Saturday, January 31, 2009

Buying A Home In The Midst Of The Bush Depression-- And The Squatting Option


Marcy Kaptur-- a voice for Americans who can't afford to rent a lobbyist

My friend is a school teacher in Compton. He makes around $55,000 a year, give or take. It's never (at least not since the Republican takeover of government) been enough to buy a home in L.A. and these days of frozen credit the dream of home ownership is further away than ever-- even as home prices drop down to more affordable levels. Banks just will not lend-- even to the most qualified buyers with steady, tenured jobs. The Bush Regime shoveled $300 billion-- no strings, no adult supervision, no accountability-- at the banksters and what happened was predictable: some of it went to scooping up other, more distressed banks and related businesses and some of it was simply stolen (in the form of self-awarded "bonuses" for... jobs well done? Rudy Giuliani may think $18.4 billion in taxpayer money to crooked, grasping millionaires (like himself) is a perfect way to get the economy moving-- in essence that is the heart of the GOP trickle down theory-- but most Americans are howling mad and want the stolen money returned. Missouri Senator Claire McCaskill would go even further.
Sen. Claire McCaskill has delivered a sharp threat to the wallets of corporate executives who took large compensation packages even as their companies accepted government bailout funds. Things, she warned, are going to change.

"I've been mad for a while," said the Missouri Democrat. "When we passed the initial half of the TARP money, [there were] rumors about bonuses, the fact that too many of these guys were holding onto the jobs even though they were running these companies into the ground. Reality didn't seem to be the order of the day."

So McCaskill took to the Senate floor on Friday to put an end to the surrealism. In a bill that came to the surprise of reporters, her colleagues, and the White House alike-- there was no coordination with the Obama administration, she said-- the Missouri Democrat called for compensation for employees of bailout recipients to be capped at $400,000 a year.

"They don't get it," McCaskill said on the floor. "These people are idiots. You can't use taxpayer money to pay out $18-billion in bonuses... What planet are these people on?"

Planet Republicana, of course. And we elected Democrats, by substantial margins, to save us from that deadly, toxic, sociopathic planet. And that brings us back to our topic of home buying.

My friend found a house in the Glassell Park neighborhood of L.A.-- a changing neighborhood-- that has been hard hit by the foreclosure mania. A hard working man who speaks little English had literally been tricked into a complex variable rate mortgage that he was assured was safe for his family of six. The house is beautiful and he got it for around $500,000 with 5% down (around $25 grand). It was a stretch but he was able to make all ends meet for two years, in the meantime upgrading everything in the house-- electric, plumbing, a guest cottage, a gorgeous garden... And then the full force of Bush's Republican Economic Miracle hit. His mortgage payments more than doubled. He had just been able to make things work before this inexplicable rise in his payments. Now he couldn't. The bank was willing to renegotiate, but not substantially. He faced foreclosure and the complete destruction of his credit-- let's hope Vice President Biden takes an active role in reforming the disgraceful bankruptcy law he helped Bush shove through Congress for his pals in the banking community now that he's in charge of that middle class task force-- and he realized he'd have to sell the house. Unfortunately, houses aren't selling-- at least not at the prices people paid in the last 15 years.

He put his house on the market as a potential short sale for $250,000, half what it was valued at when he bought it. If the bank approved-- and ate the loss-- he would be able to save his credit. My friend the school teacher saw the house and offered $270,000 in cash (borrowing money not from a bank but from a friend). The deal was approved by the homeowner's bank. But then the homeowner realized he had nowhere to go with his family. After spending months looking for a place to relocate-- even out in the dreary desert communities between L.A. and Las Vegas-- he realized that unless he was willing to split his children up among relatives, he couldn't leave the home he could no longer afford to pay for.

Legally, my friend the school teacher could have forced him out at this point. Escrow was about to close and he was entitled to pay the agreed amount and take possession. Ethically... well, how do you evict a family from their home? Instead, we found him another home (in Hollywood), and we suggested the Glassell Park guy follow the advice being offered by Ohio Congresswoman Marcy Kaptur, the longest serving Democratic woman in the House: squat in his own home.

Rep. Kaptur, who is being mentioned as a replacement for retiring Republican incumbent George Voinovich-- the GOP is putting up a hapless and pathetic Bush clone, Rob Portman-- is, like many Americans, steaming. She's angry because the federal government has squandered the TARP funds without helping out homeowners. Her area of northwest Ohio has been hard hit, like southern California. Her advice is startling-- and not exactly what Americans are accustomed to hearing from Inside the Beltway or from the Establishment's media: "Unless [you] have good legal representation do not leave your home because remember possession is 90 percent of the law." The revolution has started?
"So I say to the American people, you be squatters in your own homes," said Congresswoman Kaptur before the House of Representatives. "Don't you leave."

She's called on all of her foreclosed-upon constituents to stay in their homes and refuse to leave without "an attorney and a fight," said CNN.

"If they've had no legal representation of a high quality, I tell them stay in their homes," Kaptur told Griffin.

Kaptur is a high-profile advocate of an increasingly popular mode of fighting foreclosures best known for it's key phrase: "Produce the note."

By telling a bank to "produce the note," a homeowner can delay foreclosure by forcing the lender to prove the suing institution is actually the same which owns the debt.

"During the lending boom, most mortgages were flipped and sold to another lender or servicer or sliced up and sold to investors as securitized packages on Wall Street," explains the Consumer Warning Network. "In the rush to turn these over as fast as possible to make the most money, many of the new lenders did not get the proper paperwork to show they own the note and mortgage. This is the key to the produce the note strategy."

Watch the CNN video to get a better idea about why Kaptur is so angry at the banksters and how to hold the vultures accountable. She says if you can't afford to hire a lawyer, legal help is available through a number of organizations including legal aid and Advocates for Basic Legal Equality.

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At 12:54 PM, Anonymous Anonymous said...

Thank you Marcy Kaptur from Toledo, of the best out of Ohio. I pray that she does run for the Senate and gets Voinovich's seat....because he's done absolutely nada for his constituents. Rep Kaptur has always been the voice for labor and lower/middle classes.

At 3:11 PM, Anonymous Anonymous said...

That is a brilliant tactic. Thanks for writing about it.
Susan in Iowa

At 4:34 PM, Anonymous Anonymous said...

'Out of the blogs, and into the streets!' I hope this gets TONS more press and people really start fighting back.

Thanks for helping spread the word.

At 7:50 PM, Blogger Dave said...

I love a doomed struggle. Fortunately, there is probably a better path. Many economists and even some politicians are starting to realize that Fannie and Freddie can actually turn a profit for the taxpayer making fixed rate mortgage loans at 4.5%. It's not a panacea for everyone. The teaser rates for the borrower Howie mentioned who paid $500K produced loan payments unrealistically low and a 4.5% loan might not be possible.
Still, for many millions of homeowners and thousands of towns and neighborhoods, being able to keep people in their homes is vastly superior to evictions and boarded up homes. So, follow Marcy to the ramparts and wave the bloody flags, or call your representative and urge them to support Fannie and Freddie lending at 4.5%

At 10:40 PM, Blogger elly higginbottom said...

i was born and lived 23 years in toledo. i have always admired marcy kaptur-but, wow, she really topped herself this time.
the los angeles 5 a.m. news actually showed the report from toledo's abc affiliate. once. and since then, i haven't been able to find any major reporting on this. and when i saw that report at 5 a.m., my response was, "all right! this is it, people are REALLY going to get SO SINCERELY angry and finally get together to stand up to all of this shit!" and then almost nothing. so far not even the major supposedly liberal or progressive websites like huffpo & thinkprogress. unless you count a comment left on a story about the possibility of homeowners renting from the banks.
and that's it. what the hell? i'm not one prone to giving into paranoia that big brother has already happened (like an acquaintance who suspects the switch to digital t.v. is a way for the government to watch us in our homes) - but, how is a congress person calling for homeowners to squat not a major news story?
oh, wait, silly me - i forgot a much more important event just happened; the superbowl. economy and bailouts be damned! the steelers won their 6th superbowl!
thank you for posting this story, though. i'm comforted in a way that it is being written about at all.

At 11:55 AM, Anonymous Anonymous said...

Ridiculous. Squatting is illegal. Bottom line. By squatting you are stealing from people. How about the friend who paid all the costs of purchasing the house, jumped through all the hoops to purchase the house and is now at the mercy of a squatter?

If someone is able to float the mortgage for 2 years but not for subsequent years, they simply are not able to afford the house and should not have purchased it in the first place. I know this sounds very harsh, but there is fault to be had, not only on the bank's part, but also on the part of irresponsible homeowners who live in some sort of denial about what they can and cannot afford.

I live in a tiny house with my husband and 2 children. Do we want to live in a bigger house? yes. Could we have purchased a house for a ridiculous price a few years back? yes. Did we? no. Reason: we realized that putting down a low down payment with a fluctuating mortgage rate could potentially be a disaster. At some point, people have to take ownership of their own circumstances and realize that they took a chance, made a bad decision, and now have to pay for it.

If you've noticed, I'm bitter about the whole topic of squatters. After living cramped in a tiny house for 10 years, we are finally at a point where we can afford a larger house and have found a great investment. A short sale. Well, long story but there is a squatter (not the owner, just some lowlife that decided to squat in a house that has been on sale for 8 months and take his chances). This guy is NOT destitute, is NOT a family man, HAS moved in illegally with some nice pieces of furniture including a 90" flatscreen tv, IS raising pitbulls in the house (which is destroying all the wood in/out of the house), HAS hired an attorney, HAS tried to extort money for "relocation costs", HAS hired security. . . you name it. I have NO respect/sympathy for squatters and little for anyone that encourages this behavior.


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