR equity in YOUR home even though YOU are not in foreclosure. Do you really think that this mortgage meltdown is not going to cost YOU?
Philadelphia suspends sales of foreclosed homes (more socialism will fix it).

Reuters ^ | March 28th, 2008 | Jon Hurdle 

Posted on March 31, 2008 6:50:08 AM MST by 2banana

PHILADELPHIA (Reuters) – Authorities in Philadelphia will suspend foreclosure sales of homes whose owners have fallen behind on adjustable-rate subprime loan payments — potential relief for tens of thousands of struggling debtors.

Sheriff John Green said on Friday he would halt sales of foreclosed properties in April and would seek a court order extending a moratorium for an unspecified period.

His action follows a nonbinding resolution passed unanimously by the Philadelphia City Council on Thursday calling on Green to stop the sales to give borrowers more time to seek a settlement that would prevent them from losing their homes.

Philadelphia becomes the first U.S. city to halt foreclosure sales in the current crisis, although Cleveland and Baltimore are considering similar measures, said ACORN, an advocacy group for low-income families.

The group said 45,470 subprime foreclosures are expected in Pennsylvania between the third quarter of 2007 and the end of 2009.

Green, the sheriff of Philadelphia city and county, is trying to identify and track homeowners with weak credit histories who took out the loans with initially low repayments but who are no longer able to afford them because their rates have adjusted sharply higher.

Such loans are expected to lead to a flood of foreclosures throughout the United States this year, and have led to severe losses among financial firms trading in securities backed by the mortgages. ACORN estimates 2.2 million mortgage loans will go into foreclosure in 2008 due to the subprime crisis.

“Given the severity and complexity of mortgage foreclosures, a moratorium will allow for more time to identify and help distressed home owners,” Green said in a statement.

  • There is a most interesting by-product of all this is that the refusal of the Federal Government to get involved in the remedy to a problem that was created by intentional non-regulation and non-enforcement at the Federal level: 
  • States are rediscovering their power, their rights and their obligations. The fact is that the Federal government cannot be be trusted (or at least IS not trusted) by most participants in the mortgage meltdown. 
  • The unintended consequence of the mortgage meltdown, which adds to the Katrina fall-out is that states will take action on their own and that they might form regional unions through agreements that will look very much like treaties between sovereign nations.



States Tackle Foreclosures In Absence of Federal Help

By Dina ElBoghdady and Renae Merle
Washington Post Staff Writers
Wednesday, April 16, 2008; A01


This month alone, Philadelphia‘s sheriff delayed foreclosure auctions of 759 homes at the city council’s urging. Maryland extended the time it takes to complete a foreclosure. State leaders in Ohio recruited more than 1,000 lawyers to aid distressed borrowers.

Frustrated by the slow pace of federal action on behalf of struggling homeowners, some states and cities have struck out on their own to stem an alarming rise in foreclosures that has depressed home prices in most parts of the country and eroded local governments’ revenues as property taxes and utility bills go unpaid.

Nine states have committed more than $450 million to “loan funds” aimed at refinancing the mortgages of at-risk borrowers, according to a study by the Pew Charitable Trusts. A handful have brokered deals with major lenders who have pledged to ease terms for some troubled loans. A few states have lengthened the time it takes to complete a foreclosure.

“What the states are saying is: ‘We can’t wait any longer for the federal government. We have to get ahead of this,’ ” said Tobi Walker, a senior officer at the Pew Charitable Trusts. “The states are experiencing this pain more directly than the federal government is.”


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