MATTHEW PALEVSKY, JOURNALIST, TRNN: On Wednesday, Congress passed a housing bill that would save Fannie Mae and Freddie Mac from bankruptcy. The bill also includes a plan to help hundreds of thousands refinance their mortgages with more affordable, government-insured loans. While Congress discussed the bill, less than a mile away thousands of homeowners lined 16th Street waiting for help to lower their mortgages. The Neighborhood Assistance Corporation of America, or NACA, was holding a five-day event called Save the Dream of Home Ownership to provide free counseling to anyone looking to restructure their burdensome mortgage. Many of the people waiting in line said that the government would not help them, since they were already late on mortgage payments. I spoke with Danny Schechter, a journalist and documentary film producer who covered the five-day event, about how so many Americans fell into this mortgage trap.
DANNY SCHECHTER, MEDIA CRITIC AND FILMMAKER: After the dot-com boom busted, we needed another bubble, and housing became that bubble. And the people on Wall Street figured out how to securitize mortgages, how to turn them into instruments that they could actually sell to banks all over the world and make money on. Billions and billions of dollars was made on the subprime scam, which took money from the poorest people in America and transfered it to the richest people in America. So this is a criminal enterprise at bottom. The FBI has been investigating it. Four hundred people have been arrested so far; many others have been indicted.
MARY, HOMEOWNER: They did something illegal, because I know that in the state of Virginia the loan people are not supposed to work with the realtors, but they were working together, because one refers to the other one. So I find out that they did. Remax was the company that sold the house, but they were very unfair to me.
PALEVSKY: So you feel that they were trying to sell you a mortgage you couldn’t afford?
MARY: They did that. They did that.
SCHECHTER: When you have a lack of social responsibility in business, they don’t really discuss or care about the implications, the consequences of their decisions. They think in short-term, quarter-by-quarter calculations. They don’t realize what the impact is. Some people do. Some people warned about this, but their warnings weren’t listened to, weren’t heard. Everybody was caught up in the euphoria of greed, of making money. And the consequence is the people holding the bag, so to speak, you know, are the poorest people in America, working people, who got themselves talked into mortgages that they couldn’t really afford and can’t sustain.
ANGIE BAILEY: I purchased my home in 2006, and I was told at the table, "Well, we were talking fixed, you know, before we came to the table." Well, when we got to the table, they changed my loan and said, "Oh, Ms. Bailey, let us put you on a 80/20 interest only. This is the way to get you in it. Don’t worry, you know, your bank will refinance in one year. Well, that was a lie. That was a lie. You cannot refinance. The interest-only loans are the worst loans ever—at least that’s what I’m learning right now. So I’m down here today trying to get my loan [inaudible] Financial—which will not help me, they will not help me—and Wells Fargo combined into one low interest rate, you know, at a price that I can afford for me and my family.
SCHECHTER: And they’re losing their homes. We’re talking about a million families this year, already a million last year. All in all maybe as many as nine million are at risk. This is a major, 50-state Katrina. This is not a small problem. And unless and until something is done about it, we’re going to see much more economic pain. And, in fact, you know, in a sense this is the law of karma: what went around came around. The banks themselves, who were making so much money, ended up losing a fortune. The entire economy went into the toilet as a result, you know, of what they did, which was selling asset-based securities that had no assets behind them. It was a scam.
RODNEY MARTIN, HOMEOWNER: Well, like most people, I was sold on the fact that, you know, go ahead and take the adjustable now for the lower rate, and you can refi [refinance] within two years, and, you know, everything’ll be okay. You won’t ever have to deal with that adjustment. But because of the housing price drop, you know, it makes it impossible to refi the house, because now it’s not even worth what you paid for the house. So you can’t refi. So now you’re stuck with the adjustable, and you have to deal with, you know, the adjustable rate.
SCHECHTER: We live in a culture that has gone from production, making things, to a culture that promotes consumption, buying things. We have a gigantic, trillion-dollar advertising machine. Television is about stimulating demand and getting people to buy things. So of course people are going to shop until they drop, and the consequences of it is many people aren’t dropping. They’re dropping into very deep debt that they can’t get out of. And this is being done and promoted by big corporations, which are acting through credit cards and other loans to actually tie people up and create almost a new form of servitude in America, serfdom if you will. And this is something that is a structural change in our economy. So of course people want to have what other people have. They see it on TV, they want it. You know, you can’t blame the victim for the crime, and in most of these cases these people were tricked into signing mortgages that were illegal, that were deceptive, and that were discriminatory.
Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy.