Foreclosures Blight Michigan
Posted on June 5, 2009
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Foreclosures blight Michigan in the harshest possible manner. It has been worrying the state for nearly a decade – before the sub-prime crisis made its debut. This is largely because of unemployment.
In the past five years a million jobs have vanished. The foreclosure curse hit Detroit before it surfaced elsewhere. The sub-prime crisis completed the damage that unemployment and loss of jobs had started. Today the average price of a house is as modest as $6,237 according to the data posted on MLS.
A bill (SB-29) is making the rounds in Michigan initiated by State Sen. Hansen Clarke. If it is given the green signal it would enforce a two year moratorium on foreclosures – the longest grace period in the country. Meanwhile the occupants would pay a monthly remittance at a rate fixed by the judge that would be in proportion to their earnings.
Some pundits feel that the moratorium by itself will not deliver the goods. It would just put on hold temporarily what is inevitable unless proper tools dig at the root of the problem. Jason Reece of Kirwan Institute for the Study of Race & Ethnicity (Ohio State University) said, “You’re just postponing the inevitable if you don’t have the tools to work on this.”
In Ohio similar steps were taken in 2008 where 80,000 houses slipped into foreclosure and 40,000 were poised to do so. Reece opines that a moratorium has to be followed up by reforms in the system. This can be done by empowering bankruptcy judges to alter terms of the mortgages and by directly helping the communities that have been most affected by the foreclosure curse.
The TARP relief fund of $75 billion has been warmly received but many think it is far short of the actual amount required. Only those banks who receive this fund will be expected to participate in the programme but this leaves a big question mark. How will the government tackle the industry as a whole? It should be made mandatory on all banks who have accepted the bailout funds.
There is a strong demand for attacking the problem from the grass root level and work upwards. What is being done is the reverse and nothing effective is trickling down. In Miami a volunteer organization is doing exactly this. Take Back the Land is helping the people to relocate in vacant or ‘liberated’ houses. They arrange to restore water and electricity supplies before systematically arranging for the dispossessed to move in. Even if the participants court arrest they feel it is a question of human rights over corporate profits.
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