WaPo had a nifty little article over the weekend on the newly-homeless
sleeping in their cars, because they couldn't make payments on their
$500k homes. Good lord, the Browns looking for jobs at 72 and 78. Shoot me now.
For 45 years, Robert and Lorraine Brown have
lived in their ranch-style home in Florissant, Mo. One of their four
children was even born there. But for the past eight months, the couple
have been locked in a sleep-wrecking race to keep up with their rising
mortgage bills. They've switched to cheaper phone service, cut back on
groceries and sometimes put off ordering medicine.
When they refinanced their home two years ago to
pay off some bills, Robert, now 78, was working as a deliveryman. But
his employer went out of business last April. Now he and Lorraine, 72,
a retired nurse, are both seeking work. The rate on their mortgage has
jumped from 7% to 10.5%.
"We were having a hard time meeting bills at the
time we refinanced. It seems once you get behind, you do desperate
things to catch up, and you never do," says Lorraine, trying to hold
back tears. "At the time of the loan, they tell you, 'Well, it may go
up, but it's probably going to go down.' You want it to be so, so you
believe it."
They feel alone, but they're not. America's
five-year real estate boom was fueled partly by a tempting array of
cut-rate mortgages that helped millions of Americans qualify for home
or refinance loans. To afford soaring home prices, many turned to
adjustable-rate and other, riskier loans with low initial payments. The
homeownership rate hit a record 70%.
Now, the real estate market is cooling, interest
rates are rising and tens of thousands more Americans are starting to
have trouble paying their mortgages. Nearly 25% of mortgages — 10
million — carry adjustable interest rates. And most of them went to
people with subpar credit ratings who accepted higher interest rates,
according to the Mortgage Bankers Association.
The number of borrowers in trouble will rise
this year and peak in 2007 and 2008 as the largest number of mortgages
reset to higher rates, according to First American Real Estate
Solutions, a real estate data provider.
Already, in West Virginia, Alabama, Michigan,
Missouri and Tennessee, about one in five homeowners with a
high-interest (subprime) ARM was at least 30 days late at the end of
last year, according to the Mortgage Bankers Association. After 90
days, the foreclosure clock starts ticking. Most of those foreclosures are related to job
losses in auto and garment factories; higher mortgage payments were
often the last straw.
What worries experts such as Christopher Cagan
at First American Real Estate Solutions are the adjustable-rate loans
made in 2004 and 2005, at the end of the housing boom. These loans were
concentrated in the hottest markets, such as California, where about
60% of all loans last year were interest-only or payment-option ARMs.
That's the highest such rate in the country.
Of the 7.7 million households who took out ARMs
over the past two years to buy or refinance, up to 1 million could lose
their homes through foreclosure over the next five years because they
won't be able to afford their mortgage payments, and their homes will
be worth less than they owe, according to Cagan's research.
The losses to the banking industry, he
estimates, will exceed $100 billion. That's less than the damage from
the savings-and-loan crisis in the 1990s, which cost the country $150
billion. "It will sting the economy, but it won't break it," he says.
UPDATE:The Browns in Missouri also have had a happy
ending. The lender, Saxon Mortgage Services in Texas, declined to
discuss the Browns' case with USA TODAY last week. But within 24 hours
of a call from a reporter, Saxon agreed to give the couple a fixed-rate
loan at 7%. "I'm so elated," Lorraine said.
The older you get, the more difficult it can be to find work. It's kind of scary.
All the more reason to turn over all of our social security to Halliburton and Enron, or at least their associates in Congress.
The Immigration Debate The progressive answer to immigration is to crack down on corporate
hiring of illegal immigrants for low pay, to accelerate the path to
citizenship for existing illegals, and to reform NAFTA so that it
actually produces the wealth for Mexico it promised in the first place.
The unanswered question is, how do you fix the root problem of income
disparities. It would seem that NAFTA is actually a step in the right
direction in that regard. I know that most Democrats are opposed to
this, but I have to think this tackles the problem quite well. When
multi-national corporations go into a country and treat it like WalMart
treats small businesses in small-town USA, we should expect a double
whammy of income disparity AND decimation of locally-based businesses
to generate incomes at whatever level. The immigration issue can never be addressed successfully without
actually addressing income disparity and economic stability. Capital can move freely across borders, but workers can't. The
result is to drive wages down all over. The end result, they note, is
likely to be economic nationalism, as workers demand that something be
done.
The biggest problem with NAFTA is the exploitative mentality
of many of its supporters that knows no boundaries. Hence, CAFTA and
all the other efforts. Globalization means that even Mexican jobs are
at risk too. Hmm, low-paying and insecure income versus illegal
border-crossing for higher income. Why don't free-trade supporters get
it that any rational mind will truly consider skirting draconian
penalties to feed and house themselves?
Whether you believe Mexican immigrants help or hurt
the United States, there is one incontrovertible truth: work here pays
much, much better. A low-skilled Mexican worker in this country earns
five to six times as much as he would back home, assuming he or she
could find a comparable job.
This truth is so obvious it seems a cliche and yet it remains
mostly absent from the current debate on how to reform U.S.
immigration. For all the talk around the country of border enforcement,
guest worker programs, employer sanctions and driver's licensing
restrictions, the sad fact is that none of these "solutions'' addresses
the root of the problem - a persistent and large U.S.-Mexican income
disparity.
Even the most comprehensive and progressive immigration reform
proposal in years, introduced this month by Sens. John McCain, R-Ariz.,
and Edward Kennedy, D-Mass., is more concerned with making U.S.
immigration policy more humane than dealing with income disparity
between the United States and Mexico. The bill crafts a guest worker
program -- creating new visa categories and quotas and a secure
identification system for employers -- but only provides a vague
indication that income disparity might be a problem worth taking on.
Why such reluctance? How can a proposal that purports to reduce the
flow of illegal Mexican workers to the United States not take a stab at
the root cause? Won't better conditions for immigrant workers here only
be an invitation for more illegal migrants from Mexico, as the argument
goes, as long as wage disparity remains unaddressed?
To alter income disparity, it is obvious that Mexico must reduce its
development gap and raise incomes. What is just as apparent is that
Americans do not feel, at least at the moment, that they have a
responsibility or even an interest in reducing that gap through
investment of money and expertise. They don't feel the same obligation
they once felt, say, after World War II for Europe, or that the
European Union took on when it bolstered its poorest members. Mexico
and the United States may share a 2,000-mile border but their sense of
a shared future runs two two inches deep.
When you get half a million people marching in the streets
to protest Republican immigration policies, you better believe that the
political pot is beginning to bubble in time for the 2006 election.
It
presents a real conundrum for conservatives, and a real opportunity for
progressives. That was clear from the events that sparked this
weekend's protests:
Saturday's
rally, spurred by anger over legislation passed by the U.S. House of
Representatives last December, was part of what many say is an
unprecedented effort to organize immigrants and their supporters across
the nation. The U.S. Senate Judiciary Committee is to take up efforts
Monday to complete work on a comprehensive immigration reform proposal.
Unlike the House bill, which beefed up border security and toughened
immigration laws, the Senate committee's version is expected to include
a guest worker program and a path to legalization for the nation's 10
to 12 million undocumented immigrants.
The Associated Press report of the rally
noted that the legislation "would make it a felony to be in the U.S.
illegally. It also would impose new penalties on employers who hire
illegal immigrants, require churches to check the legal status of
parishioners before helping them and erect fences along one-third of
the U.S.-Mexican border."
The
Republicans in Congress who spearheaded these measures -- particularly
Rep. Tom Tancredo of Colorado and Rep. James Sensenbrenner of Wisconsin
-- represent a resurgent Cro-Magnon wing of the party, one that is
threatening to swamp the genteel grip of corporate conservatives whose
approach to immigration is decidedly different, if equally poisonous.
The Cro-Magnon approach, embodied by vigilantes like the Minutemen,
is to blame the pawns. Their policies are predicated on the laughable
idea that we can build a fortress wall around the country and just keep
people out, a pretty notion that quickly runs aground on the reality
that no wall can contain the larger forces driving illegal immigration.
They consistently scapegoat the emigres while ignoring -- and indeed
abetting -- those same larger forces.
The
Cro-Magnon approach is repellent enough on its own merits, but the
other side of the Republican coin on immigration is the Bush plan to
create a "guest worker" program that is nothing less than the
realization of corporate America's wet dream of having a labor force
that cannot vote. It would create a permanent underclass of
disenfranchised workers, and would forever change the very nature of
immigration as we have historically known it in America, severing it
from citizenship.
This two-headed approach to immigration is like being given a choice of refreshing beverage: arsenic or strychnine. You pick.
It's all part of the ongoing Latin Americanization of the United States,
in which the standard of living and the economic and political power of
the middle and working classes is consistently driven downward and held
there. As PZ Myers puts it, "The Republican agenda is to turn the United States into a third-world shithole."
It's time,
indeed, for progressives to come up with their own plan for dealing
with immigration -- one that goes beyond the scapegoating and the
narrow business interests and realistically and fairly comes to grips
with the issue.
The negative effects of unbridled immigration on
American workers is only the tip of the iceberg when it comes to how
liberals should be thinking about this. They need to understand that
mass employment of illegal immigrants is open ground for gross
exploitation and civil-rights abuses. It also corrodes the value of
citizenship.
The progressive answer to immigration is to crack down on corporate
hiring of illegal immigrants for low pay, to accelerate the path to
citizenship for existing illegals, and to reform NAFTA so that it
actually produces the wealth for Mexico it promised in the first place. Oh yeah, and Democrats, this is a great opportunity to get the Latino
vote permanently on our side. Many Americans will understand the
corporate argument if we start making it. So as usual, progressive policies are good
politics.
