Tuesday, October 21, 2008

Ending Like Detroit

The city of Detroit has the highest repossession rate for a major city in the US, with real-estate owned (REO) homes—that is, homes repossessed by banks or mortgage holders—at 3.7 percent in 2007. Cleveland, Ohio came in a close second with a 3 percent REO rate.

The social reality behind these figures is illustrated by a recent sale of a foreclosed home in Detroit. In September, a modest two-story single-family home on Detroit’s east side near the Detroit City Airport sold for one dollar. Less than two years ago, in November 2006, the same home sold for $65,000.

The one-dollar sale of the Detroit house even made the Sunday Times of London, which recently ran a piece titled “America’s Darkest Fear: to end up like Detroit.”

Toshiana noted the absence of the most basic services in the city of Detroit. “We don’t even have a grocery store anymore.”

She continued, “You actually have to go back to the early ’90s to see when all this started to happen. I could tell you a couple blocks I lived on in Detroit that I watched gradually torn down. They were really nice when I was there, but what happened? One place, I came back five years after I had moved, just to visit. I could not believe what had happened. The place was a mess; the houses were in terrible shape.

A 2006 Association of Community Organizations for Reform Now (ACORN) report, “The Impending Rate Shock,” singled out Detroit as one of the cities likely to experience a housing disaster.

ACORN should know: National non-profit ACORN Housing has been providing free housing counseling to low and moderate income homebuyers since 1987. We have opened HUD-certified, Fannie Mae-approved housing counseling offices across the US, helping over 50,000 families to achieve homeownership. ACORN Housing provides one-on-one mortgage loan counseling, first-time homebuyer classes, and helps clients obtain affordable mortgages through our unique lending partnerships.

----- The biggest problem for cities and towns like Detroit and Cleveland goes beyond the loss of jobs and bad loans. Detroit is a fine example of almost 40 years of government social programs helped along by NGO's. Detroit is a good example of what government and/or "program" dependency does to people.

I have known a dozen former homeowners locally who when they receive a few thousand dollars in tax refunds each year would not put it aside for mortgage payments, not spend a dime on upkeep, preferring instead to buy plasma screens, down payment on a new car to be repo-ed in 6 months, a trip to the river casinos, expensive clothes, and paying off some of the predatory payday loan places they cannot seem to avoid.

I remember when parents got up and made breakfast for their kids. I remember when parents packed school lunches. I remember when couples saved to buy a home and would go without a color TV if that's what it took to make the mortgage payments. I remember when gambling was penny-ante poker for my uncles around the kitchen table. I remember when to borrow between paychecks was something a self-respecting person would not do. Back in the "old days" when Big Daddy was an aging relative and not the Government.

You can blame the government, the liberals, the conservatives, the war, or globalization or some conspiracy of reptilians - but the basic problem is the US is going on it's third generation of a large class of people who believe the "good life" should be free and provided by the government, because for much of their lives it's been easy come/easy go. And that is exactly why so many are missing out on the good life - they're waiting for someone or something to provide it to them.

Americans may have wants, dreams, needs, but they have no pride - that's the social reality.

(BTW - note that Detroit/MI is heavily democratic/progressive as is long-time Cleveland congressman Kucinich. What does that tell you?)

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