The American Dream Foreclosed

The American Dream Foreclosed

By FORD FESSENDEN
Published: October 14, 2007

A SURGE in subprime lending across the region in recent years is now helping to fuel a boom in foreclosures, with the number of filings rising 55 percent in suburban counties in the first nine months of this year, compared with the same period last year, an analysis of real estate data shows.

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On Long Island, the number of foreclosure actions increased sharply during the summer. Nearly 1,000 foreclosure notices were filed in July, and 728 foreclosures were scheduled in the third quarter. Both numbers represent an increase of more than 60 percent over the same period in 2006, according to Long Island Profiles, a real estate information service.

The growth is similar to that across the 19 counties of suburban New York, Connecticut and New Jersey, where more than 41,000 foreclosure notices or repossessions were filed through the third quarter of 2007, according to RealtyTrac, a national real estate information service.

The recent foreclosures represent a fraction of the total number of mortgages in the region, but experts say that loans are going bad far more quickly than they did just three years ago. For example, on Long Island, the average age of a loan in foreclosure last month was a little more than two years, according to Long Island Profiles. In January 2004, the average length of time it took borrowers struggling with loans was five years before losing their property through foreclosure.

Jacqueline Cila, divorced with a 7-year-old son, who lives in a three-bedroom house in East Moriches, sent her usual payment of $2,000 off to her mortgage company in July. But in August, her mortgage company told her she was delinquent: Her payment had risen to $2,798.

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It’s hard to remember that there was a time not too long ago when this President talked about creating an “ownership society.” But as the mortgage foreclosures start to pile up, we’re learning who gets to do the owning: big banks!

Buying your own home has always been the foundation of the American dream – but when more than 2 million Americans—including thousands in Massachusetts—risk losing their homes, for too many the dream of home ownership is becoming a nightmare.

Why is that happening? Because we have a sub-prime mortgage market that’s been abused by lenders’ deceptive practices and abandoned by the federal bank regulators who looked the other way: in the Bush economy, anything goes— but for families in danger of losing their homes, the question “why” is less important than: “What now?”

Today families fighting to hold onto their homes also find themselves fighting the federal government. When a bank does the right thing to try to lighten a family’s mortgage burden, the federal government turns around and taxes this assistance as if it were real income. This is just plain wrong. The government should be helping families pick themselves up, not kicking them when they’re already down. That’s why I’m fighting in the Senate to change the law so families don’t have to fight the IRS while they’re fighting to keep their homes.

We also see that too many families can’t get a mortgage at a fair price on the open market. To help them here in Massachusetts and across America to find a way out of the abusive loans that now hold them hostage, we should immediately increase federal loan limits and lower down payment requirements.

And third, we should make sure regulators do their job: stopping abusive mortgage practices and guaranteeing that anyone buying a home gets good information and responsible advice. Instead families have been lied to; they have been misled; and it’s long overdue for Congress to lead by making sure that lenders actually tell Americans the truth.

In the end, as we know all too well, owning a home is just one part of an ownership society. Most importantly, the promise means having a sense of ownership over your whole life: being able to save for college, save for retirement, put money away to care for an aging parent, earn a decent living. No amount of White House spin can build an ownership society out of Republican policies that make those things impossible and are really telling most Americans “you’re on your own.” -- John Kerry