SECURITIZATION: How our society changed when we learned to turn lead into gold.
The idea of turning worthless metal into gold has fascinated us for thousands of years. The word, alchemy, is derived from the Greek meaning, “The Egyptian Artâ. And Lapis philosophorum, referred to as the philosophers’ stone, is the legendary alchemical substance, that was said to be capable of turning base metals, especially lead, into gold.
Legend has it that a 13th-century scientist and philosopher named Albertus Magnus discovered the philosopher’s stone. In his writings, Magnus reported that he witnessed the creation of gold by “transmutation”.
Sir Isaac Newton, the same guy that I was taught, needed an apple to fall on his head to figure out the whole gravity thing, was also a famous alchemist.
I imagine that the whole idea of lead being turned into gold was probably involved in the worldâs first securities fraud case brought by an investor, like maybe Sir Issac Newton was really just an 18th century version of Bernie Madoff, and all that gravity stuff was just the work of a public relations firm putting the right spin his image.
âLetâs go with the gravity pitch… and also… Iâm gaga over that whole Apple thingâŚ I want to see some sketches on my desk by Old Hallowed Eve”
Anyway, itâs easy to see how the idea of turning something of little value into gold would capture manâs attention. Itâs the ultimate winning Powerball ticket. Like Jack’s magic beans getting him the goose that lays golden eggs.
Itâs impossible, of course. You canât turn lead into gold.
Or can you?
SecuritizationâŚ Weâre Forever in Your Debt
I think you have to be at least in your forties to remember what life was like before securitization took hold of out society.
Before that, people used to say that the only way a bank would give you a loan was if you could prove you didnât need one. Once securitization was driving our national pride, banks made loans as fast as they could in the form of credit cards, auto loans, and every other flavor of debt imaginable.
Before securitization kids grew up with fewer presents for their birthdays and holidays, and I donât need a source for that statistic. Hotel rooms never cost $600 a night pre-securitization. In fact, there were simply far fewer âluxury goodsâ before we were all sold on the idea that taking on debt was the hip-hop-happening thing to do.
Just take look at what’s happened to cars.
Before securitization I wanted a Ford Bronco. After securitization, I wanted a Range Rover. The Bronco was way better, by the way, but it cost me $792.40 a month for three years to find that out.
Iâm not sure when it happened, but sometime in the last decade, the price of cars went completely around the corner and up the hill. One day, a really expensive car cost $40,000. I went away for the weekend, came home and a really expensive car cost $65,000. Three months later, top of the line was $80,000. And today, there are ultra-luxo-window stickers reading $115,000 and more. I donât know how you feel about this issue, but for $115,000, I need bedrooms. Thank you securitization!
A few years ago, my daughter, then maybe 12 years old, said she wanted True Religion jeans. All the kids were wearing them, and Iâm a father who understands and accommodates the forces of peer pressure, so to the mall we went. Nordstromâs, an entire department store that stands as a testament to securitization, carried the ultra-desirable jeans. How much could they be, I wondered as I reached for the price tag.
Do you know the answer to this one? If you donât, you better sit downâŚ $310.
When I first saw the price tag I thought they must sell them as a 6-pak, but no. Three hundred bucks for one pair of True Religion jeans. Theyâre jeans. Like Levis with heavy, pronounced stitching so they look like someone made them in a high school sewing class. And God forbid they have an over sized piece of glass on the pockets, and youâre closing in on four bills with tax and tip.
The girl at the check out counter asked me how Iâd like to pay for them. I replied, âHow about a little bit each month for a couple of years at an obnoxiously high interest rate,â and I handed over my plastic debtor card.
In one fell swoop, I made my daughter happy beyond words, and at the same time, I did my part for Wall Streetâs bond builders. Little did I know that those bond builders would soon cause the credit markets to freeze solid, leading us into an ice age in the credit markets that would transform the United States government into the lender of first and last resort.
Sidebar:By the way, in this story the stock market is largely irrelevant. Hereâs what David Einhorn of Greenlight Capital, one of the insiders to todayâs crisis, said about what has happened:
âWhat most people donât realize is that the fixed-income (read: bond) world dwarfs the equity (read: stock) world. The equity world is like a f#@king zit compared with the bond market.â
I’ve noticed that people know very little about the bond market. But then, we donât make movies about the bond market, now do we?
What is Securitization?
Securitization is a process that takes certain assets (think: loans) and âpoolsâ them so they can be packaged into debt securities, which are a type of bond. The interest and principal payments that come from the borrower making payments on a loan are paid to those that invest in the securities/bonds. Basically, when you take a bunch of mortgages, put them into a pool, slice them into tranches… you’ve turned it into a âsecurity,â a bondâŚ and so, youâve âsecuritizedâ the loans.
Okay, letâs start here: Lending money to anyone is risky.
No matter what, you just never know if the loan will be repaid. The borrower may intend to repay it, but canât due to a life event that could not have been foreseen. Maybe the borrower became unemployed unexpectedly. Maybe divorced. Or, I donât knowâŚ like, maybe the borrower got hit by a bus… and don’t we all hate it when that happens.
Itâs probably a little safer to lend money to someone with a good credit score than a bad one, but no matter what FICO says, lending money to any human being is still a significant risk.
Securitization changed all thatâŚ it made lending money lot safer.
Lending money to people can also be quite profitable, so when securitization reduced the risk of doing so, a whole lot more investors wanted to do it. After all, stocks go up and down, but bonds are IOUs from corporations or the government. If theyâre rated triple A by the bond marketâs credit rating agencies, Moodyâs, Fitch and Standard & Poors, theyâre just about like money in the bank… the kind of investment thatâs perfect for a pension fund.
Securitization got its start in the 1970s, when home mortgages were pooled by U.S. government-backed agencies, Fannie Mae, Freddie Mac, Ginnie Mae, and Sallie Mae.
When you securitize mortgages you spread the risk of lending money to any one individual by creating a pool of loans and then slicing them into debt securities, called bonds, that entitle their holders to a percentage of the payment streams, (made up of the principal and interest payments made by the borrowers as they make payments on their mortgages). Because the mortgages are pooled, if one person doesnât make their mortgage payment, the impact to any one of the investors is minimal.
The securitization process involves two steps:
Step One: A company that originated loans identifies which loans it wants to remove from its balance sheet. It creates a pool of these loans, referred to as the âreference portfolioâ.
Next it sells this reference portfolio to an entity referred to as an âissuer,â which is set up by a financial institution to purchase the assets in the pool. Issuers are âspecial purpose vehicles,â commonly called âStructured Investment Vehiclesâ or SIVs and SIVs exist off of a companyâs balance sheet for both accounting and legal purposes.
Step Two: The issuer finances the purchases of the assets in the pool by issuing and selling mortgage-backed securitiesâŚ bondsâŚ tradable, interest-bearing securities sold to investors. The reference portfolio, or pool of assets, generates cash flows that fund a trustee account that pays investors fixed or floating rate payments.
The originator of the loans services the loans in the reference portfolio, in some cases anyway, and collects payments from the borrowers who took out the loans. The servicer deducts its fee from the payments collected and then passes the balance on to the SPV or trustee.
Okay, how are we doing? Hanging in there?
If youâre feeling overwhelmed, you can always go back and read those last two paragraphs again slowly. Itâs not complicated. It just takes a little getting used to. Hereâs an even simpler explanation of the two steps above:
Step One, Take Two: We originate some loans that we donât want on our books anymore. We want to sell them to someone else, but the someone else probably doesnât want them eitherâŚ for the same reasons that we donât. So, we make a list of these loans and we call it our âreference portfolioâ. Then we set up a separate company with a âspecial purpose,â thatâs not found on our financial statements. That entity is called an SIV, and its purpose is to buy the loans that we want off our books.
Step Two, Take Two: Now, the SIV we set up needs to buy the loans we want off our books, but it needs money to buy them. So, the SIV finances the purchase of the loans by selling mortgage-backed securities (called “pass-through certificates) to investors.
As the borrowers make their payments, they are placed into a trustee account, which pays the investors either a fixed or variable rate of interest, which becomes the investorâs return on their investment in the mortgage-backed securities.
And since we originated the loans, we want to keep servicing themâŚ we just didnât want them on our books anymoreâŚ we donât mind earning a fee for sending out the monthly statements and collecting the payments. We take our fee off the top of what we collect , and send the rest to the trustee account.
Better? I hope so.
Can you see how it would be less risky for an investor to buy a mortgage-backed securityâŚ which is a share of a pool of loans that have been securitizedâŚ then it would be to loan someone $500,000 for a single mortgage? Way less risk, right? Okay, letâs move onâŚ
More recently, like in the last 15 years, Wall Street started dividing the reference portfolio into sections called âtranchesâ. Each tranche represents a different amount of risk to the investor. The least risky tranche is the senior tranche, or super senior tranche, and it receives its share of the cash flows before any of the more junior tranches.
Once the most senior tranche has received all that itâs supposed to, then the middle tranche starts filling up. And once the middle tranche is full with the amounts it was supposed to receive, then the bottom tranche starts to fill with cash flows from the payments borrowers are making.
(In a previous article on Mandelman Matters, I described these tranches as drawers in a dresser, in case you donât recall. You can find that article here: Mandelman U.)
In our latest financial meltdown, the most senior tranche was rated triple A, so the mortgage-backed securities that came from the most senior tranche were triple A rated bonds.
The middle tranche was rated triple B, so the bonds sold from that tranche were rated triple B, which is the lowest rating thatâs considered âinvestment gradeâ. And the bottom tranche was rated below triple B, so we can think of the bottom tranche as being akin to junk bonds. (Sometimes the bottom tranche is called the NIM, for “Net Interest Margin,” and other times you’ll see it referred to as the “equity tranche.”)
Securitization provided a way for banks and financial institutions to find new sources of funds either by moving assets (loans) off of their balance sheets, or by borrowing against them, which replenishes the cash needed to originate more loans.
You seeâŚ itâs the circle of life, Simba.
Securitization made a bankâs cost of borrowing go way down because assets being securitized are removed from the bankâs balance sheet, which means that issuers can raise funds to finance the purchase of assets more cheaply than would be possible on the strength of the originatorâs balance sheet alone.
And unlike conventional debt, securitization does not inflate a companyâs liabilities, so it generates funds for future investment… without balance sheet growth. So cool, right?
The system of originating loans, securitizing them, and selling the securities cut from the pool seemed to work just fine and dandy for a long time, bringing huge economic benefits to this country. Letâs face it, itâs an attractive propositionâŚ all the advantages of lending without the risk of not being repaid.
The marketing of debt was on the move, and soon we became a country jammed packed with consumers anxious to borrow and spend, borrow and spend. Money from overseas became jealous, and figuratively speaking, booked passage to the USAâs spectacular spending grounds, where the streets were said to be paved with gold and platinum plastic cards.
The 1980sâŚ If you can borrow it, they can securitize it.
Beginning in the 1980s, Wall Street started securitizing other forms of debt too… anything considered an âincome producing asset,â because payments made by the borrowers could provide an income stream to the investor. Car loans, credit cards, student loans, computer loans, aircraft loansâŚ if we could borrow it, Wall Street found a way to securitize it.
When mortgages are used as the backing for the bonds, we call them mortgage-backed securities (MBSs), and when other types of income producing assets are behind the cash flows, we call the bonds âasset-backed securities (ABSs).
In theory, securitization reduces the risks of lending and increases liquidity for loan originators. For society as a whole, however, securitization is a double-edged sword.
Securitization transforms an illiquid assetâŚ a loanâŚ into a publicly issued tradable debt security. It also takes loans on a balance sheet made to people with relatively low credit scores and turns them into triple A rated bondsâŚ very much like alchemyâŚ the “science” of turning lead into gold.
And when you can turn lead (sub-prime loans) into gold (triple A rated bonds) thereâs a strong incentive to make more sub-prime loans.
You see, there’s virtually unlimited global demand for triple A rated bonds because they’re supposed to be as safe as bonds issued by the U.S. Treasury. But there’s NOT an unlimited supply of sub-prime loans.
To use our alchemy analogy, a few years into the housing bubble, Wall Street found there was a shortage of lead, so they started doing everything possible to get more lead… they started predatory lead gathering, if you get my meaning.
Over the past three decades, the number of securitized residential mortgages in this country has increased steadily and dramaticallyâŚ roughly 45% at the end of 2004, roughly 51% at the end 2007. Some private securitizations, as opposed to the U.S. government-backed variety, grew by 102% between the years 2004 and 2007, accounting for almost 40% of total mortgage securitizations by the end 2007. The vast majority of the loans placed into private securitization pools during this period were sub-prime or Alt-A.
Securitization is what drives all of those credit card and mortgage advertisementsâŚ itâs what has fueled the campaigns to convince us to embrace debt as being a good thing, a status symbol, something to be desired.
Our countryâs economy grew, as we all went further in debt. And credit was made available to more people than ever before, even those with relatively low credit scores. That’s why someone with low income was given a $700,000 mortgage during the bubble.
But, is that what caused the economic crisis weâre now in? Was it the sub-prime borrowers not making their mortgage payments that drove our economy off of the proverbial cliff?
No, it was not.
Securitization is why we all started living with debt without thinking about it as a burden. Itâs why, when going to the mall armed with our credit cards, we say weâre âgoing shopping,â instead of describing what weâre really doing, which is âgoing borrowingâ.
Try this the next time you pull out your Visa or MasterCard to âbuyâ something.”
Say to yourselfâŚ “Iâm now borrowing money at a high interest rate. Chances are that product, or whatever it is, wonât look nearly as good as it did a few minutes ago.” Whatever you see in the window… ask yourself if you want to borrow money at 20% interest to get it.
Securitization did many good things too. It made mortgages available to more people, so more people could own their own home. Home ownership is a good thing for a nationâs economy for obvious reasons. People invest in homes. They raise families in homes. As home prices rise, wealth is accumulated in the form of home equity.
Historically, sub-prime loans performed quite well. People, in general, tend to pay their mortgages, a fact that should come as little surprise to anyone. People with less than stellar credit scores pay their mortgages before they pay other bills because they value having a home a whole lot.
Understandably, they donât want to move back to that apartment in which the kitchen smelled like old socks. In fact, one of the reasons the bond credit rating agencies rated the bonds backed by sub-prime mortgages as triple A, besides the impact of securitization into tranches, was the historical performance of sub-prime loans.
And, just for the record, sub-prime borrowers donât intentionally go out and buy homes that they know they wonât be able to afford next year. You want to know why? Because no one likes moving their refrigerator that much. Because they have to find a friend who has a truck, like me, who will come over on a Saturday and help carry the fridge to their new apartment, which is invariably on the second floor and the elevatorâs broken or not big enough.
No, what happened to cause the economic crisis thatâs dragged us close to an outright depression, had little to do with sub-prime borrowers, it had a lot to do with securitizationâŚ and it had everything to do with derivatives, incentives, leverage, and the bond market, or rather the shattering of the bond and credit markets.
When Goldman Sachs CEO, Lord BlankcheckâŚ I mean Lloyd Blankfein, testified about his firmâs role in a scandal du jour, in which Goldman was accused of betting against the bonds they sold to investors by buying credit default swaps that paid off when the bonds failed, he referred to the investors as being âsophisticatedâ.
But, bond investors are not, generally speaking, sophisticated. They buy using a credit rating system that uses letters of the alphabet to signify the amount of risk involved. I mean, you might as well color code the darn thingsâŚ Iâm buying yellow bonds today! I like purple bonds!
A recent S&P document states:
âOur ratings represent a uniform measure of credit quality globally and across all types of debt instruments. In other words, an âAAAâ rated corporate bond should exhibit the same degree of credit quality as an âAAAâ rated securitized issue.â
What happened to create this mess was NOT the result of borrowers borrowing too much, although some certainly did.
It wasnât the housing bubble, although we did have one that popped.
It wasnât predatory lending, stated income or Option ARM loans, although some of these caused problems for some people.
It wasnât homeowners believing that real estate prices would go up forever, or using their homes like ATMs, although Iâm sure there were some that were guilty of both.
It was Wall Streetâs bankers abusing the system in every conceivable wayâŚ because they could do so for profitâŚ and an enormous profit, at that. Â It was Wall Streetâs investment banks that irresponsibly borrowed too much, Lehman was leveraged at 30:1. Â It was Wall Streetâs banks that seemed to think that home prices would go up forever. Â And it was absolutely Wall Streetâs bankers that used their banks like giant ATMs, pumping cash out of them until there was no more as reward for short term gains that turned out to be illusory.
Wall Streetâs bankers abused the securitization process, creating mortgage-backed securities and collateralized debt obligations (âCDOsâ), which are really towers of BBB rated mortgage-backed securities, that were unquestionably destined to default. They did this because, starting in 2003, someone at Goldman Sachs convinced someone at AIG to issue credit default swaps on triple A rated mortgage-backed securities. Make no mistake about itâŚ they knew what they were doing.
From In Understanding the Securitization of Sub-prime Mortgage Credit, referenced below:
The rating agencies differ about what exactly is assessed. Whereas Fitch and S&P evaluate an obligorâs overall capacity to meet its financial obligation, and hence is best through of as an estimate of probability of default, Moodyâs assessment incorporates some judgment of recovery in the event of loss.
In the argot of credit risk management, S&P measures PD (probability of default) while Moodyâs measure is somewhat closer to EL (expected loss).
In 1998, there werenât enough credit default swaps in existence to make any difference to anyone. By 2007 there wereâŚ itâs hard to say, but estimates seem to hover around $60 trillion. Today, those same estimates say the number has been reduced to $30-$40 trillion. Thatâs trillion, with a capital âTRILLIONâ.
Credit default swaps are sort of like bond insuranceâŚ they pay off when a bond defaults. Because triple A rated bonds hardly ever default, buying insurance that pays off when they do default was cheap. For example, for $200,000 a year for 10 yearsâŚ you could buy a credit default swap insurance policy on $100 million in bonds backed by sub-prime mortgages. If the $100 million bond defaulted, the credit default swap would pay you the $100 million.
In Understanding the Securitization of Sub-prime Mortgage Credit, a white paper written Adam B. Ashcraft and Til Schuermann of the New York Federal Reserve Bank in March of 2008, they described the infrequency of highly rated bonds defaulting as follows:
Highly rated firms default quite rarely. For example, Moodyâs reports that the one-year investment grade default rate over the period 1983-2006 was 0.073% or 7.3 basis points. This is an average over four letter grade ratings: Aaa through Baa.
So, buying a credit default swap on a mortgage-backed security that was backed by sub-prime loans became a way for institutional investorsâŚ they werenât available to you or meâŚ to short the sub-prime market. And you didnât even have to own the mortgage-backed security to insure, or rather, bet… against its default.
Nothing was right about what was happening on Wall Street, but it wasnât easy to see, in large part because it only went on for a few years, but also because Wall Street obfuscates what it doesnât want others to seeâŚ in fact, Wall Street guys are legendary in that regard.
What could be seen were the houses. Bigger, newer, nicer and nicer, and lots of themâŚ everywhere you looked. I felt like I had spent much of 2006 feeling like I was either a wimp in the risk taking department, or that Iâd fallen behind in the race to the top of the hill. Where were all these houses coming from?
So, when things changed the country experienced the changes through the real estate market. The bubble had popped and everything that would happen after that would be blamed on those houses, those inside them, and those who sold them and the loans that financed them.
The bankers of Wall Street were insolvent and their insolvency threatened the global financial system, their behaviors had squandered untold trillions, but it was blamed on âirresponsible sub-prime borrowersâ.
I ran the following paragraph by several people and they all thought that it was about rightâŚ soâŚ conventional wisdom goes something like this:
Sub-prime, and other borrowers, irresponsibly got in over their heads and bought houses they couldnât afford, or took out home equity loans in amounts they couldnât afford to repay, and then at some point couldnât make their payments.
When they didnât pay for the houses and loans, it caused the bonds to default and Wall Street banks and other investors around the world lost so much money that some went under and the government had to bail them out to save the banking system.
Then, AIG had to pay out $170 billion because of credit default swaps that were triggered when the bonds defaulted, which the U.S. government had to bail out so investors wouldnât lose all that money.
What a crock of crap that is. The only part of that paragraph that resembles truth is that the U.S. government did in fact bail out AIG. The rest is unadulterated hooey that was started by the banking industryâs PR machine, and something like half the country still believes to be true. And because they do, the people trapped by our deteriorating economy in one way or another, are alone, ashamed and afraid. Itâs dividing our country along imaginary lines. And while we blame each other for what securitization started, the bankers get richer and more powerful.
Thatâs not at all what happened here. What weâre experiencing today in our economy isnât the result of a real estate bubble popping. Wall Streetâs investment banks didnât come crashing down because some previously hidden class of irresponsible Americans with sub-par credit bought houses they couldnât afford.
What caused our economy to collapse happened on July 10, 2007, because that was the day that something happened that had never happened before, and what it destroyed remains destroyed to this day. Because of what happened on that day in July of 2007, the U.S. government is the only investor in mortgages in this country, the only lender in the mortgage market, through Fannie and Freddie, now both essentially government agencies.
More than three years later and private securitizations of mortgages are little more than an historical footnoteâŚ they are no more. Â And even Goldman Sachsâ bondsâŚ theyâre debtâŚ is still guaranteed by the U.S. government. The banks arenât healthy, no matter what Tim âTransparencyâ Geithner wants us to believe. And the toxic assets we were all told were clogging up the balance sheets of our nationâs largest financial institutions are right where they were in the fall of 2008. All because of what happened on July 10, 2007âŚ
The day that Standard & Poors and Moodyâs downgraded the ratings on 1,011 bond issuesâŚ some were downgraded by several letters of the alphabet. It was LESS THAN ONE PERCENT of the bonds secured by sub-prime mortgages.
Less than one percent of the bonds secured by sub-prime mortgages were downgraded that day. You probably didnât even notice it, but it started a series of dominoes falling that had been set up to spell out disaster.
Pension fund managers were furious. Their funds had bylaws that prohibited them from investing in anything but triple A rated bonds. If Standard & Poors and Moodyâs hand screwed up the ratings on these bonds, what about the trillions of other mortgage-backed securities that institutional investors were holding? What about the bond insurers? Who was vulnerable? Fund managers dumped their bond holdings in the morning, and at fire sale prices. Investors ran for the exit on financial stocks.
Money for sub-prime and Alt-A mortgages evaporated literally overnight.
Within weeks, money for all types of mortgages was scarce and fading fast. Then money for all sorts of credit had left the building, even for debts that had nothing to do with mortgages. Banks began hoarding cash. Within two or three weeks, banks didnât trust each other enough to lend to each other.
The SIVs that the banks had set up off of their balance sheets had to be refinanced every three to six months, but suddenly no one wanted to invest in them. Banks like Citibank were forced to buy them back, or force their investors to take unthinkable losses.
On August 7th, the Federal Reserve had refused to lower rates. But on August 17th, the Fed hit the panic button and announced a huge expansion of its emergency lending program for banks. Hereâs what the Federal Reserve had to say on that August 17thâŚ
Release Date: August 17, 2007
For immediate release
Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward. In these circumstances, although recent data suggest that the economy has continued to expand at a moderate pace, the Federal Open Market Committee judges that the downside risks to growth have increased appreciably. The Committee is monitoring the situation and is prepared to act as needed to mitigate the adverse effects on the economy arising from the disruptions in financial markets.
Did you see anything in there about irresponsible sub-prime borrowers buying houses that were too expensive, or even anything about the housing market at all? No, I guess you didnât, now did you? And why not read that last line one more timeâŚ
(The Federal Reserve) is prepared to act as needed to mitigate the adverse effects on the economy arising from the disruptions in financial markets.)
The worldâs biggest bailouts were about to begin.
With no way to get a mortgage, housing prices started to fall, but they didnât just come down gradually as they would in a normal market correctionâŚ they fell of a damn cliff, like in the last scene of the movie Thelma & Louise. With no way to refinance, those that had been sold loans that needed refinancing were doomed. The credit markets were frozen solid. Consumer spending would soon slow, transforming a torrent into a trickle, and unemployment had nowhere to go but up.
The U.S. government might have stepped in to stabilize the financial markets that fall, but by the end of the year, the country had only one question on its mindâŚ which candidate would be the countryâs next president. Everything else, including the beginnings of an economic meltdown that would come to resemble that of the 1930s, would have to wait.
What had started growing as a result of securitization, now was a growing feeling of insecuritization. But it wasnât the borrowers that flipped the switch and turned on the financial chaos channel, it was Wall Streetâs bankers.
No one told them to create loans than needed to be refinanced every two or three years, no one forced them to securitize loans into pools with more risk of default than was present in the individual loans themselves. No one got out of bed one morning and saidâŚ hey, why not break the bond market so only the government will make loans from now on. And no one said leverage your assets 30 or 40:1. Bankers did all that, babyâŚ not borrowers.
Let my people goâŚ itâs long past time to come together…
Donât you get it? Weâre not going to have any sort of recovery until we stop the foreclosure crisis. And we canât stop the foreclosure crisis without helping people avoid foreclosure. And we wonât help people avoid foreclosure until politicians know that they wonât get clobbered by their constituents for having done so. And meanwhile, the water just keeps rising higherâŚ and higher.
Life events happen. Illness. Job loss. Divorce. Any of those things happens today and chances are better than excellent that itâs a foreclosure to boot. And those things don’t just happen to other people, they happen to everyone.
The foreclosure crisis is entirely unnecessary at this point. It can be stopped. Itâs being allowed to continue and the people are too ashamed to speak out and demand that it be stopped. There are millions of homes sitting vacantâŚ and for what?