SPEAKOUT: Foreclosure aid helps all Coloradans

By Sen. Ken Salazar and Rep. Ed Perlmutter

Published April 18, 2008 at 12:05 a.m.

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Homeownership is not often thought of as a responsibility shared between neighbors. One of the reasons so many Coloradans and Americans dream of owning their own home is precisely because it is their own - a place to live, to raise a family and to build unique and personal experiences.

However, the storm of foreclosures that has pummeled our state and nation over the past two years has shed light on the broader importance of homeownership as a community responsibility. The consequences of the housing bubble and the relationship between the modern-day housing market and the broader economy have demonstrated that, to a significant extent, we are all in this together.

All across America, families are feeling the pain inflicted by the housing crisis. It's not just the families whose homes are being foreclosed upon that are feeling this pain. It is their neighbors, whose home values have declined steeply as a result of foreclosures in the neighborhood. And it's their communities, which are seeing their tax bases depleted and important social services cut back dramatically.

Some of the statistics that have been reported in recent weeks are staggering. On March 25, it was reported that home prices in the nation's largest metropolitan areas declined more than 10 percent between January of 2007 and January of 2008 - the largest annual decline in history.

The families suffering as a result are not just families who made poor or shortsighted financial decisions. Many are families who bought or refinanced houses between 2002 and 2006, stayed current on their payments, and hoped to be able to see the value of their homes continue to appreciate.

The fallout is just as widespread in our state of Colorado. According to the Center for Responsible Lending, Colorado will experience nearly 50,000 additional foreclosures in 2008 and 2009, as adjustable-rate mortgages reset and as home values continue to plummet. On top of that, almost 750,000 homes - approximately 35 percent of all the homes in Colorado - will suffer declines in their value.

On top of the specific impact that foreclosures have on the values of homes in surrounding neighborhoods, the housing crisis has broader economic implications. When homeowners began to default on their mortgages in greater numbers in 2006, credit became much harder to obtain. And investors in mortgage-backed securities - repackaged and resold mortgages that helped inject more liquidity in the mortgage market - were no longer as willing to provide needed cash.

As our neighbors' homes decline in value, so do ours. As more and more loan defaults occur, the harder it is for the rest of us to get credit and for businesses to get the capital they need to invest, create jobs and grow. In the end, we all get hurt.

Government must act responsibly to help families stay in their homes and to stem the tide of foreclosures continuing to serve as a serious drag on our overall economy.

Earlier this week, Congress took steps in that direction when the Senate passed the Foreclosure Prevention Act of 2008, a bill that seeks to provide meaningful and immediate assistance to families and communities affected by foreclosures, and to prevent other families and communities from finding themselves in the same situation in the future. Additionally, the House of Representatives is working on a proposal to keep more than 1 million homeowners in their homes by allowing them to restructure their loans, while also providing government-backed insurance to lenders who allow the loans to be restructured.

These bills are not about bailing out people who made bad decisions. They are about providing assistance to the families and communities caught up in the growing tide of foreclosures, and putting the brakes on the growing tide of home foreclosure that threatens to drag our whole economy into a recession.

The housing crisis is not limited to one group of homeowners or lenders, or to any particular community, state or region. We are all in this together. We should work together to find the right solution.

Democratic Sen. Ken Salazar is Colorado's junior senator. Democratic U.S. Rep. Ed Perlmutter represents Colorado's 7th Congressional District.

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Comments

April 18, 2008

1:23 a.m.

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david.miller writes:

That’s absolute nonsense Ken. As a consumer in a market economy, you need to be sharp enough to figure out that values don’t always go up, either in the stock market or the real estate market. That same consumer needs to be sharp enough to realize that adjustable rate mortgages are just that: Adjustable. That means that the rate can rise and fall with the market. (Do you recall the housing market, loan rates and buydowns of the early to mid-1980s? I certainly learned from it.) Those same consumers must be prudent when it comes to knowing how much they can afford in the way of a mortgage payment and perhaps take the more conservative approach of opting for a fixed rate loan on a lesser priced home (or not refinancing it every year or so to drag cash out of it). Without enduring the consequences of having made bad decisions, nobody ever learns from their mistakes. That said, I would offer a similar set of comments with respect to the lenders currently faced with non-performing, poorly collateralized loans. Anyway you slice it Ken, this is a bailout, no matter how you dress it up and put lipstick on it. In the end, nobody learns because there are folks, such as you, wanting to buy votes with handouts.
April 18, 2008

6:45 a.m.

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Mike_In_Hartsel writes:

How do Democrats get elected? They buy votes with your money. That's all this is. The housing crisis affects those who got in over their heads. That happens. Then they lose their homes. That happens. My neighbors don't help me pay my bills. Those are my bills. The government should stay out of this and quit using our money to buy votes.
April 18, 2008

7:20 a.m.

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LOUIE writes:

Many people, regardless of income, live well above thier means. Those that are financially responsible have to bail them out. Credit rich, cash poor, and they look so good for all to see as they dig the hole deeper. For some, medical issues and unforseen setbacks are to blame, and that's a valid need. For the vast majority however, it's thier own irresponsibilty. No savings, credit cards maxed out, upgrading to homes far above thier financial capabilities. Big gas guzzling SUV's, nice big house with an equally big payment; why would you do this to yourself? The rest of us have to save every dime, shop for house well affordable but not as big, find cars that get good gas mileage but surely not as impressive as a luxury SUV. Then you don't have to cry for help paying your bills. I seen many a simple man be worth a fortune, and the flashiest be worthlessly leveraged. For the sake of misery, I guess society has to pay the bill for the irresponsible. To the banks that extended this ungodly line of unaffordable credit, hows your bottom line doing? I guess I'll look for the great deals brought about by those who built thier house upon the sand; hey banker, want to unload that bad paper you're setting with?
April 18, 2008

7:51 a.m.

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vudumom writes:

Most homebuyers are so blinded by the fact that when they are buying a home they fail to protect themselves and trust the Realtors,the brokers and the lenders to look after their interests. They are now realizing that was not the other people's job but theirs ,as the homebuyer.They signed papers they didn't even understand and alot were duped by the " professionals" who were involved. The home buyers failed to realize that the only people left holding the bag after all was said and done was them.
A lot of the buyers should not have been given loans. The government should not have relaxed lending rules and brokers and lenders all over the nation did business unchecked. That is the bottom line.
Home buyers were allowed to take equity out of a home before even moving in. Homeowners were allowed to take 100 -120% of their home value out of there homes and are in deep trouble because the values have dropped and they can't pay the mortgage because of the rising interest rates. Many did not realize the pre-payment penalties on the loan and can't re-fi now. They didn't read the papers. A lot of home buyers and homeowners did not forsee the mess the industry was going to be in. However in most instances greed was the driving factor in a lot of these mortgages and 2nd loans as well as home lines of credit. Greed was the driving force with homebuyers,realtors,brokers and lenders. Greed from the homebuyers and homeowners taking equity out for stupid reasons like buying a new vehicle,vacations,fixing up homes ,etc.... Some homeowners and buyers rolled their credit card debt into their home loans. This is insanity. Realtors , brokers and lenders saw dollar signs and went out of their way to talk people into these risky loans so they could get their fees. I don't have any sympathy for people who can't read or are buying homes above their means. We wouldn't be having this problem if people would stop living above their means. It makes the credit worthy and the people with perfect credit because they have always paid their bills, less worthy. That is not right. We shouldn't have to bail out our " neighbors".
April 18, 2008

8:28 a.m.

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jackson_foi writes:

The commercial played many times: new house, new car, new riding lawn mower, and the consumer up to his eyeballs in debt. Now you think we should help him. The problem with government is that it doesn't really make any widgets, so can't create wealth. The cost of this plan in reduced savings yield, devalued dollar, and future tax increases will be paid by voters too. This program continues to chip away at the notion of personal responsibility. Colorado used to be a place of conservative innovation, please remember your constituents, and take a pass on this program. We will understand.
April 18, 2008

10:20 a.m.

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mytwosense writes:

I have conflicting feelings about a homebuyers bailout. First off, I hate to say it, but SASQUATCH has a point with his last remark. A bailout, to some degree, is not going to help bring home prices back to the land of reality for those of us that didn't get caught up in this mess and would actually like to buy a home one day.

On the other hand, not all of the homebuyers were greedy, or buying second homes, etc. The fact is, they were the less sophisticated party in the financial transaction. Many brokers were flatout deceitful about terms. Yes, homebuyers have now learned their lesson, but what a lesson: Don't trust financial institutions ever again. I can't believe such a distrust is a good thing for our economy in the long term. We should live within our means, but there are times all of us need credit, and a lack of trust in credit providers is not a good thing.
April 18, 2008

11:19 a.m.

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Davek80501 writes:

Quote from 5th paragraph.
"The families suffering as a result are not just families who made poor or shortsighted financial decisions. Many are families who bought or refinanced houses between 2002 and 2006, stayed current on their payments, and hoped to be able to see the value of their homes continue to appreciate."

Quote from 11th paragraph.
"These bills are not about bailing out people who made bad decisions."

Ok Sen. Ken Salazar and Rep. Ed Perlmutter, How about a answer to these questions, What you say in the 11th paragraph contradicts what you say in the 5th paragraph. The bills do bail out people who made bad decisions. Do you really think the people of Colorado are ignorant enough not to realize this? Or do you think most of the people of Colorado are stupid enough to believe your "Democrat Double Speak?"

Anyone care to guess on what the chances are of me getting a answer?
April 18, 2008

11:33 a.m.

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mark79trans writes:

How in the world do people learn lessons if the government bails them out? The housing market will correct in the next 2-5 years...let it happen on its own. I have a rental that lost 20% of its value, it is up-side-down, and it rents for less then the mortgage payment. This is my problem! I make up the difference each month and have less discretionary spending money. Again, this is my problem! This is not some big bad evil lender preying on the helpless consumer. People signed a contract to purchase a home. It is their responsibility to review and have the means to uphold that contract...get a second job if necessary. If they go through foreclosure, they can rent and deal with the credit problem. The foreclosed homes in our neighborhoods will eventually sell. This is an issue of personal responsibility, which we obviously lack in this country.
April 18, 2008

11:33 a.m.

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Davek80501 writes:

Quote
"These bills are not about bailing out people who made bad decisions. They are about providing assistance to the families and communities caught up in the growing tide of foreclosures, and putting the brakes on the growing tide of home foreclosure that threatens to drag our whole economy into a recession."

Sen. Ken Salazar and Rep. Ed Perlmutter,
Yes they are! You both want to take my tax dollars and bail out people who made bad decisions by either buying a house that they could not afford or getting a refi loan that they could not afford.

Sen. Ken Salazar and Rep. Ed Perlmutter, I have a question for you both and will hope you both will answer it here.
Here is my question.
How much of the money that my wife and I work very hard for should we be able to keep?
April 18, 2008

11:41 a.m.

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Davek80501 writes:

Quote
"These bills are not about bailing out people who made bad decisions. They are about providing assistance to the families and communities caught up in the growing tide of foreclosures, and putting the brakes on the growing tide of home foreclosure that threatens to drag our whole economy into a recession."

Sen. Ken Salazar and Rep. Ed Perlmutter,
Yes they are! You both want to take my tax dollars and bail out people who made bad decisions by either buying a house that they could not afford or getting a refi loan that they could not afford.

Sen. Ken Salazar and Rep. Ed Perlmutter, I have a question for you both and will hope you both will answer it here.
Here is my question.
How much of the money that my wife and I work very hard for should we be able to keep?

Or do you both think " From each according to his ability, to each according to his needs"?
April 18, 2008

12:57 p.m.

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gary writes:

It appears that these two politicans are worried about taxes going down because home values going down. They do not want that to happen....they want more money to spend on more Democratic programs that do not bail anyone out of anything!!

DaveK80501 is right on with his statements.

One last thing.....am I the only one that notices that the vast majority here do not support these two guys views??

Why did we elect Sen. Ken Salazar??

To represent who??

Nuff Said
April 18, 2008

6:25 p.m.

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david.miller writes:

At the end of the day, do you think Ken and Ed can feel the echo in here?
April 18, 2008

11:24 p.m.

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Darwin writes:

Well said posters. Now if just once, our politicians would listen to us. I doubt that Ken and Ed will even bother to read these posts and if they do, they will ignore them.
April 19, 2008

9:25 p.m.

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p_myers661 writes:

We are the voices they love to ignore. My husband and I bought a used mobile home six years ago and have been making higher payments than required so we, for the first five years, paid double on the principle which took our ten year loan down to seven years. Next year it would have been paid off. We had a stretch where my husband fell for a scam where they changed the address we mailed our payment and for six months he paid the crooks. Our lender merely asked us to catch up. By August we will again be ahead of the payments but will need an extra year to make the payments.

About a year after we bought our house a slickie called and promised everything under the sun and we would qualify for an adjustable rate mortgage. Unfortunately, for the crook at least, I did the math and discovered that the money would cost us too much. We have since muddled along and survived a number of things that cut our income by almost half. The original lender told us that he was sure we'd default at once since we had no credit. His business depended on a lot of payments and when we started paying enough to pay off in five years he knew we would make it. We had no credit since we never wanted, nor needed a credit card. All purchases have been made with cash.

Now we have a year and a half's worth of income owed in medical bills alone. Bankruptcy was our only choice. Had we fallen for the lure of the loan we would end up in my mother's basement.

There is still no need for the government to help us. We will survive with less and keep our independence.

They won't read this response either. I know I didn't vote for Salazar. Those who did have a few more years to live with their choice.
April 20, 2008

1:05 a.m.

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infidel91 writes:

It's embarrassing to have these two "representing" me in Washington with nonsense like this.

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Home › Opinion › Speakout

SPEAKOUT: Foreclosure aid helps all Coloradans

By Sen. Ken Salazar and Rep. Ed Perlmutter

Published April 18, 2008 at 12:05 a.m.

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