Tuesday, January 15, 2008

Oakland's Silly Mortgage Workshop

This past weekend Oakland held what can at best be called a completely worthless forum on the so-called mortgage crisis.

Not to suggest that the mortgage crisis isn't real. The statistics show that numerous East Bay residents took out risky subprime mortgages and will pay the consequences either through high payments or foreclosure.

For starters let's take a look at government officials' claims about what set off the mortgage crisis in the first place. Supposedly, a set of unscrupulous lenders "took advantage" of completely innocent and ignorant borrowers, most of them with low incomes, and a disproportionate number of them Black or Latino (that latter charge is one I suspect to be false, but I don't really feel like following up on it at the moment).

The neo-racist-Leftist logic here is probably that mortgage brokers, being committed racists, preferentially targeted minorities for toxic loans. Even worse, maybe they're suggesting that minorities are somehow less able to understand what they're signing. Naturally, this is completely illogical. More probably, those in minority communities were more likely not to have been homeowners in 2003 when interest rates plunged and the housing bubble began to inflate. They took the opportunity to buy homes with low payments, choosing to take the risk of rates resetting later, and the rest is history.

I also reject the notion that subprime "victims" are in any way blameless. Every one of us knows at least one person who was drawn into the housing bubble, and in nearly every case that person is not some victim who was forced under duress to sign documents they could not understand. No, these people were either greedy, hoping to sell the property and make a quick buck, or they simply willfully ignored the financial peril, just like those who pulls out credit cards to that handbag or flat-screen TV they can't afford.

So I'm not really sure what the point of this community meeting was, other than to reinforce in people's minds the importance of having government around to come bail you out of trouble every time something bad happens. Short of a disastrous government bailout, these people will wind up exactly where they belong -- ex-homeowners with poorer credit records who return to the ranks of the renting.

Our local Congresswoman Barbara Lee blamed the problem on George Bush, suggesting that he's stopping Congress from doing something to "solve" the "problem." I find this argument humorous, considering it was pretty obvious starting in 2003 that a housing bubble was inflating, and I don't recall seeing Lee running around trying to prevent people from getting into trouble. No, just like Hurricane Katrina and countless other examples, Leftist government officials get a free pass on being proactive.

The crux of the forum appeared to be the suggestion that troubled homeowners not try to "go it alone" in dealing with their lenders. "Make sure," our local leaders said, "to have someone such as a credit counselor advocate on your behalf." Here we meet another Leftist trick designed to make people as dependent on the government, or its agents, as possible. Wasn't it people's reliance on bad advice that supposedly got them in this mess to begin with?

The East Bay is rife with this mentality that people -- particularly poor people -- need the government to come in and help them out, or potentially even run their lives for them. That was the basic message of this forum, from the staff memos to the meanderings of Oakland's do-nothing mayor Ron Dellums. No one mentions the potential positives of people taking personal responsibility for what transpired and moving on.

No one deserves a bail-out here, and there is no reason why a lender should "step up" and change loan terms unless doing so is in the lender's best interest. From the borrowers' perspective, facing foreclosure offers a difficult but not intractable opportunity to take control over their lives.

And, by the way, Dellums knows this. He doesn't care. He just wants to get the right quote in the papers so he can continue to slow down the "recall Ron Dellums" movement and keep his access to the perks of the mayor's office.

But more on that later.

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