Foreclosures: Reasons, Results, Remedy
There are 124 million year-round housing units in the United States, according to the U.S. Census Bureau. About 52 million homes have mortgages. By the third quarter of 2009, nearly one of every 10 homeowners with mortgages was at least one payment behind in their mortgage payment. That translates into about 5 million homes.
A staggering one in seven American homeowners is either already in foreclosure or behind on payments.
At the beginning of the first stage of the housing collapse, the defaults and foreclosures were driven by sub-prime loans. Those loans had low introductory rates that quickly moved to a level beyond the borrower’s ability to pay, even if the homeowner was working.
Today, the bulk of new foreclosures are high-quality prime loans with fixed rates. One-third of the third quarter 2009 foreclosures were this type of loan, traditionally considered the safest. But without jobs, borrowers cannot pay even those mortgages.
Greedy lenders who pushed sub-prime mortgages and unnecessary fees on unsuspecting potential homebuyers definitely made the foreclosure crisis worse – but they did not cause it. The foreclosure crisis is a crisis of the system itself – and shows the need for an entirely new system. Fundamentally, the reason people cannot pay their mortgage payment is because they are losing their jobs as a result of the transformation of the economy. And many of those who are still employed are working fewer hours and getting paid less.
Causes of the crisis
As long as the rulers of this country needed human labor – and lots of it – in the factories of this country, they were willing to pay good wages to workers in at least the most decisive industries in the most important parts of the United States. Those good wages made it possible for many industrial workers to buy homes. As a result, for decades the United States had one of the highest rates of home ownership in the world. Those wages and that home ownership helped produce the extraordinary political stability of the United States.
Now the development of electronics has led to a new situation. Automation has increasingly eliminated human labor. Even before the current great recession, a survey of 20 large economies all over the world found they lost 22 million manufacturing jobs from 1995-2002. The United States lost 11 percent of its manufacturing jobs, Japan 16 percent, Brazil 20 percent, and even China lost 15 percent.
Millions of people are simply no longer needed in the production process. This cannot be changed by encouraging banks to re-negotiate home mortgages, or by efforts to encourage tourism. The Rock and Roll Hall of Fame in Cleveland, Ohio is not going to undo the damage done by the shuttering of its steel mills.
Government attacks on education, health care, welfare, unions, and civil liberties demonstrate that the ruling class of this country has made a very calculated decision. It will not educate or care for a class of workers that it no longer needs, a class of workers that can no longer expand its wealth.
The crisis in housing is a crisis of the system itself. It can only be solved by getting rid of this system and establishing a new, cooperative society. Such a society is marked by the distribution of the basic necessities of life – including housing – according to a person’s need, not according to a person’s ability to pay.
What can be done
People are not taking the foreclosure wave lying down. All across America, homeowners, tenants, and communities are rising up in protest. They have tried and tested a broad range of tactics.
Walk-aways, or strategic defaults. With more than 25 percent of homes “under water” now and possibly up to 50 percent by the end of 2010, many owners are simply walking away. If the trend to walk away continues to grow, some lenders may be more willing to reduce principal, especially if people organize to do it collectively.
Foreclosure and eviction moratoriums, modifications, and debt relief. Moratoriums can and are being fought for at the local, state, and federal level, with pickets and sit-ins at offices of banks, mayors, governors, and members of Congress. They bring people into political activity.
Foreclosure and eviction resistance. Many foreclosed homeowners are simply refusing to leave. U.S. Rep. Marcy Kaptur of Ohio called for her foreclosed constituents to refuse to leave their homes. The Minnesota Five organized an entire neighborhood to fight for the home of Rosemary Williams.
Legal assistance and class action. City Life/Vida Urbana in Massachusetts is combining legal defense with bank protests and eviction blockades, and they frequently force banks to negotiate both interest and principal reductions.
Mass takebacks and takeovers of foreclosed homes. A coalition of grass-roots groups carried out mass takebacks and takeovers beginning in May, 2010. Direct action teaches people by deeds, not just words. Human beings have no moral obligation to obey the laws of private property when those laws stand between them and the homes they need to survive.
The “Right to Housing” movement. The U.S. Alliance of Inhabitants and others are working with Raquel Rolnik, the United Nations Special Rapporteur on Adequate Housing, to make housing rights a reality in America.
A movement for “Jobs or Income” patterned after the marches organized by Dr. Martin Luther King Jr. in the 1960s. As unemployment begins to surpass the subprime crisis as the leading cause of foreclosures, people have no choice but to demand that government act to provide jobs or income for every American.
These are the first steps of the movement, and without these it cannot move forward. None of these tactics take us all the way to the structural change necessary to secure the right to housing for all. But they contain “seeds” that can be cultivated to grow the political motion that could result in that change.
“No one is an island.” Neither the foreclosure crisis nor the resulting homelessness are “individual” problems. Almost 8 million homes entered foreclosure from 2007-09, and an additional 5 million are projected to be foreclosed on in the next two years. The wave of foreclosures is also causing a dramatic tightening of the rental housing market, resulting in higher rents for millions more and increasing homelessness.
This is the problem of a whole economic class of dispossessed people. They are not just one color, one language, one occupation, one neighborhood, or one city. It is a class of all people whose survival is threatened because they cannot find enough work that pays enough money to pay for the mortgage (or rent).
It is time for people to join forces with others who are in similar situations. There is strength in numbers. We must rise above the daily struggle to survive by confronting the system that created that struggle, and must vie for systemic change.
We start by joining any and all of the movements and tactics the people are already taking up. We fight to broaden them, unite them one with another, and then with all the movements of the dispossessed for housing, health care, immigrant rights, education, and all our basic human necessities.
As we grow stronger, we begin to demand that the government defend us by taking proactive action against the corporations that are step-by-step destroying our society. Ultimately the anti-foreclosure movement – like most of the other social movements in America today – needs to coalesce around the demand to thoroughly, completely, and irrevocably nationalize the banks in the interests of the people. Their fabulous resources must be turned over to meet our needs.
This is not the “partial” or “temporary” nationalization supported by Alan Greenspan or other prominent bankers, economists, or columnists. Those are just inventive schemes to extort more bailout money from the government. Nationalization in the interests of the people means not only government takeover of ownership of the banks. It means conversion of banks from profit-making predators into non-profit utilities that only exist to serve the public.
The problem of the fight for nationalizing banks for the people is that the government as it exists now is indisputably owned lock, stock, and barrel by the very institutions we are targeting. The struggle for bank nationalization is therefore inseparable from a struggle to replace our current government – which is run by and for corporations – with one that is run by and for the majority of our people.
The only thing blocking America’s dispossessed today is our own thinking. Our minds are still grounded in the ideology of an economy of small producers, an economy that has been in decline for a hundred years and today has virtually disappeared. The role of revolutionaries today is to guide people step-by-step to an awareness of their actual economic position in America’s society, and point the way to the solution. The battle to nationalize the banks in the interests of the people is a critical step in this process.
Excerpted from a pamphlet recently published by the Foreclosure Subcommittee of the National Housing and Homelessness Committee of the League of Revolutionaries for a New America.
This article originated in Rally, Comrades!
P.O. Box 477113 Chicago, IL 60647 firstname.lastname@example.org
Free to reproduce unless otherwise marked.
Please include this message with any reproduction.
The age-old vision of a world without scarcity, without exploitation, class domination, organized violence, and stultifying labor has been the dream of millenia. The new completely socialized labor-eliminating means of production ... sets the basis for its realization. Now human history can begin, the light of the individual shining in the full brightness of liberated life, that can only be realized within true equality and cooperation: communism, a cooperative society.'Without Vision, the People Perish'
Rally, Comrades ! May/June 2011