One Picture, A Thousand Words: A Blast From The 2008 Meltdown

<Photo: The Reckoner>

(Sorry about the crinkles -- it's been 

sitting in a drawer, for God knows how long!)

 

I came across this flyer (above) while doing some spring cleaning this week. Some friends of mine were going to this particular event, and gave me a copy, "just in case," but I had something to cover that night, I think. So I didn't make it.

But it's a fascinating blast from the past. An eviction moratorium from 2008? It's enough to make me say, "Holy Groundhog Day, Batman!" Because here we are again, in more or less the same place, only with far more damaging effects. Roughly three million homeowners are behind on their mortgages, while an additional 2.1 million are relying on mortgage forbearance, due to COVID-19-related hardships. (Forbearance refers to the process of delaying foreclosure by giving the borrower a specified time to catch up on their past due amount.)

The Biden administration has extended a national foreclosure moratorium through June 30. Borrowers can also apply for forbearance through that date, if they wish, though the Consumer Financial Protection Bureau is proposing a new rule to extend those protections through next year (see link below). 

The agency would also ask more from lenders, such as requiring them to make a "live contact" (read: phone call), and spell out options for borrowers. In some instances, they might not be able to charge late fees, interest or past late fees, which can make it tougher to catch up. We'll see what happens after the May 11 deadline for public comment passes, but it all sounds good, on first glance.

Looking back, then, the excuses that greeted State Senator Hanson Clarke's proposed two-year foreclosure moratorium in 2008 seem sadly familiar, ranging from "Lenders will go elsewhere" (they didn't, especially after the $700-800 billion bailout took effect), to, "they can plead their case to a judge" (not anymore, once the final three-year redemption period expires), to, "why should lenders wait longer for their money?" (they hold all the cards, anyway, so what's the rush to kick people to the curb?).

I'm sure that those dreaded cliches of "Big Government" and "Full-bore socialism" got tossed around a fair amount, too. As we all know, that's the standard response whenever people get tired of feeling the fat cats' feet on their necks. 

Not that banking interests had any reason to lose any sleep, given how many of the past and present Republican majorities their dollars bought them, notwithstanding the flyer's call to action ("Only a mass outpouring of people from all around Michigan will force the State Legislature to pass SB-1306"). 

Would a mass outpouring have made a difference? I don't know. Don't forget, we were about to enter the Rick Snyder era, followed by the neutering of democracy in (mostly) majority black cities like Flint, and the poisoning of its residents' drinking water.

Such horrible  outcomes happen when business and governmental interests get too intertwined for comfort, which is why I'm not ready to hand Biden the transformational President medal he covets. Yes, he seems off to a decent start, and he's been a pleasant surprise, for actually keeping progressives in the loop (compared to his predecessors, Clinton and Obama, who largely kept them at arm's length, or on the bench, depending on what they felt their latest muddle dictated).

The mainstream media seems pleasantly surprised, too, judging by the questions they're posing (as the New Yorker did last month, for example: "Is Joe Biden Really The Second Coming Of FDR And LBJ?"). But let's see what happens. After all, Biden comes from a generation that puts government action and market solutions on a similar par.

This is the essence of neoliberal policymaking. Tinker with the existing system, but whatever you do, don't try to transform it. Just fix whatever doesn't seem to work, and then, step out of the way. The only problem with this approach, as we saw in 2008, is that it rewards a handful of winners, but leaves out a slew of losers. 

It need not have taken a pandemic to finally arouse our government to act, and take actions that seemed unthinkable back then -- such as telling lenders to stop acting so predatorily, and wait a bit longer to cash their chips. But that's what went down, and that's why we're here now. Never forget that. --The Reckoner

Links To Go (Hurry, Hurry,
Before Your Stuff Ends Up On The Lawn):

The Metro Times: Foreclosure Fight:
https://www.metrotimes.com/detroit/foreclosure-fight/Content?oid=2193382

The Mortgage Reports:
No Foreclosures Until 2022?
CFPB Seeks To Extend Foreclosure Moratorium:
https://themortgagereports.com/75868/cfpb-foreclosure-moratorium

The Rent Is Too Damn High (The Squeeze Continues...)

"Who owns what you do? Who owns what you use?"
(The Gang Of Four, "Of The Instant")

It's no secret that housing costs are out of whack. Ever since the housing meltdown in 2008, more Americans rent than ever (around 43 million, according to a study by Harvard University's Joint Center for Housing Studies). However, escaping the foreclosure trap just means falling into a different trap -- the gap between what you can afford, and what the landlord squeezes from your wallet.

According to CNN, one in three Americans now pay 30 percent or more of their median monthly incomes for rent. (This figure assumes a market with a three-bedroom house, something that's only a distant dream for me, and most of the folks I know.) In cities like Baltimore, Brooklyn, Miami and Philadelphia, the figure is more like 50 percent.

The financial pros quoted in the article have a knack for understatement, as Capital One's managing vice president of community development, Laura Bailey, demonstrates: "When they get affordable housing, their lives can take an entirely different, more productive path."  Uh, can we say: "Well, duh?"

Rent is too high, way too high.  Funny how the wages remain flat and are sinking down but rent goes higher.  At least where we live, it's not too bad, just small increases...but you have wonder where all this misplaced money is going. --The Squawker

"Greed knows no boundaries, Greed does not feel

I'll be damned if I die for a profiting deal"

(The Pogues, "The Bastard Landlord")

Thanks for putting this issue on the old blogger's radar, Squawker, I'll take it from here...to me, what's even more interesting than CNN's May 2014 story is the discussion below it.  It's always worth reading the comments below any news story of note, if only to see what the Haves really think of the Have-Nots: 

"I'm a landlord. I charge as much as I possibly can. I want to make a profit. Supply and demand. If a potential tenant can't afford my rates, there a cheaper apartments elsewhere. When my vacancies become a problem, I lower rents. Don't whine that rent is too high...and then rent the place. Go live somewhere else. Maybe with more roommates." 

Sounds like the figure in the Pogues song, doesn't it? Comically so...to top it all off, he identifies himself as "American" -- though I suspect he probably shops regularly at big box stores where all those cheap Chinese-made goods are always available. Thankfully, though, he gets a proper slap-down from the next commenter, cman:

"Yea, you seem like a complete tool. The problem Mr. American (I'm assuming your a man, because such di**ish comments suggest you have the requisite genitalia), is that people cannot go live somewhere else. These high rents are city-wide phenomenon (and indeed its becoming a national trend). People cannot simply pack up, take their families and jobs with them and move to rural Alabama where you can buy a nice home for as much as you can get a decent condo in Maryland. The jobs market is terrible, and social mobility is not an option for most."

"Second, people ARE living with more roommates, for much longer (Millennials). That same demographic then gets chided by the older generations for being lazy slackers -living in parents basements, sharing apartments with friends, when their parents owned their first home at that point in their lives. This is mainly due to economic circumstances brought about by the negligence of prior generations and has nothing to do with current youngsters."

Of course, the latter paragraph speaks to a different problem, as Matthew Yglesias notes in his book, The Rent's Too Damn High (What To Do About It, And Why It Matters More Than You Think):

"The housing cost problem is largely obscured by the predominance of owner-occupied housing among middle-aged middle-class people who think of expensive housing as 'wealth' and investment profits. That perception is a mistake...If you own a home and the price of buying a house rises faster than the price of renting one, then you can make money by selling your home and moving to a new place. But as we'll see, this is a telltale sign of a bubble rather than a strategy for national wealth creation."

This phenomenon comes with unique twists in cities like San Francisco, where only A-list techies seem to have no problem affording the Golden Gate City's infamously steep rents, as Chandler Properties vice president, Samantha Chandler Duvall, informs SFGate.com: "The people coming into the city to apply for our apartments are making huge salaries -- all six digits," she says. "It's insane. I'm the first to admit it."

Mind you, this isn't a new problem, as Tony Sanchez cheerfully explains in Up & Down WIth The Rolling Stones (1978) in recounting the response from his A-list employer, Keith Richards, to a legal order that barred him from entering France for two years:

"'Now, at last, I can stop paying that grand [$2,400] a week rent for that bloody house. It's cost me more than a hundred grand already [$240,000] just to keep it going so the cops wouldn't try to extradite me.' He earned something like $25,000 a week. Using the old rule-of-thumb that rent shouldn't exceed more than a quarter of your salary, I guess Keith could afford Nellcote." 

So there you have it, boys and girls...while the political classes twiddle their thumbs, and hope that the problem goes away, you'll either have to brush up on your computer skills, or take up the guitar and hope that you can string together three chords to write The Great Lost Hit Record.  There's just one small matter, though...Keith's already got a 50-year head start.  --The Reckoner

Links To Go (Read 'Em And Weep, Then Hide Your Wallet):
CNN Money (One In Three Americans Spending Too Much On Rent):
http://money.cnn.com/2014/05/01/real_estate/rent-spending/

Joint Center For Housing Studies (Rental Housing Affordability):
http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/ahr2013_05-affordability.pdf

National Housing Conference/Center For Housing Policy

(Housing Landscape 2013 Study):
http://www.nhc.org/media/Landscape-2013-release.html

San Francisco Chronicle (Rents Soaring Across Region):
http://www.sfgate.com/realestate/article/Rents-soaring-across-region-4924282.php

SFGate.com: One-third Rule Not Always Feasible In Bay Area Rental Market

http://www.sfgate.com/business/networth/article/One-third-rule-not-always-feasible-in-Bay-Area-5300473.php

It's Eight O'Clock...Do You Know Where Your Local Realtors Are?

Long ago, when Your Humble Narrator toiled in the mass media trenches, he was assigned to write a feature on a husband and wife realty team.  They'd been a fixture in town for years, were considered progressive employers, and had a good reputation. "Not a problem," Your Humble Narrator replied. "Sounds like a piece of cake."

My 45 minutes with the Dynamic Duo of Realty passed pleasantly enough, covering all the usual bases of what they thought it took to succeed in the housing marketplace.

At some point, the male half had to take a call, and his wife weighed in with a pungent observation of her own: "When we interview anybody who wants to come here, we require them to have at least three months of savings."

"And you require that, because..." I asked.

"Well, look at this way: you might take a year to sell your first house," she responded.  "That's how it was for me.  You've still got to pay your bills, what else are you going to live on?"

"Fair point," I agreed.  "So it's not just about showing houses, and taking 'em on tours, eh?"

"Not quite, no." She pursed her lips, paused briefly, and went on. "A lot of people come through here, thinking, 'This sounds like such a nice job, showing people houses, and making money doing it.'  Well, it's not like that."

She pursed her lips yet again. "You're working nights, you're working weekends, you're working Sundays, and all this time, you're showing a house that may not sell. It's a tough business."

I remember hearing those comments around 2001-02, a good six or seven years before the Housing Bubble burst, and your local realtor had ample grounds for slitting their wrists.

Judging by a couple of articles that The Reckoner has come across,  the profession hasn't gotten much more fun, such as this cheery observation from "Business Insider" ("The 19 Jobs Where You're Most Likely To Kill Yourself"): http://www.businessinsider.com/most-suicidal-occupations-2011-10#10-real-estate-sellers-are-138-times-more-likely-to-commit-suicide-than-average-10
According to the National Association of Realtors, members' incomes have decreased from $52,200 in 2002, to $34,100 in 2010, although the association stated that realtors' median incomes rose slightly, by $800, from 2010 to 2011.

Obviously, your prospects depend greatly on where you're plying your trade, as this article about the "6 Most Stressful American Citieis" in Realtor magazine suggests:
http://realtormag.realtor.org/daily-news/2012/01/25/6-most-stressful-american-cities

Notice something missing?  All three states profiled (Florida, Michigan and Nevada) continue to struggle with high foreclosure rates, as this "CNN Money" article makes clear:
http://money.cnn.com/2012/10/25/real_estate/foreclosures-cities/index.html

You'd think that foreclosure would amount to a major stressor by itself -- what's scarier, being put in that situation, or reading a trade publication that doesn't even acknowledge the problem?

At any rate, while the "CNN Money" article suggests that there's some improvement on the horizon, nobody should feel ready to break out the marshmallows quite yet.  For realtors, there's definitely a lot of hard work ahead in most markets before anybody can say that the worst is over.

Even without the backdrop of foreclosure rates and other social issues to consider there's still the reality of living on commission. As my interviewees noted so long ago, you don't get a dime until the sale goes through -- if it goes through.

And that's before we raise those nettlesome issues of health and retirement benefits, which is a "YP" (Your Problem), not an "MP" (My Problem), at least from Uncle Sam's point of view. Nowadays, you might be waiting six months for that first paycheck, as this gent from the Seymour Herald suggests: http://www.seymourherald.com/blog/2012/08/21/the-reality-of-realty/

I did some checking online recently, and it seems that my interviewees are still active in the business.  Having seen the toxic trends that we've all witnessed over the last five years, I'd love to go back and get their reflections now...and, while I'm unsure how candidly they'd speak, one bet seems certain...

...I suspect that they'd probably require more than three months' savings for any new realtor coming aboard. --The Reckoner