Tag: homeowners

Let’s stop blaming homeowners for our economic crisis

Politicians and pundits quickly found an easy target to pin the nation’s economic crisis on — homeowners who bought more house than they could afford.  I, for one, think we should stop blaming homeowners for bad public policy, poor government oversight, and greedy lenders.

“But,” the critics argue, “it’s the irresponsible homeowners who caused this crisis because now they can’t repay their mortgages. This creates bad debt at banks, further reducing the banks’ ability to lend.”

That argument is flawed and here’s why:

  • Homeowners didn’t package and slice up mortgages into untraceable, unmeasurable and risky economic instruments.
  • Homeowners didn’t relax the rules allowing banks to increase their debt-to-deposits ratio.
  • Homeowners didn’t run the SEC, Fannie Mae or Freddie Mac whose lax oversight and loose policies allowed the Bernie Madoffs to steal billions, and predatory lenders to defraud millions.
  • Homeowners didn’t create the shellgame called credit default swaps, a house of cards created by the lenders to provide the illusion that real “insurance” covered their loan portfolios.
  • Homeowners didn’t create the housing bubble, or inflate the market price of property, or assure others that “your house value will always go up.”
  • Homeowners didn’t rate the riskiest of financial instruments as sound and solid, like the rating agencies did.  Those same agencies are supported by the companies they rate.

No, homeowners didn’t do any of those things.  I personally know of instances where bankers encouraged borrowers to borrow more, to take out 100% loans, to apply for no-money-down loans, and to accept variable rate loans with ridiculously low initial teaser rates.

I also know families who have lost their homes during this crisis.  Families for whom the American dream came within reach while both were working, but when the husband lost his job that dream evaporated quickly.  I do not blame hardworking families for trying to better their lives by buying their own home, or by moving to a newer home in a newer neighborhood with better schools and services.

Were there abuses?  Absolutely.  Two houses down from us is a house bought under a government program by a family who never paid a penny on its mortgage, and rented the house to any and all comers.  When the bank foreclosed, it wasn’t a bank here in Chatham, or Danville, or even in Virginia.  The bank that held the mortgage on that little house in Chatham, Virginia is headquartered in Texas.  How did that happen?  Bad policy, poor financial oversight, lax government regulation, and, in that case, unscrupulous borrowers.  But let’s stop blaming all families who dreamed of a better life for the misdeeds of the few.

What does this have to do with churches?  Just this — the people who live in your communities and mine may have made mistakes, may have taken on too much debt, and may be in trouble financially.  Churches can minister to these families with solid financial training, personal support, financial help, and spiritual encouragement.

In the past few months our church has helped one family stay in the home they were going to lose, helped another family pay their rent during an illness, and found a better house with lower rent for a third.  These are real problems faced by real people who only wanted to live a better life.  Now we in churches in these communities have the opportunity to stand with them.  And when we do, we must not be tempted to explain this complex economic crisis by blaming our neighbors.  That’s my opinion, what’s yours?

The Decline of the Suburbs

CNN notes today that 40% of Americans want to live in “walkable” communities, and that the suburbs as we know them may be an endangered species. The subprime mortgage crisis, which put many people in homes they could not afford, has led to record foreclosures, bankruptcies and repossessions. Some homeowners, facing falling home values, are abandoning their dream homes altogether.

Professor Arthur C. Nelson contends that by 2025, America will face a surplus of 22-million large lot (suburban) homes. Some suburban developments are noticing an increase in crime, unkempt lawns, graffitti covered sidewalks, and other signs of “suburban decay” which is the same as urban decay, only in a different neighborhood.

Shortly after World War II, as returning GIs moved their growing families to the suburbs after buying their first automobiles, urban flight seemed like an irreversible wave. Inner cities were left to wither, urban churches struggled to stay alive (and many did not), and suburban churches thrived during the Baby Boom generation.

We may actually be watching the beginnings of the reversal of urban flight, transformed into suburban flight. Positive forces like new urbanism, the arts, downtown redevelopment, and urban diversity have made cities with high density populations the place to be. Sports arenas, once built on the edge of major cities, are all constructed inside the urban perimeter now. Negative forces such as high gasoline prices which makes commuting expensive; the subprime mortgage crisis; and cash-strapped suburban areas whose governments cannot keep pace with their growth are causing portions of the population to rethink urban living.

With rising urban home prices, the poor will be pushed out to the suburbs to occupy the surplus houses soon available at fire sale prices. CNN notes that the ubiquitous McMansion will become the multi-family dwelling for lower income families — much like urban brownstones were chopped up into multi-family apartments during urban flight.

The implications for churches both urban and suburban are tremendous. Suburban churches with large debt and massive buildings may be caught in the same predicament that urban churches were in 50-years ago. Declining membership due to population shift from suburban to urban may change the church landscape in the years to come. Our church in our small town was built on a small lot because in 1890 people in town walked to church. Maybe we’re coming full circle, back to the neighborhood church, which was usually small. What do you think? And what does it mean for your church in 2025 — only 17 years from now?