A sticker attached to the Baltimore Sun last week announced, “Foreclosed home auction … March 8-11 … Over 500 homes must be sold!”
What a world of trouble in those words: 500 homes, once shelter to families who toiled to keep up with mortgages, utility bills, car payments, food and gasoline. Now they are losing everything. These folks are doubtless searching frantically for an affordable apartment or, worse, live in shelters or on the streets.
Once homeownership was seen as key to economic security. Equity and steady appreciation in the value of a home was collateral working people used to obtain loans for their children to go to college. It paid for home improvements, a new car, travel, health care. The only “nest egg” many seniors have to insure a comfortable old age is their home.
Now the bottom has dropped out of new and old house sales, and real estate values are plummeting. Banks are tightening credit, making it impossible for buyers to purchase a new home. The U.S. Conference of Mayors predicts that foreclosed homeowners will lose a combined $1.2 trillion in equity this year.
Real estate billionaire Donald Trump sees opportunity in this tragedy. He is running full-page newspaper ads under the headline, “The time is now to profit from foreclosure.” He offers “free” seminars on how you too can make a fortune on human misery.
We can do better.
During the Great Depression, farmers, often led by members of the Communist Party, organized “penny auctions” to save farmers facing foreclosure. Unemployed Councils, again led by the Communist Party, organized teams to carry furniture back into the homes of evicted tenants. Massive public housing construction projects created more than a million affordable rental units.
Today we have a crisis that also calls for far-reaching measures to protect people from economic ruin. Sen. Hillary Clinton has proposed a 90-day moratorium on foreclosures of subprime loans. Sen. Barack Obama has proposed a $10 billion emergency fund to provide financial assistance so homeowners keep their property. These and even more far-reaching measures will be needed to prevent another crisis that could be as deep and prolonged as the Great Depression.