Fighting Foreclosures in Boston
Bill Moyers recently profiled the work of the Boston nonprofit City Life/Vida Urbana which is working to stop foreclosures. We highly recommend watching the segment on PBS’s website. Community organizer Steve Meacham explains the tactics he and community members use to stop foreclosures and evictions in Massachusetts.
Meacham makes the point that many of the homeowners could afford their homes at the current market value if they were given a fixed-rate, 30 year mortgage. But they can’t afford their current mortgages, which value the homes at inflated values set during the housing bubble. In an outrageous twist of irony, the banks refuse to resell the properties to the homeowners at their market value – despite the fact that this is all they’ll get from any prospective buyer after foreclosing. They claim “moral hazard” for this refusal. Meacham explains:
“If Deutsche Bank forecloses on Joe Schmoe the best they can do is to sell that property at real value. So if Joe Schmoe can afford the property at real value, why not sell it back to him? But the only reason the banks aren’t doing that is because of what they call moral hazard. They say basically that homeowners should be punished because they signed these loan documents.
“These are the same guys who have run our entire economy into the ground and who have been rewarded with billions in taxpayer bailouts and have used billions of that money to give bonuses to the very executives that drove their companies and the whole economy into the ground. And they are citing moral hazard as the reason why they can’t resell that property to the existing homeowners at the real value. That is disgusting and hypocritical and in the extreme.”