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U.S. Loan Effort Is Seen as Adding to Housing Woes
The Obama administration's $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.
Since President Obama announced the program in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people but has largely failed to provide permanent relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes.
As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.
Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.
"The choice we appear to be making is trying to modify our way out of this, which has the effect of lengthening the crisis," said Kevin Katari, managing member of Watershed Asset Management, a San Francisco-based hedge fund. "We have simply slowed the foreclosure pipeline, with people staying in houses they are ultimately not going to be able to afford anyway."
Mr. Katari contends that banks have been using temporary loan modifications under the Obama plan as justification to avoid an honest accounting of the mortgage losses still on their books. Only after banks are forced to acknowledge losses and the real estate market absorbs a now pent-up surge of foreclosed properties will housing prices drop to levels at which enough Americans can afford to buy, he argues.
"Then the carpenters can go back to work," Mr. Katari said. "The roofers can go back to work, and we start building housing again. If this drips out over the next few years, that whole sector of the economy isn't going to recover."
The Treasury Department publicly maintains that its program is on track. "The program is meeting its intended goal of providing immediate relief to homeowners across the country," a department spokeswoman, Meg Reilly, wrote in an e-mail message.
But behind the scenes, Treasury officials appear to have concluded that growing numbers of delinquent borrowers simply lack enough income to afford their homes and must be eased out.
In late November, with scant public disclosure, the Treasury Department started the Foreclosure Alternatives Program, through which it will encourage arrangements that result in distressed borrowers surrendering their homes. The program will pay incentives to mortgage companies that allow homeowners to sell properties for less than they owe on their mortgages - short sales, in real estate parlance. The government will also pay incentives to mortgage companies that allow delinquent borrowers to hand over their deeds in lieu of foreclosing.
Ms. Reilly, the Treasury spokeswoman, said the foreclosure alternatives program did not represent a new policy. "We have said from the start that modifications will not be the solution for all homeowners and will not solve the housing crisis alone," Ms. Reilly said by e-mail. "This has always been a multi-pronged effort."
Whatever the merits of its plans, the administration has clearly failed to reverse the foreclosure crisis.
In 2008, more than 1.7 million homes were "lost" through foreclosures, short sales or deeds in lieu of foreclosure, according to Moody's Economy.com. Last year, more than two million homes were lost, and Economy.com expects that this year's number will swell to 2.4 million.
"I don't think there's any way for Treasury to tweak their plan, or to cajole, pressure or entice servicers to do more to address the crisis," said Mark Zandi, chief economist at Moody's Economy.com. "For some folks, it is doing more harm than good, because ultimately, at the end of the day, they are going back into the foreclosure morass."
Mr. Zandi argues that the administration needs a new initiative that attacks a primary source of foreclosures: the roughly 15 million American homeowners who are underwater, meaning they owe the bank more than their home is worth.
Increasingly, such borrowers are inclined to walk away and accept foreclosure, rather than continuing to make payments on properties in which they own no equity. A paper by researchers at the Amherst Securities Group suggests that being underwater "is a far more important predictor of defaults than unemployment."
From its inception, the Obama plan has drawn criticism for failing to compel banks to write down the size of outstanding mortgage balances, which would restore equity for underwater borrowers, giving them greater incentive to make payments. A vast majority of modifications merely decrease monthly payments by lowering the interest rate.
Mr. Zandi proposes that the Treasury Department push banks to write down some loan balances by reimbursing the companies for their losses. He pointedly rejects the notion that government ought to get out of the way and let foreclosures work their way through the market, saying that course risks a surge of foreclosures and declining house prices that could pull the economy back into recession.
"We want to overwhelm this problem," he said. "If we do go back into recession, it will be very difficult to get out."
Under the current program, the government provides cash incentives to mortgage companies that lower monthly payments for borrowers facing hardships. The Treasury Department set a goal of three to four million permanent loan modifications by 2012.
"That's overly optimistic at this stage," said Richard H. Neiman, the superintendent of banks for New York State and an appointee to the Congressional Oversight Panel, a body created to keep tabs on taxpayer bailout funds. "There's a great deal of frustration and disappointment."
As of mid-December, some 759,000 homeowners had received loan modifications on a trial basis typically lasting three to five months. But only about 31,000 had received permanent modifications - a step that requires borrowers to make timely trial payments and submit paperwork verifying their financial situation.
The government has pressured mortgage companies to move faster. Still, it argues that trial modifications are themselves a considerable help.
"Almost three-quarters of a million Americans now are benefiting from modification programs that reduce their monthly payments dramatically, on average $550 a month," Treasury Secretary Timothy F. Geithner said last month at a hearing before the Congressional Oversight Panel. "That is a meaningful amount of support."
But mortgage experts and lawyers who represent borrowers facing foreclosure argue that recipients of trial loan modifications often wind up worse off.
In Lakeland, Fla., Jaimie S. Smith, 29, called her mortgage company, then Washington Mutual, in October 2008, when she realized she would get a smaller bonus from her employer, a furniture company, threatening her ability to continue the $1,250 monthly mortgage payments on her three-bedroom house.
In April, Chase, which had taken over Washington Mutual, lowered her payment to $1,033.62 in a trial that was supposed to last three months.
Ms. Smith made all three payments on time and submitted required documents, Chase confirms. She called the bank almost weekly to inquire about a permanent loan modification. Each time, she says, Chase told her to continue making trial payments and await word on a permanent modification.
Then, in October, a startling legal notice arrived in the mail: Chase had foreclosed on her house and sold it at auction for $100. (The purchaser? Chase.)
"I cried," she said. "I was hysterical. I bawled my eyes out."
Later that week came another letter from Chase: "Congratulations on qualifying for a Making Home Affordable loan modification!"
When Ms. Smith frantically called the bank to try to overturn the sale, she was told that the house was no longer hers. Chase would not tell her how long she could remain there, she says. She feared the sheriff would show up at her door with eviction papers, or that she would return home to find her belongings piled on the curb. So Ms. Smith anxiously set about looking for a new place to live.
She had been planning to continue an online graduate school program in supply chain management, and she had about $4,000 in borrowed funds to pay tuition. She scrapped her studies and used the money to pay the security deposit and first month's rent on an apartment.
Later, she hired a lawyer, who is seeking compensation from Chase. A judge later vacated the sale. Chase is still offering to make her loan modification permanent, but Ms. Smith has already moved out and is conflicted about what to do.
"I could have just walked away," said Ms. Smith. "If they had said, ‘We can't work with you,' I'd have said: ‘What are my options? Short sale?' None of this would have happened. God knows, I never would have wanted to go through this. I'd still be in grad school. I would not have paid all that money to them. I could have saved that money."
A Chase spokeswoman, Christine Holevas, confirmed that the bank mistakenly foreclosed on Ms. Smith's house and sold it at the same time it was extending the loan modification offer.
"There was a systems glitch," Ms. Holevas said. "We are sorry that an error happened. We're trying very hard to do what we can to keep folks in their homes. We are dealing with many, many individuals."
Many borrowers complain they were told by mortgage companies their credit would not be damaged by accepting a loan modification, only to discover otherwise.
In a telephone conference with reporters, Jack Schakett, Bank of America's credit loss mitigation executive, confirmed that even borrowers who were current before agreeing to loan modifications and who then made timely payments were reported to credit rating agencies as making only partial payments.
The biggest source of concern remains the growing numbers of underwater borrowers - now about one-third of all American homeowners with mortgages, according to Economy.com. The Obama administration clearly grasped the threat as it created its program, yet opted not to focus on writing down loan balances.
"This is a conscious choice we made, not to start with principal reduction," Mr. Geithner told the Congressional Oversight Panel. "We thought it would be dramatically more expensive for the American taxpayer, harder to justify, create much greater risk of unfairness."
Mr. Geithner's explanation did not satisfy the panel's chairwoman, Elizabeth Warren.
"Are we creating a program in which we're talking about potentially spending $75 billion to try to modify people into mortgages that will reduce the number of foreclosures in the short term, but just kick the can down the road?" she asked, raising the prospect "that we'll be looking at an economy with elevated mortgage foreclosures not just for a year or two, but for many years. How do you deal with that problem, Mr. Secretary?"
A good question, Mr. Geithner conceded.
"What to do about it," he said. "That's a hard thing."
46 Comments so far
Show AllOnce again "our government" shows that it is for, by and of the money. We have to use all the imaginary money that the Fed can put into the computers to save the money that is already on the books. Damm the people and their homes. If the homes aren't worth what the original price is and the banks have to take a loss to recover some of their money, just let the owners pay on a smaller amount, and pay a smaller amount. Keeps the rif raf off the streets. In the streets, they might get a little restless. We can't go letting the natives get restless, now can we?
It's not like the solutions, such as those you suggest, are unknown to those in control. It's not like they don't know what to do and need help in coming up with ways to assist homeowners. The fact is they are doing exactly what they intended to do, and the programs are having exactly the consequences they wanted. It's only those of us who don't see things from the financial industry's perspective who keep making these helpful suggestions as if they, and we, saw things in the same way and had the same goals. As if they only needed our helpful input to get it right. But for some inexplicable reason they aren't listening.
This whole article is framed to show how benefiting the banks is what's important and good as well as the only meaningful consideration. As for the homeowners, they are presented as worthless, fungible assets in need of being purged from this otherwise important and valuable system.
All of the 12 trillion that went to speculation ,mergers and bonuses should have gone to making millions of citizens secure and employed.
Trickle up is the only meaningful way to operate.
Why is there no moral hazzard discussion of refinancing failed banks in relation to solvent banks
but insurmountable moral hazzard in making good failed homeowners mortages.
Enrich the few and throw millions under the bus.
Obama's race to the bottom, these corporates are serious when they say USA ans should work for developing country wages, $5 a day.
You will be an civilian indentured servant or a militant indentured servant.
One of the saddest thing is to see so many of the lower income half agitating to destroy unions, they might as will cut off their own limbs.
Also Fannie Mae and Mac have recently been awarded unlimited treasury funds and Dean Baker suspects they will be using it to buy toxic derivatives at the taxpayers expense.
Some excellent points Glenn. Especially about Fannie Mae and Mac.
But there are some Unions that are so corrupt, their leaders so dishonest and their detrimental effect on the American worker, especially those in the lower income groups, they should be destroyed. Unions can be a blessing, but also occasionally they get big enough or corrupt enough to be part of the problem.
"Trickle up is the only meaningful way to operate."
Love this thought!
Thanks civis some unions are corrupt but some have raised the workers standards alot
Mr. Gettlefinger and the UAW come to mind! UAW= U ain't working!
Do More Harm Than Good.
It's the American Government/Corporate Way.
the first problem here is obamas incompetency. he hired
the twisted clowns that destroyed american while working
for bill clinton. then he didn't have a set of people
to fact check his teams assertions to make sure it would
work for america. yeah he inherited a really bad hand
but he has added fuel to the fire and made things worse
kept the same militaristic bozos in charge of the dod .
for a guy as smart as he is reputed to be you don't
stay with the status quo unless your part of that clique
which he has revealed himself to be!
I believe it should have been known that Mr. Obama was nothing but an empty suit who would work for the interests of the ruling elite. He graduated from Harvard Law. What more evidence does one need?
That is not the giveaway. The giveaway is his freakin' RECORD (not yelling at you, just yelling), and if anyone had bothered looking at it, which apparently they didn't, Barack "Barry Soetoro" Obama would never have "won"! Don't listen to what people SAY, look at what they DO!!
Another trick program from o and it is evidently becoming just another failure for the people by channeling more money into the 'elite's' pockets, so why is this not surprising? It is not surprising because o from the beginning is a corporate lap dog just waiting to get his $100,000,000.00 pay day after his service to those 'elite' is finished.
In our Orwellian times, it seems every piece of legislation does exactly the opposite of what it is said while further enriching the Oligarchy. This one is no different.
Amen!
Frankly, since this President took office, I'd defy anyone here (or anywhere else) to point to anything of consequence that he has proposed or signed to be other than worthless or damaging.
Anybody left that still believes the lies from this bunch? If so, name one please.
Slowly but surly this country is headed towards another bubble and then the giant crash, a depression.
Let this article be the lesson in which to help other's make the decision of what they should do if they are put into a position of having to foreclose. For every one positive story, there's going to be 50 more like Christine Holevas's being hidden. It's all about the banks stealing and lining their own pockets. How else can they justify a successful year of record making profits and their hefty bonuses?
Little Timothy Geithner is well aware of this. He just gave Freddie and Fannie CEO’s a 6 M-dollar bonus and said “We have to pay them, because we can’t afford to lose them.” Then he turned around and dolled out another 42 M in bonuses to slice up between 12 other corrupt banksters. It’s all a joke on a stupid American public and all the while these banksters are toasting and smoking cigars. It is their plan to pay the American people as little in wages as they possible, throw them into ruins, unable to afford a home or a car, and lock us in. Then they’ll mandate health insurance so they can steal away what little people have. The number one reason people will be going to the doctor is to pick up their prescription for pain relief for their terminal cancer they’ve gotten from their poisoned drinking water and air they breath. Few will be able to escape to Mexico for treatment, too poor.
2010 will be the year that the media pushes out a constant barrage of lies about how the county is recovering. Once again we will be hearing how dire and then how good things are all within days, a constant back and forth ball of confusion as this country creates a less visible middleclass and a larger pool of poor. It’s only a prop for this administrations to hang on before the bottom falls out, yet again.
Depends on your perspective.
There are many who still claim that "Obama is failing" or "Obama is a disappointment" or "Obama has betrayed us" or "Obama's efforts add to housing woes" and so forth.
Once you see this from a class perspective and understand who Obama represents and where his allegiances have always been you can clearly see that none of the above plaints that I put forth as examples hold true.
Obama, like his predecessor, is in fact a smashing success.
When you or I speak about 'housing' we might think of 'people being housed', and moreso, in a way that is humane and affordable. When the elites and their markets speak of 'housing' they have only profits and speculation as their points of reference.
The 'housing market' is being propped up in all manners by the forced largesse of taxpayer money and so the profits and speculations are really not in much trouble at all as long as this is the case and so we see that Obama, by signing off on all the various business-friendly packages, is doing his job well, and all crocodile tears aside, he understands quite well what is required of him.
So from the perspective of Obama and the ruling elites he represents the 'housing woes' are no more a problem or even a reality than the war against (fill in the blank) is a failure. The rich are getting richer at record rates and still there are some who have such unwarranted assumptions as "Obama is failing."
mcoyote,
Well, stated.
Another question may be: why do people still write articles like the above? Has the social and economic conditioning been so very thorough that they cannot see that Mr. Obama has been and remains a shill for the ruling elite?
It is not like the evidence was never available until now.
>>The choice we appear to be making is trying to modify our way out of this, which has the effect of lengthening the crisis," said Kevin Katari, managing member of Watershed Asset Management, a San Francisco-based hedge fund. "We have simply slowed the foreclosure pipeline, with people staying in houses they are ultimately not going to be able to afford anyway."
In essence Mr Katari who runs a HEDGE FUND is asking that the Market be allowed to do work its magic.
This means foreclosing on all those homes and throwing the people out in the streets until everything gets back to normal and the builders can start putting up new homes.
I doubt Mr Katari, the runner of a HEDGE fund is in any risk of having his own home foreclosed on.
Again why continually go back to the peoples who created this mess for advice on a solution? It is what Obama did and it is obviously not working.
How about writing down all the debt to the current market value of the home as a start?
I don't think banks necessarily want to foreclose on anyone. They just don't want to be in a position of having to write off a mortgage that went drastically to hell. If they are compelled to do that, their losses could amount to failure of the bank. It's all Kabuki drama--everyone pretending houses have value they don't have and the government pretending people will get back on their feet and pay down those mortgages--even if there is not a prayer they will do so. The result is, lots of empty houses and lots of houses occupied but not with residents making regular mortgage payments. People in danger of foreclosure should just stay put. The onus is on the banks, not on them.
Dean Baker's idea of making potential foreclosure victims renters sounds reasonable to me. Of course, Baker represents "progressive thinking" and Obama would never pay attention to that.
I, too, thought Baker's conversion to rental idea was the best solution to an intractable problem. Too simple and banks could have been hurt. I'd also ban all sales of mortgages--you make the loan, it's yours. Could only be sold if the bank was sold or went into bankruptcy.
The "mortgage that went drastically to hell" went there BECAUSE OF the actions of the bank. The banks SHOULD fail. They had to be pretty sure their irrational lending policies would lead to problems. They threw the dice, and lost. Failure is the learning method all the rest of us are subjected to when we do something so stupid or risky. The banks consist of people who took advantage of their position to create a false economic environment that they knew would make them money. Their narcissistic selfishness caused them to not even consider anybody beyond themselves. Was there maybe a bit of sociopath in some of them?
There seems to be a natural forgiveness involved in the way people write about bankers, but then pass judgment on those who fell for the mortgage scams created by those bankers. This backwards thinking is reflected in who got the money. It's unbelievable to me that the people responsible for the mortgage meltdown, who already made millions of dollars while do creating it, are now getting the bailout money. And millions of others are losing their life savings, and are becoming homeless.
One thing you can ABSOLUTELY COUNT ON, and that is: The so called real estate experts and financial consultants will never give good advice to consumers. Both are parasites who have insinuated themselves into the financial transactions of consumers and their first and foremost concern is for themselves.
This article has lit up my corporatist spin meter. Consider this quote:
"We have simply slowed the foreclosure pipeline, with people staying in houses they are ultimately not going to be able to afford anyway."
That is rich. The whole point of MHA was to slow the foreclosure process in part because trillions$ have been given to the banks to prevent them from going under.
Those trillions$ have already been spent. I seriously doubt the US can maintain its social cohesiveness if the perception should somehow arise that it is ok to bail out banks, most recently Fannie and Freddie on an "unlimited" basis, no less, while simultaneously concluding that foreclosure is a good thing.
Although the public has had some time to forget about the bailouts and although the spin is that the mega-banks are repaying the bailout $$$$$$$ they recieved ($$, maybe), it is too soon, even for our dumbed down public, I think anyway, to unleash foreclosure.
First, the poor will no longer be able to actually own property. They will be subject to the landlord. Second, an amendment will be passed giving the right to vote to landowners, exclusively. They are saying that renting is cheaper than owning. That is not necessarily so. I say that if you can't afford to own, you will probably have a problem affording rent. To quote Bill Clinton: "It's the economy, stupid!" To paraphrase: "It's the War and Occupations, stupid!" "It's the Health Insurance rip-off, stupid!" "It's the Congress in the pocket of the corporate lobbyists, stupid!" "It's NAFTA and other NWO treaties, stupid!", etcetera. Bring home the troops, and with the surplus, create govt. jobs rebuilding the infrastructure. HEAVILY tax those making 10 to 100 or more times the average wage in America in ascending increments. There are ways to fix the economy without it being on the backs of the poor and middle incomes. I say raise the poor and lower middle to the average wage by lowering the upper and highest wages. Everyone who works earns a living. Living should be the key word. Most of us earn just enough to get by, maybe with a few lesser luxuries, while there are a many who make a true living who don't work any more hours. Education might dictate the degree of effort one must expend to put in 40 hours, but shouldn't dictate the compensation throughout an entire career. Somewhere experience on a job should equal education as far as "deserving" compensation. It is time "fair and equal" should be applied to the entire work force. We all want to go on an extended cruise, or something comparable, without giving up all other comforts just to be able to afford it. Let's raise the floor and lower the ceiling on compensation. We should all be in the same room, at least.
What is needed is a federal mandatory judicial foreclosure law which some states already have, With such laws, judges have already refused approval for foreclosure by banks where the mortgages are bundling in with other mortgages as has been the case so often with the banks seeking to make the maximum amount of money out of such arrangements, but with such bundling, the titles to such properties can't be located or at least not without great difficulty, Even foreign banks are involved in these mortgage bundling deals, and now they as well as their domestic cohorts and fellow greed bags can be at least slwed down in throwing people out in the streets by such legislation,
AD
What you are talking about is not a bad idea, but it can't be done retroactively.
What you are talking about is taking salt out of the soup.
But keep thinking, you'll catch up. Thinkers are always needed.
Hmmnn. Is this a country or what? Failed state, anyone?
Failed state. Break it up. The idiots in the Stupid Crescent (Southeast and Midwest USA) can have their medieval superstition and cut the rest of us loose. They have rejected the Enlightenment and they can try to live with the results.
So the way I read this article is that Geitner passed legislation that basically allows the banks to maintain a false sense of the property's worth so they wouldn't have to report the loss.
The money goes to 'helping' people pay for a house that they 'cannot afford' because the house's worth is artificially kept at its bubble-price.
In effect, it is an attempt to bail-out banks while keeping those less well off in their homes a bit longer while continuing to extract money from them without realistically assessing the worth of the property.
Why the hell didn't Geitner instigate equity loss schemes? Tell the banks...look guys, you are facing total losses because all these people will foreclose at once. INSTEAD why not reduce the house and loan value...take the partial loss rather than the whole one...and keep people in their homes which they NOW are unlikely to walk away from. A partial loss is surely better than a full one eh???
I can tell you why, because Geitner cannot conceive of a solution that gives ANY loss to the bank!
Until this country recognizes that 1/2 of the responsibility IS the bank-loan culture they created themselves and they pay for part of it we are going to see an even faster impoverishing of the middle class.
Soon you will have the Lord and Lady of the manner once again. Enjoy your freedman status while you can folks.
You are smart. When the revolution starts, there will be a place for you. I am enjoying "freedman" status and I will continue to do so.
As for the "Lords and Ladies", they are rich, weak, and headed for the guillotine.
Thanks for that! I will be happy to participate to the Glorious New World Order!
Nationalize the banks, forgive everyone's debt.
Instead they nationalize the debt and forgive every one of the banks.
The part of this story that really pinched me was the part where the bank forclosed on her house, and then auctioned it off (to itself) for $100, Hmmmmmm. This would be piracy if these dipshits where badass enough to take it by force, but really we have a bunch of hired goons to do all the dangerous stuff like throwing frightened defeated families out of their homes.
So who is winning this screwed up game of monopoly? The"rich"? White men mostly, guys who hang out in offices. But why? for the pure joy of eating in fancy restaurants? To have expensive watches?
Basically the only real advantage to being stinking rich is erotic possibilities.
No matter how-- ugly, old, fat hairy, stupid, obnoxius, evil,boring etc.. you are...
If your rich you can screw anything you want, boys, girls , dogs frogs, kids whatever...
And because you are picking up the tab, it's service with a smile!
They say power is sexy, and with so much powerlessness in the air, it's probably even more so.
I guess there is a reason that all the inhabitants of the forbidden city (who ran the economy of ancient china) were eunich's.
THere must be a way to slow down the swine banking elite.
We will probably need to put them up against the wall however. sad but true.
See Peter Brooks' "Marat Sade" on youtube, its about the failures of revolution, but it's really pretty, and informational, and it's a musical.
x 9:53 -------- Actually sex for the greedy is not easy.
All that negative thinking deflates the tool and then the viagra makes them blind and heart attack patsies.
I think you hit on something that is rarely talked about. I have noticed that very often when these guys are investigated it turns out that they have young beautiful mistresses or are even into more politically incorrect ways of satisfying their sexual desires, some of which you alluded to. And as long as they can keep the millions flowing in, their wives will stick with them for the glory and glamour of it all, maintaining a beautiful image of aristocracy for the masses who are expected to accept their own inferiority. In Dubai there are apparently hotels for the wealthy tourists that offer complementary beautiful Russian prostitutes for the guests of the hotel. There is a lot going on in the world of these super-wealthy elites that gets little coverage in the US.
I would add that while feminism has dramatically impacted the lives of US middle-class males, I believe it has hardly touched the lifestyles of these male super-predators.
OBAMA'S motto really is:
"THE BANKERS ARE STARVING !!!!! we have to HELP THEM !!!!".
"Treasury officials appear to have concluded that growing numbers of delinquent borrowers simply lack enough income to afford their homes and must be eased out."
"The Treasury Department started the Foreclosure Alternatives Program, through which it will encourage arrangements that result in distressed borrowers surrendering their homes."
Homelessness you can beleive in!
too bad we can't apply that "wrenching yet cleansing process" to the goldman etc vampires running (ruining) the economy.....
instead of a "wrenching yet cleansing process" that only applies to WE THE PEOPLE........
or better let's apply that "wrenching yet cleansing process" to congress and the white house!
or how about the pentagon........
Stop fantasizing and start plotting.
Yea, I was thinking something similar myself.
Who the hell writes this stuff and just how calous can you be?
It wouldn't piss me off so much if, as you say, all this "wrenching" and "cleansing" were in any way being experienced by the people taking home million dollar bonuses this holiday season. I don't see them 'wrenching' only coming back to the public trough for more.
But then, that's part of the conservative line...this whole thing is the POOR people's fault!
Oh yea!
Clearly, "MORE HARM THAN GOOD" will be the motto of our current leadership. The healthcare bill alone will probably destroy the Democratic Party.
But don't you see? If Obama can steal more money from people, and give that money to his banking friends, the ones who helped install his unqualified @$$ in office, then it's all good, right, Howard Dean, Nancy Pelosi, Donna Brazille, and all you other sellout @$$&%!&$?
You are not Democrats, you are demons.
THIS ARTICLE - about more and more americans
LIVING SOLELY ON FOOD STAMPS "their SOLE INCOME".........
is so horrible..........how can a wealthy country allow this to its own people? to be reduced to having as "income" -- food stamps only?
these are human beings..
it's really heartbreaking.
====================
January 3, 2010
The Safety Net
Living on Nothing but Food Stamps
By JASON DEPARLE and ROBERT M. GEBELOFF
CAPE CORAL, Fla. — After an improbable rise from the Bronx projects to a job selling Gulf Coast homes, Isabel Bermudez lost it all to an epic housing bust — the six-figure income, the house with the pool and the investment property.
Now, as she papers the county with résumés and girds herself for rejection, she is supporting two daughters on an income that inspires a double take: zero dollars in monthly cash and a few hundred dollars in food stamps.
With food-stamp use at a record high and surging by the day, Ms. Bermudez belongs to an overlooked subgroup that is growing especially fast: recipients with no cash income.
About six million Americans receiving food stamps report they have no other income, according to an analysis of state data collected by The New York Times. In declarations that states verify and the federal government audits, they described themselves as unemployed and receiving no cash aid — no welfare, no unemployment insurance, and no pensions, child support or disability pay.
Their numbers were rising before the recession as tougher welfare laws made it harder for poor people to get cash aid, but they have soared by about 50 percent over the past two years. About one in 50 Americans now lives in a household with a reported income that consists of nothing but a food-stamp card.
“It’s the one thing I can count on every month — I know the children are going to have food,” Ms. Bermudez, 42, said with the forced good cheer she mastered selling rows of new stucco homes.
Members of this straitened group range from displaced strivers like Ms. Bermudez to weathered men who sleep in shelters and barter cigarettes. Some draw on savings or sporadic under-the-table jobs. Some move in with relatives. Some get noncash help, like subsidized apartments. While some go without cash incomes only briefly before securing jobs or aid, others rely on food stamps alone for many months.
The surge in this precarious way of life has been so swift that few policy makers have noticed. But it attests to the growing role of food stamps within the safety net. One in eight Americans now receives food stamps, including one in four children.
Here in Florida, the number of people with no income beyond food stamps has doubled in two years and has more than tripled along once-thriving parts of the southwest coast. The building frenzy that lured Ms. Bermudez to Fort Myers and neighboring Cape Coral has left a wasteland of foreclosed homes and written new tales of descent into star-crossed indigence.
A skinny fellow in saggy clothes who spent his childhood in foster care, Rex Britton, 22, hopped a bus from Syracuse two years ago for a job painting parking lots. Now, with unemployment at nearly 14 percent and paving work scarce, he receives $200 a month in food stamps and stays with a girlfriend who survives on a rent subsidy and a government check to help her care for her disabled toddler.
“Without food stamps we’d probably be starving,” Mr. Britton said.
A strapping man who once made a living throwing fastballs, William Trapani, 53, left his dreams on the minor league mound and his front teeth in prison, where he spent nine years for selling cocaine. Now he sleeps at a rescue mission, repairs bicycles for small change, and counts $200 in food stamps as his only secure support.
“I’ve been out looking for work every day — there’s absolutely nothing,” he said.
A grandmother whose voice mail message urges callers to “have a blessed good day,” Wanda Debnam, 53, once drove 18-wheelers and dreamed of selling real estate. But she lost her job at Starbucks this year and moved in with her son in nearby Lehigh Acres. Now she sleeps with her 8-year-old granddaughter under a poster of the Jonas Brothers and uses her food stamps to avoid her daughter-in-law’s cooking.
“I’m climbing the walls,” Ms. Debnam said.
Florida officials have done a better job than most in monitoring the rise of people with no cash income. They say the access to food stamps shows the safety net is working.
“The program is doing what it was designed to do: help very needy people get through a very difficult time,” said Don Winstead, deputy secretary for the Department of Children and Families. “But for this program they would be in even more dire straits.”
But others say the lack of cash support shows the safety net is torn. The main cash welfare program, Temporary Assistance for Needy Families, has scarcely expanded during the recession; the rolls are still down about 75 percent from their 1990s peak. A different program, unemployment insurance, has rapidly grown, but still omits nearly half the unemployed. Food stamps, easier to get, have become the safety net of last resort.
“The food-stamp program is being asked to do too much,” said James Weill, president of the Food Research and Action Center, a Washington advocacy group. “People need income support.”
Food stamps, officially the called Supplemental Nutrition Assistance Program, have taken on a greater role in the safety net for several reasons. Since the benefit buys only food, it draws less suspicion of abuse than cash aid and more political support. And the federal government pays for the whole benefit, giving states reason to maximize enrollment. States typically share in other programs’ costs.
The Times collected income data on food-stamp recipients in 31 states, which account for about 60 percent of the national caseload. On average, 18 percent listed cash income of zero in their most recent monthly filings. Projected over the entire caseload, that suggests six million people in households with no income. About 1.2 million are children.
The numbers have nearly tripled in Nevada over the past two years, doubled in Florida and New York, and grown nearly 90 percent in Minnesota and Utah. In Wayne County, Mich., which includes Detroit, one of every 25 residents reports an income of only food stamps. In Yakima County, Wash., the figure is about one of every 17.
Experts caution that these numbers are estimates. Recipients typically report a small rise in earnings just once every six months, so some people listed as jobless may have recently found some work. New York officials say their numbers include some households with earnings from illegal immigrants, who cannot get food stamps but sometimes live with relatives who do.
Still, there is little doubt that millions of people are relying on incomes of food stamps alone, and their numbers are rapidly growing. “This is a reflection of the hardship that a lot of people in our state are facing; I think that is without question,” said Mr. Winstead, the Florida official.
With their condition mostly overlooked, there is little data on how long these households go without cash incomes or what other resources they have. But they appear an eclectic lot. Florida data shows the population about evenly split between families with children and households with just adults, with the latter group growing fastest during the recession. They are racially mixed as well — about 42 percent white, 32 percent black, and 22 percent Latino — with the growth fastest among whites during the recession.
The expansion of the food-stamp program, which will spend more than $60 billion this year, has so far enjoyed bipartisan support. But it does have conservative critics who worry about the costs and the rise in dependency.
“This is craziness,” said Representative John Linder, a Georgia Republican who is the ranking minority member of a House panel on welfare policy. “We’re at risk of creating an entire class of people, a subset of people, just comfortable getting by living off the government.”
Mr. Linder added: “You don’t improve the economy by paying people to sit around and not work. You improve the economy by lowering taxes” so small businesses will create more jobs.
With nearly 15,000 people in Lee County, Fla., reporting no income but food stamps, the Fort Myers area is a laboratory of inventive survival. When Rhonda Navarro, a cancer patient with a young son, lost running water, she ran a hose from an outdoor spigot that was still working into the shower stall. Mr. Britton, the jobless parking lot painter, sold his blood.
Kevin Zirulo and Diane Marshall, brother and sister, have more unlikely stories than a reality television show. With a third sibling paying their rent, they are living on a food-stamp benefit of $300 a month. A gun collector covered in patriotic tattoos, Mr. Zirulo, 31, has sold off two semiautomatic rifles and a revolver. Ms. Marshall, who has a 7-year-old daughter, scavenges discarded furniture to sell on the Internet.
They said they dropped out of community college and diverted student aid to household expenses. They received $150 from the Nielsen Company, which monitors their television. They grew so desperate this month, they put the breeding services of the family Chihuahua up for bid on Craigslist.
“We look at each other all the time and say we don’t know how we get through,” Ms. Marshall said.
Ms. Bermudez, by contrast, tells what until the recession seemed a storybook tale. Raised in the Bronx by a drug-addicted mother, she landed a clerical job at a Manhattan real estate firm and heard that Fort Myers was booming. On a quick scouting trip in 2002, she got a mortgage on easy terms for a $120,000 home with three bedrooms and a two-car garage. The developer called the floor plan Camelot.
“I screamed, I cried,” she said. “I took so much pride in that house.”
Jobs were as plentiful as credit. Working for two large builders, she quickly moved from clerical jobs to sales and bought an investment home. Her income soared to $180,000, and she kept the pay stubs to prove it. By the time the glut set in and she lost her job, the teaser rates on her mortgages had expired and her monthly payments soared.
She landed a few short-lived jobs as the industry imploded, exhausted her unemployment insurance and spent all her savings. But without steady work in nearly three years, she could not stay afloat. In January, the bank foreclosed on Camelot.
One morning as the eviction deadline approached, Ms. Bermudez woke up without enough food to get through the day. She got emergency supplies at a food pantry for her daughters, Tiffany, now 17, and Ashley, 4, and signed up for food stamps. “My mother lived off the government,” she said. “It wasn’t something as a proud working woman I wanted to do.”
For most of the year, she did have a $600 government check to help her care for Ashley, who has a developmental disability. But she lost it after she was hospitalized and missed an appointment to verify the child’s continued eligibility. While she is trying to get it restored, her sole income now is $320 in food stamps.
Ms. Bermudez recently answered the door in her best business clothes and handed a reporter her résumé, which she distributes by the ream. It notes she was once a “million-dollar producer” and “deals well with the unexpected.”
“I went from making $180,000 to relying on food stamps,” she said. “Without that government program, I wouldn’t be able to feed my children.”
Matthew Ericson contributed research.
Seventy-five billion dollar boost to Bankers' Bonuses.
Tax the peons and serfs for it, eh?