Did you catch Maenette Behnam, dean of the UH Manoa School of Hawaiian Knowledge, featured in a recent episode of HGTV’s House Hunters?
Here’s the promo for the episode:
Maenette and Bob Benham live in a two-bedroom, two-bathroom condo in downtown Honolulu with their two young children, Kiana and Kaimi. The place has become much too small for the family, and they are looking to upsize, while remaining close to where they work. With a budget of up to $900,000, they hope that realtor Dan Ihara can find them the perfect place.
It’s scheduled to repeat on March 11.
With all the talk about corporate money and campaign finance, here’s another aspect of corporate power I flagged a couple of weeks ago and then forgot to mention. It’s an NPR interview about those home mortgages that are “underwater”, meaning that the outstanding mortgage is now worth more than the property.
Brent White, former legal director for ACLU Hawaii and now a law professor at the University of Arizona, points out the double standard that exists when it comes to dealing with such mortgages. Individual homeowners who choose to just walk away from homes that are costing them far more than the properties are now worth face not only legal action but the shame and stigma that goes with it. But, he argues, corporations routinely walk away from unexpectedly costly deals. For them, it’s just business.
I wrote an academic article in which I made an observation that has been somewhat taboo. And that observation is that to millions of Americans who are underwater would, in fact, be financially better off if they did walk away, just like Morgan Stanley recently walked away from five properties in San Francisco, five buildings which were underwater. Morgan Stanley just gave the properties back to the bank. But most homeowners, or homeowners as a group, don’t walk away. They don’t strategically default.
And they don’t so because of anticipatory shame and guilt and what I believe is an exaggerative fear about the consequences of waking away from a mortgage. And I argue in my paper that these emotions of fear and shame and guilt are cultivated by the government, by the financial industry and, to some extent, the media. And they do this by cultivating a double standard, a standard in which Americans, average Americans are told to have a moral obligation to pay their mortgage and to meet their financial obligations, whereas corporations freely and frequently default when it’s in their financial best interest to do so.
And, in fact, they would be obligated to protect the interest of their shareholders and walk away from an underwater mortgage if it was a financially wise decision. And my argument is that this norm asymmetry, the difference in norms between average Americans and banks leads to distributional inequalities whereby average Americans are bearing a disproportionate burden from the housing collapse. [emphasis added]
I think that’s a very important point, something I hadn’t thought about in such terms before.
Well, it is Feline Friday, after all, but I’m going to close with this link to a pretty incredible story from Financial Times about the estimated 35,000 stray dogs that live in the streets and subways of Moscow. Quite a tale!
Hey! If corporations are the same as people, how cum they can walk away from … ?? It’s a puzzlement, but maybe we can get Justice Alito to clear that up for us.
Frontline has an episode about how the crashed economy is affecting the average person. One of the people in it, Mike, went through a tough time when his wife was dying of a terminal disease. Then he lost his job. It put a strain on his savings and he spent as much time as he could with his wife.
He managed to find a new job. But he began to fall behind in his mortgage.
A few days after his wife died, he came home to find everything he owned out in the street and the house locked up.
In the end, the bank re-sold the property for a fraction of what Mike owed. The new owner is buying it partly as an investment.
In this case, the bank could have considered this individual’s hardship, re-negotiated the mortgage, and kept someone from further anguish.
But the banks seldom, if ever, take human issues into consideration. It’s the same with credit cards with their arbitrary interest rates and penalty fees.
See the chapter “This isn’t supposed to happen here”, at 46:07.
http://www.pbs.org/wgbh/pages/frontline/closetohome/view/#morelink
accidentally clicked on that House Hunters ep and thot hey! a local segment! but it got old real quicklike. Thought the couple were local. But the woman had 375 complaints per room. And she kept bitching about “oh on the mainland this… back in the mainland that…” (Commercials were refreshing. ) And Ihara didn’t slap her! who da hell writes these scripts?! Not authentic!
I want to second Dean’s comments and follow up. While I agree with Brent White’s argument, surely the solution is to not convince homeowners to walk away, but convinve banks to renegotiate their loans rather than endure the ocsts of foreclosure and selling the house for much less than “it is worth.”
In the case cited by Dean, what are the disincentives which prevented the bank from simply selling th house back to the owner, or what almost amounts to the same thing, renegotiate the loan based upon the CURRENT market value of the home.
The banks seem to argue borrowers must be punished for their bad investment decisions or they will not be prudent in the future. But obviously, the banks themselves are not held to the sasme standard.
One of the MANY things I find infuriating about the Obama administration is that they have taken the side of the mega-banks in the crisis, bailing THEM out, but have done little or nothing for the homeowners and small businesses who are suffer
Why can’t we have a government program which encourages renegotiations of loans to homeowners as a means to stop the downward spiral of the mortgage crisis.? Even “prudent” homeowners suffer when comparable homes are flooding the market and depressing the value of their home.
??If it’s not clear already after seeing a global economic meltdown caused by the gluttony of financial parasites, it should be. The entire system has failed to produce anything resembling improvement in our lives for years: Median male incomes today are the same as they were in 1974 in the US. No progress has been made despite a doubling of productivity and massive top line GDP growth. Female incomes aren’t on par with male incomes. The typical American family makes much less per hour worked than in 1974; All of the requirements for entry into the middle class are now private expenses. From health care to a college education, if you can’t afford the minimum, you aren’t allowed entry. Worse, those expenses are spiraling out of control. Nothing is being done to address this. The system is geared to make us fail. Not only has outsourcing/off-shoring just started (everything that can be moved offshore to take advantage of the arbitrage opportunity in wage disparities between western and workers in developing countries will be) we are being laden with un-repayable debt. To wit: there’s been NO job growth in the last decade (despite tens of millions in population growth) and total debt from all sources is still near ALL time historical highs. To add insult to injury, efforts to correct any of the above through governmental or regulatory reform have failed miserably (the government and both parties have been captured by transnational business interests): from endless bailouts to industries actually writing the legislation that covers them to guarantee rich profit growth while solving nothing meaningful (as we saw with both the recent health care and finance bills). We are at a dead end. So, take control. If you are underwater on your mortgage (by a lot), mail in the keys. Since your contract is with the global system, it’s a business decision and not a moral one. Don’t be an idiot. 15m homes in the US fall into this bucket. Reconfiguring your family’s life for an accelerated future will likely require downsizing the property/things you own from the old economic/societal — unless you can upsize the family in the home. If you are underwater on your student loan (by a lot), meaning the loan is greater than two years salary, walk away from it. Since your contract is with the global system, it’s a business decision and not a moral one. Don’t be an idiot. You’ll never qualify for the credit needed to buy a home. Forget it. Scissor the credit cards. Pay cash. Reconfiguring your life for an accelerated future will likely require downsizing the property/things you own from the old economic/societal. Get used to it. You were lied to about the value of an education and especially lied to about the value of enslaving yourself to a lender to get it.