The liberal New York Times steps up for the banks today in the person of David Leonhardt, who counsels that whatever modest aid may be given to “underwater” homeowners should make distinctions — between those presumably deserving souls who cannot make their mortgage payments, and those who (in his view) simply see some sort of economic opportunity in abandoning the homes in which they live.
Leonhardt is sympathetic toward the “almost 1.5 million homeowners — out of about 75 million nationwide” who are two months behind on their mortgages. But he sees another, larger group who “may decide they don’t want to continue making” their payments because their homes have “lost so much value that they’re now worth less than the underlying mortgage” — that is, mere speculators who happen to live inside their investments, and will demand compensation out of greed, after receipt of which they will remove themselves and their families to some cheaper address, and chortle over the fast one they put over on Uncle Sam to the tune of, by Leonhardt’s estimate, $4 trillion. He cites in evidence a California saleswoman who comes close to expressing the cynicism Leonhardt imputes to millions of homeowners.
Leonhardt prescribes “a smorgasbord of programs,” including a colleague’s plan to “allow homeowners to forfeit their deeds and rent their homes back from the bank.” (We assume the word “allow” is chosen for its humorous impact.)
“If we’re unlucky enough to get to the point when a $4 trillion program seems necessary to resolve the crisis,” concludes Leonhardt, “there would be a lot of ways to spend the money beyond devoting it all to underwater homeowners. They aren’t the only ones, after all, who live on Main Street.”
Well, yes — at this point Main Street probably has its share of vagrants, optionless renters, and of course developers whose depreciating stock of unoccupied housing will compel them to muscle to the front of the line of applicants for government assistance, as they did with the recent Foreclosure Prevention Act.
But let’s not worry about them. Let’s worry instead that “Flip This House” accurately portrays the situation of most people who live in houses in America. Let us confine our cynicism to homeowners, and exclude from it the noble souls who have gotten rich selling and mortgaging those homes. After all, if people were suckers enough to take those deals, they’ll be suckers enough to take the blame.
This article from the Village Voice Archive was posted on October 22, 2008