Last week Mayor Emanuel announced a $20 million program to rehab and reoccupy foreclosed homes in nine neighborhoods. At AustinTalks, Otis Monroe points out that Austin and North Lawndale aren’t part of it – traditionally “left-out communities” that have been left out again.
Indeed, not a single West Side community is included in the program.
In Austin, the same day the city program was announced, South Austin Coalition was releasing a report calling on banks to fix the housing crisis and the related economic collapse by writing down underwater mortgages to market value (see Newstips). That would free up $70 billion a year in consumer spending, creating a million jobs a year, according to the New Bottom Line Campaign.
Yesterday a New York Times editorial backed up the report’s contentions: “The economy will not recover until housing recovers — and that won’t happen without a robust effort to curb foreclosures by modifying troubled mortgage loans.
Instead of pushing the banks to do what is needed, the Obama administration has basically urged them to do their best to help, mainly by reducing interest rates for troubled borrowers…
Reducing principal is a better solution than lowering interest rates, because it reduces payments and restores equity. Bankers resist, because it could force them to recognize losses they would prefer to delay. The administration has resisted, in part because principal reductions are seen as rewarding reckless borrowers.
But many of today’s troubled borrowers were not reckless. Rather, they are collateral damage in a bust that has wiped out equity and hammered jobs, turning what were reasonable debt levels into unbearable burdens.
The Times urges action by regulators and by Fannie Mae and Freddie Mac to ease the rewriting of underwater mortgages. The paper calls on President Obama to include “strong support for principal reductions and easier refinancings” in a forthcoming announcement on jobs — otherwise he “will not get at the root of the problem.”
SAC and NBL don’t focus on government; they argue it’s up to banks to rewrite mortgages – and they owe it to us, having received trillions in bailouts and backstops. And right now they’re sitting on unprecedented cash reserves.
SAC chose a foreclosed home in Austin now being rehabbed by the Westside Health Authority in the first phase of a $2.4 million community restoration fund, won from U.S. Bank by the Coalition to Save Community Banking after the takeover of Park National Bank.
That shows that communities can pressure banks to step up and take responsibility – though it will take a lot more pressure to get banks to take full responsibility for their role in the collapse, especially with a political establishment that treats banks with kid gloves.
In any case, it shows that community groups on the West Side are acting to save their neighborhoods from the ravages of foreclosure, in the face of historic neglect – and that they merit more attention from the mayor.