Housing Meltdown, Ground Zero (Andy Kroll)

by Dollars and Sense

The latest from TomDispatch. Here's Tom's introduction to the article:

Talk about a devastated landscape... Any which way you look, the housing numbers are relentlessly bad. For example, 23% of U.S. homeowners owe more on their mortgages than their properties are worth, according to Ruth Simon and James R. Hagerty of the Wall Street Journal. They possess, in the vivid lingo of the housing industry, "underwater mortgages." Among them, 5.3 million households have mortgages that are at least 20% higher than their home's value, 520,000 of whom have already received default notices. In the meantime, home-loan delinquencies and home repossessions are now at record highs. According to E. Scott Reckard of the Los Angeles Times, by the end of September, "one in seven U.S. home loans was past due or in foreclosure," and the chief economist for the Mortgage Bankers Association expects the number of foreclosures to keep rising deep into 2010.

Worse yet, foreclosures on large rental-unit buildings are also on the rise. This means, reports Robin Shulman of the Washington Post, that not just homeowners but renters are now being swept up in the housing crisis as landlords of apartment buildings in trouble let upkeep go while maintenance problems soar. Nor are the latest figures on home prices offering much cheer. Two key price indexes released last week, write David Streitfeld and Javier Hernandez of the New York Times, "indicated that the momentum the housing market showed over the late spring and summer is faltering."

There was, however, a rare ray of good news amid this dismal scene: Wall Street has, according to Louise Story of the Times, figured out how to make money from the mortgage mess by "buying billions of dollars' worth of home loans, discounted from the loans' original value" and pocketing profits while shifting "nearly all the risk for the loans to the federal government -- and ultimately taxpayers."

With this grim picture in mind and with California one of four Sunbelt states that account for 43% of all foreclosures started in recent months, we sent TomDispatch regular Andy Kroll to the Ground Zero of the mortgage crisis to see what an economic "recovery" looks like firsthand in post-meltdown America.
—Tom

And here's the beginning of the article:

Housing Meltdown, Ground Zero

The American Home-Owning Dream on Life Support

By Andy Kroll | TomDispatch | November 30, 2009

I Rescuing the Dream

At the end of a week in mid-October when the Dow Jones soared past 10,000, Goldman Sachs recorded "just another fantastic quarter" with a $3.2 billion quarterly profit, JPMorgan Chase raked in a cool $3.6 billion, and a New York Times headline declared "Bailout Helps Revive Banks, And Bonuses," I spent a Saturday evening with about 100 people camped out in a northern California parking lot. A passerby, stealing a quick glance, might have taken the crowd for avid concertgoers staked out for tickets. There was, however, no concert here—just weary, huddled souls, slouched in vinyl folding chairs, covered by blankets, windbreakers, and knit hats against a late autumn chill.

A ragged line of them wound through the lot outside the entrance to the Cow Palace, a dingy arena decades past its prime on the southern edge of San Francisco. These people, and thousands more like them who had streamed into the arena all day long from as far away as Los Angeles, Phoenix, and Las Vegas, were unemployed, broke, bankrupt, or at their wit's end. They were here waiting for help—for their chance to make it inside the warm arena to participate in "America's Best Mortgage Program."

For these homeowners, the last shot at saving their homes—and their personal version of the American Dream—lay under the glow of the floodlights in a expanse where tiers of brown and yellow seats encircled a desk-lined floor more accustomed to livestock shows and rodeos. This was, in fact, the latest stop on the "Save the Dream" tour, a massive homeowner-relief event organized by a consumer advocate group, the Neighborhood Assistance Corporation of America (NACA).

The turnout was staggering: close to 45,000 desperate homeowners showed up during NACA's five-day stand at the Cow Palace for the chance to renegotiate their disastrous subprime mortgages or sky-high interest rates or interest-only payments. For them, this event beat any chance at a star-studded concert—and best of all, it was free.

Read the rest of the article.

Labels: Andy Kroll, foreclosures, housing crisis, NACA, TomDispatch.com

 

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12/01/2009 12:40:00 PM