Martin Luther King III has called on the federal Justice Department to intervene in the nation’s foreclosure situation, a call that could have the effect of energizing voters in Georgia’s gubernatorial election.
King issued his letter to U.S. Attorney General Eric Holder on the heels of a controversial report on the nation’s housing market by the chief economist of Freddie Mac. The report paints a fairly rosy picture of the trend line of the jobs and housing sectors, at least on the national level.
At the state level, King’s call reminds Georgia voters of home foreclosures during a campaign in which Sen. Jason Carter, a Democrat, is pressing his point that Republican Gov. Nathan Deal hasn’t done enough to help the middle class. Deal points to jobs created since the end of the great recession.
Georgia’s Senate campaign, between Democrat Michelle Nunn and Republican David Perdue, has focused less of late on jobs and the economy.
Incidentally, Georgia’s foreclosure rate ranks fifth in the nation, according to the August foreclosure report by realtytrac.com.
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Monday marked the sixth anniversary of the collapse of Lehman Brothers. The investment bank’s bankruptcy accelerated the financial meltdown that began with the near collapse of the investment bank Bear Stearns in March 2008 (saved by the Federal Reserve and JPMorgan) and picked up steam with Fannie Mae and Freddie Mac going under the week before Lehman’s demise. The day after Lehman failed, the giant insurer AIG was set to collapse, only to be rescued by the Fed.
With the other Wall Street behemoths also on shaky ground, then–Treasury Secretary Henry Paulson ran to Capitol Hill, accompanied by Federal Reserve Chairman Ben Bernanke and New York Fed President Timothy Geithner. Their message was clear: The apocalypse was nigh. They demanded Congress make an open-ended commitment to bail out the banks. In a message repeated endlessly by the punditocracy ever since, the failure to cough up the money would have led to a second Great Depression.
The claim was nonsense then, and it’s even greater nonsense now.
The housing market’s collapse bogged down courts nationwide with foreclosure cases that often took years to resolve. The Florida Legislature directed state courts to accelerate the foreclosure process, but that has created a foreclosure speedway where some homeowners say judges are more interested in moving cases quickly than in providing due process. The backlog needs to be cleared, but judges should be aware that dispensing of foreclosure cases with deliberate speed can result in unintended consequences that harm Florida families.
In early 2013, Florida had about 358,000 foreclosure cases pending in courts around the state and another 680,000 estimated by fiscal 2015, according to a group of judges and court personnel assigned to tackle the foreclosure problem. The Legislature and legislative budget commission responded by committing $36 million over a three-year period to help with the backlog. The money, which funded things such as technology and dedicated staff, came from a $334 million state settlement with five banks accused of foreclosure fraud.
The Center for Public Integrity reports Florida has set a goal of disposing of about 256,000 foreclosure cases every year. Some Florida judges hear more than 100 foreclosure motions a day. Homeowners and lawyers complain of rushed proceedings that give deference to banks. And in some cases, judges have moved for foreclosure even when the homeowner and the lender appeared together in court and expressed a desire to work out a deal. That was the case with Ricardo Lopez, a St. Petersburg police officer who fell behind on mortgage payments after he was injured in 2009. Though late, Lopez continued to pay his loan and wrangled with his bank for years trying to keep his family in their home. This spring, a judge ordered foreclosure and set a sale date. In August, the lender that had recently purchased Lopez’s mortgage agreed to consider him for a loan modification, but the house remains on schedule for sale unless the parties reach an agreement.