Until Congress Acts: Freeze Foreclosures

Posted by Nathan Havey, Brave New Foundation at 3:34 PM on February 19, 2009.

Penny Saldovar had a lot going for her. She had a nice house, and a beautiful family. Then Hurricane Ike roared through the Gulf. Penny’s house was spared, but not completely. When the storm dissipated, Penny’s home had been damaged to the tune of an estimated $18,000. Insurance covered some of the costs of repair but not enough. In her efforts to repair her home, Penny fell behind on her mortgage. Today she is still making payments but she is three months behind, and at risk of foreclosure. Penny and her family are exactly the kind of people who will be saved when congress enacts something like President Obama’s plan - if they still have their home.

Over the past few weeks, I’ve been working on the Fighting For Our Homes Campaign, helping to collect stories of the people across the country who are facing foreclosure. Penny in Texas, Meagan in California, Debra in Pennsylvania, Maria in Arizona, William and Barbara in Florida and many, many more may fall victim to the crisis in the days and weeks before help arrives. We can’t let that happen.

Last week, Citibank, JP Morgan Chase, and (somewhat later) Bank of America all suspended foreclosures until the 6th of March. While this is a welcomed move on the part of these publicly subsidized enterprises, it is far too little. I had the opportunity to discuss the foreclosure crisis in some depth with Congresswoman Marcy Kaptur (D-OH) and Dr. Dean Baker, the Co-Director of the Center for Economic and Policy Research. Some good points were raised, not least of which was Congresswoman Kaptur’s observation (3:45 in the video below) that a three-week freeze in foreclosures sounds like a ‘public relations gimmick.’ If the banks want to show us that they are serious about helping struggling homeowners, then they must freeze all foreclosure proceedings until the Obama plan takes effect.

Keeping people in their homes is a good idea for everyone. Vacant homes deteriorate and drag down the value of every home in the area. If banks will take real action to keep people in their homes, they will see a return in the form of stabilizing house prices, which will in turn lead to a decline in the foreclosure rate. Keeping people in their homes is so important that Dr. Baker even advocates a policy in which families who fail to make their mortgage commitments should be able to rent the properties instead (8:55 in the video above).

There are those who will say that people suffering from this crisis should have been more careful, and that government intervention will only reward people who have been irresponsible at the expense of those who have not. Whether they are right or not doesn’t really matter. Allowed to continue unchecked, the skyrocketing rate of foreclosure, and its vast ripple impacts will cripple our economy. This crisis must be a national priority.

The Obama plan isn’t perfect. Many people who need help won’t get it, and some people will find ways to game the system, and frustrate the rest of us with their greed. It is time for the banks to step up for us, as we have stepped up for them. They must show us that they are going to be a partner in dealing with this crisis. They must halt foreclosure action until the Obama plan can be signed into law, and do what it does. They must give struggling families that have lasted this long the chance to save the place they call home.

Tagged as: bailout, foreclosure, fighting for our homes

ZP Heller is the editorial director of Brave New Films. He has written for The American Prospect, AlterNet, The Philadelphia Inquirer, and The Huffington Post, covering everything from politics to pop culture.