 |
|
|
 |
|
|
|
|
It’s Time for a Marshall Plan for Mortgages
By The Rev. Jesse Jackson Sr.
For the two million homeowners who face foreclosure over the next year because of the subprime mortgage crisis, their hopes rest not with themselves but with policymakers and lawmakers in Washington and the investment community on Wall Street.
The enormity of the unfolding crisis is clear. Unfortunately, the remedies to the sub-prime crisis that have emerged will only serve to slow down the threatened economic tsunami, not avoid it.
The Bush administration’s proposed five-year freeze on home-loan rates, while a step in the right direction, doesn’t go far enough. The plan simply doesn’t help most of the families facing a foreclosure threat. Of the 6.5 million subprime borrowers in total, only about 750,000, or 12 percent, would be helped, according to some estimates.
They are the homeowners who are up-to-date now with their loan payments but would fall behind and risk foreclosure when the loan resets in the coming year. To truly help those in need, many of whom are first-time homeowners realizing the American Dream, any statue of limitation should be eliminated, among other actions.
What we must provide is a solution that restructures, not repossesses.
It’s time for another U.S. government-sponsored Marshall Plan – but instead of reconstructing Europe after World War II, today’s Marshall Plan for Mortgages would restore homeowners’ and investors’ confidence and dreams.
We already have a model for such a plan. It has been used successfully several times since the Great Depression. It has always worked. That model is the Reconstruction Finance Corporation. During the Depression, President Hoover used the independent government agency it to provide $2 billion in aid to state and local governments and for loans to banks, railroads and other businesses. Subsequently, President Roosevelt used it to finance the most creative aspects of his New Deal.
It helped restore business prosperity by financing building programs for highways and other infrastructure and for reorganizing the banks. It founded Fannie Mae and its government-insured home mortgages and provided funds for rural electrification efforts. And practically all of the nearly $10 billion in loans made by the RFC were repaid to the U.S. Treasury – with interest.
Since then it has helped our farmers and, during the 1990s, a similar agency – the Reconstruction Trust Corporation – rescued failing savings and loans. If we can save the S&Ls, we certainly can save homeowners with subprime mortgages. And whatever you call the revived agency – whether its middle name is Finance, Trust or even Mortgage – it is needed today to restore homeowners’ and investors’ confidence and dreams. It will rescue the futures of those Americans steered into subprime, adjustable-rate mortgages, often laced with hidden fees they never knew about.
Many of these victims of aggressive mortgage brokers were single women, young couples, Latinos and African Americans. And they live in every neighborhood in every one of our major cities and elsewhere. In one block alone on West Madison Street in Chicago, every one of the homeowners is in default on their current mortgage terms. In neighborhood after neighborhood in Chicago, foreclosures have soared to more than 50 per square mile.
We must move immediately to adopt this Marshall Plan for Mortgages or face the prospect of entire neighborhoods and communities becoming depressed and, potentially, abandoned. Unless we act, the crisis will continue to snowball.
On Jan. 1, the interest rates on hundreds of thousands of home loans are scheduled to balloon, triggering an avalanche of foreclosures. Finding a permanent answer to this crisis should be a priority that unites all Americans, regardless of political party, ethnic background or income level. Financial institutions, politicians and local communities must work together to restructure mortgage loans and stem the rising numbers of foreclosures.
Our leaders must not fail us. On Monday, (Dec. 10), thousands of Americans, including business leaders, mayors and others, are expected to march on Wall Street and in cities across the country to urge the government to take the right steps immediately to solve this economic emergency that touches everyone.
It’s time to heed their battle cry:
Save our houses – restructure, don’t repossess. |
|
|
|
|
