‘Moratorium needed to stop foreclosures’

President Barack Obama announced with fanfare on Oct. 24 that he was bypassing “an increasingly dysfunctional Congress” and issuing federal rules to offer relief for struggling homeowners who may soon be facing foreclosure. Speaking in Las Vegas, one of the cities in the United States hardest hit by the ongoing foreclosure crisis, Obama outlined a plan that would offer help to an estimated 1 million to 1.6 million homeowners. (Associated Press, Oct. 24)

Occupy Detroit demands foreclosure moratorium, Oct. 21. WW photo: Kris Hamel

According to Jerry Goldberg, an organizer with the Moratorium NOW! Coalition to Stop Foreclosures, Evictions & Utility Shutoffs, “The plan would make it easier for homeowners who are current on their mortgages but whose loans are underwater — meaning the value of the home is much less than what is owed on the mortgage loan — to refinance their loan to a lower interest rate.” The plan would affect mortgages owned or backed by Fannie Mae or Freddie Mac, but would not reduce the principal amount owed on the loans.

“A homeowner’s loan refinancing,” Goldberg told Workers World, “would still be subject to the whim of the banks, which are the servicers for the loan, in carrying it out. This program would not provide any aid to the millions who are currently behind on their mortgages, such as the 3.8 million homeowners who are facing foreclosure this year alone.”

The Moratorium NOW! Coalition, based in Detroit, issued a press release Oct. 26 demanding the president use his executive authority to truly help the millions still facing foreclosures and evictions. It stated: “If Obama is serious about addressing the foreclosure and mortgage crisis … he could issue an executive order placing a two-year moratorium on all foreclosures and foreclosure-related evictions.

“Because the federal government now owns or insures 75 percent of all mortgage loans through Freddie Mac, Fannie Mae and HUD [Department of Housing and Urban Development], the President has the absolute authority to implement such a moratorium. In fact, President Obama’s announcement of a modest loan refinance program through executive action confirms this.

“The mortgage crisis was created by the criminal, fraudulent actions of every major bank, as confirmed in the Senate Select Committee report issued this year. The banks continue to get bailed out with virtually every foreclosure by the government-owned Freddie Mac and Fannie Mae, as well as by HUD. The banks get paid full value for their inflated loans, and then the government tosses homeowners on the streets and sells their homes for a pittance. The Congressional Budget Office has estimated that this silent bailout of the banks through Fannie Mae and Freddie Mac will cost taxpayers $389 billion.

“The people need more than a modest refinance program that will help a few who manage to get through to the banks. What is needed is for the President to take a real step to stop the foreclosure epidemic that is destroying our communities. It’s overdue for President Obama to place an immediate two-year moratorium on all foreclosures and foreclosure-related evictions.”