Housing crisis at historic level

The drastic rise in mortgage foreclosures, which began more than a year ago, coupled with the decades-long attacks on affordable housing for renters, has resulted in a housing crisis in the U.S. today that is of historic proportions.

In some areas particularly hard hit by foreclosures and the lack of affordable rental properties, tent cities reminiscent of the 1930s’ Hoovervilles are beginning to swell in size.

A man from California recently interviewed by the British Broadcasting Company explained that after struggling to keep up with rising mortgage payments he was eventually faced with a choice no worker should ever be forced to make.

“It came down to feeding my family or keeping the house,” he said, “so I got rid of the house.” (BBC, March 14)

This man and his family are now living in a growing tent city in Ontario, Calif., just outside of Los Angeles. The tent city has more than quadrupled in size since last summer and is now populated by more than 200 men, women and children.

Some of the newly arriving residents at the tent city are homeless as a direct result of being ensnared in predatory subprime mortgage loans, but many are also living there because they are victims of the intensifying layoffs and wage cuts being perpetrated by the bosses across all sectors of the U.S. economy.

Faced with job loss and wage cuts at the same time that mortgage, rent, food and energy costs are all going up, an ever increasing number of workers across the country are being forced into homelessness.

The pain of the housing crisis is being felt most acutely in the most oppressed communities.

A recent study titled “State of the Dream 2008,” released by United for a Fair Economy, puts the monetary cost of the subprime mortgage crisis for people of color in the U.S. at $213 billion.

Brenda Cotto-Escalera, co-executive director of UFE and one of the authors of the report, said, “As a result of coldblooded targeting of people of color and low-income people in general by the subprime mortgage industry, communities across the nation are being torn apart.” The study concludes that, “The subprime lending debacle has caused the largest loss of wealth to people of color in modern U.S. history.”

For many communities of color, the drastic rise in foreclosures is just the latest in a long list of attacks on community housing stock. Intensifying gentrification and the wholesale destruction of public housing, as are currently taking place in New Orleans, are also contributing to the rapid disappearance of affordable housing in cities across the country.

Perhaps nothing is more emblematic of the vilely predatory nature of the mortgage lenders than the targeting of immigrant communities during the housing bubble. Subprime mortgage loans were deliberately marketed to immigrant communities where English was not the primary language.

In many Latin@ communities, mortgage loans were marketed in Spanish in television and radio ads, but the financial documentation detailing the terms of the loan was written in English. These financial documents were deliberately designed to disguise exploding interest rates and confuse the borrower as to the actual terms of the loan.

The mortgage lenders had no incentive to ensure that borrowers could repay these predatory loans because they quickly sold them off at a profit to larger financial institutions on Wall Street. Wall Street then pooled all these mortgage loans and many other types of loans, repackaged them as securities and derivatives, and sold them off at a profit to investors in the U.S, and around the globe. This created a giant financial house of cards, or “shadow banking system,” that has been collapsing in tandem with the U.S. housing market since last summer.

The experience of Glenda Ortiz, a Honduran immigrant profiled in a recent Washington Post article, is similar to that of thousands of immigrants around the country who were targeted by subprime lenders.

In 2005, Mrs. Ortiz was given a subprime mortgage loan, with terms which were not fully explained to her, to purchase a home in Alexandria, Va. When her mortgage payments soared to $3,000 a month, which was more than 70 percent of her and her husband’s combined monthly incomes of $4,200, she quickly began to fall behind. In 2007 Ortiz was forced into bankruptcy and foreclosure. Her home was repossessed by the bank. She said, “My house, my dream, it was an illusion.” (Washington Post, March 22).

The deepening housing crisis is a crime perpetrated against the workers by the capitalists. The Wall Street tycoons are being bailed out with hundreds of billions of dollars from the Federal Reserve, but there has yet to be any substantial relief for the millions of workers who are losing their homes.

This crisis of historic proportions demands a militant fightback that is equally epic in size. Grassroots people’s struggles against the mortgage lenders, bankers and bosses, such as those being waged by organizations like MECAWI in Detroit, can and must be replicated in cities and towns across the country. The capitalist bankers and bosses are pushing us from our homes. We must push back.