Posts Tagged ‘s’

Financial illiteracy is one of the root causes of foreclosure crisis. Realizing this, a movement is taking shape among the social workers of America who are tuning themselves to address primarily the woes of foreclosure victims. Largely they became gullible victims of predatory lending because they could not understand the basics of budgeting income.

Social workers debuted during the end of the 19th century and the have mainly worked for the poor. But today in this Foreclosure Age where credit card woes are rampant many social work education centres are focusing on those who are economically vulnerable. The ever-increasing numbers of scams are also making them sit up. Some schools are offering specialized training in financial matters. Thus there is a wave of change in the field of social service work in the wake of the foreclosure crisis.

The School of Social Work under University of Maryland introduced the idea of ‘financial social work’. Workshops are held and there are for students mini-courses. Professors in St. Louis have set up a ‘think tank’ to find out in what way social work organizations and schools can best prepare their students to help clients to make financial decisions.

Reeta Wolfsohn of Ashville, North Carolina, is offering a certificate course on the Internet. It embraces 20 states. In Wilson County, North Carolina, the Social Service Department has hired a person who has completed Wolfsohn’s course as a ‘financial coach’. Susan Parker the manager of Self-Sufficiency program of Wilson County said, “Before, we’d do a two hour training session for clients and pat ourselves on the back. But we were just giving them information. No one was helping them one-on-one to change behaviour.” But the new angle of approach is not just about throwing “safety nets to families. It’s about teaching them to be their own safety net.”

Sharon Mercer is 41 and a single mother of nine children starting from 4 to 17. She has benefited from this change of approach of social workers. She did not have a job but was afraid to seek help from the county fearing that the children would be taken away from her. But she was surprised when the social workers built up her confidence. She said, “It wasn’t about just giving me a check – it was about building my confidence.’ She kept saying that she could not whereas they kept saying that she could.

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Foreclosures are compelling USA to move towards nationalization – a move that smacks of Marxism in a haven of capitalism. Is Marx laughing? More than a century and six decades ago he had said that socialism would take over the controls of even the most fanatically industrialized countries. Perhaps he was not far from the truth if we look at what is going on in the foreclosure-ridden America of today.

It is not well to openly talk about in the streets of Washington and New York because socialism continues to remain a dirty word. Except for few pockets along the east and west coasts, talking along these lines will invite derision and abuse.

But words cannot hide the truth of what is happening. The country is reeling under the foreclosure crisis that has affected not only the humble borrowers but also giant financial bodies. Last Tuesday (16th September) the government of USA in effect nationalized the American International Group (AIG) by purchasing 79% of its stock. A loan of $85 billion was given to AIG. The amount came from the pockets of the taxpayer. The giant government owned insurance body has to repay it in two years. A parallel can be drawn with what Fidel Castro did with private property about fifty years ago in Cuba.

Only a miracle can turn around the properties of AIG within two years to enable it to pay back this jumbo loan. Everybody knows that. The only way out is for AIG to sell its subsidiaries. But what if there are no buyers for it? In all probability there will not be. Then AIG will just become an appendage of the government.

Only a week ago the USA government nationalized Fannie Mae and Freddie Mac by taking over their stock that was worth conservatively one billion dollars at that point of ‘nationalization’.

One can clearly notice the slow but sure descent into a controlled economy. USA is following the path laid down by the central states of Europe, which had a ‘goulash’ type of socialism in Hungary, Yugoslavia and Poland about ten to twenty years prior to the fall of communism.

Till the other day the leaders of America were shouting from the rooftops about free market for the world at large. Today foreclosure related housing crisis are making them sing another tune as they dribble with the return to the shareholders.

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There was a recent announcement that thousands of foreclosure victims who have been impacted by the failure of IndyMac Bank will get help from US banking regulators.On July 11th 2008, The FDIC (Federal Deposit Insurance Corporation) of Pasadena, California seized IndyMac – it being the third largest bank in the country. Modification proposals for 4,000 mortgage holders under threat of foreclosures are being considered. It is expected that within the next few weeks modification notices will be sent out to 25,000 borrowers.

Shiela Bair, the chairperson of FDIC said that their goal is to “get the greatest recovery possible on loans in default or in danger of default, while helping troubled borrowers to remain in their homes.”

In 2007 IndyMac was the 9th largest mortgage lender according to Inside Mortgage Finance. It has under its umbrella 740,000 loans either directly or through the services of others. The mortgage portfolio amounts to $184 billion. For many months Bair had been pulling up banks for not speeding up the process of loan modifications. Now is the turn of FDIC itself to practice what it has been so far preaching. Bair thinks that most of the modified mortgages of IndyMac will exceed its foreclosure value. She wants FDIC to play the part of a role model for other financial bodies to emulate.

The modified loans will be for most of the borrowers who are on their first mortgage either directly owned by IndyMac or serviced by it. It will be for those who are seriously in default. It will be only for the borrower’s primary residence. The modified loans will come with an interest of 6.5% - this being the current rate of Freddie Mac for similar mortgages. But rates will be lower for some other mortgages. The goal is to achieve a ratio of debt to income amounting to 38%.

Bair commented that the foreclosure process is costly as well as destructive. By modifying the mortgages at risk from foreclosures, the value of FDIC will be maximized making it easier to find a buyer for IndyMac. Simultaneously the returns to the creditors of IndyMac will improve.

Immediately after taking over the reins of IndyMac, FDIC had for the time being halted all foreclosures amounting to $15 billion mortgage loans. Bair said that servicers had been reluctant to proceed with modifications apprehending reaction from the investors. She is hopeful that with this new approach, confidence will be built up for all sides concerned.

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The USA hunting industry is blatantly targeting foreclosure pets. It is their very nature to take aim at animals when they are at their most vulnerable. They seek out polar bears when ice floes are melting, nesting doves in September even after they have been protected for decades as well as protected antelopes in pens for collecting head trophies. The gruesome list is endless showing up man at his beastly lowest. The animals they bravely target have little or no chance of escape – like foreclosure victims.

Foreclosed pets have become a term in foreclosure language to refer to pets that have been abandoned by their foreclosed owners. The guns are being focused on them at a time when these hapless creatures need help most.

The Sportmen’s Alliance of USA has announced that the community should not participate in any programme aimed that helping hundreds and thousands of pets suffering from the foreclosure crisis. It is not just an empty threat. They drive home their message in no uncertain way.

The Humane Society of USA after noting the rising demand of animal shelter and volunteers because of the problems arising from the foreclosure crisis, launched an Emergency Fund to help the quadrupeds. The unfortunate dogs and cats understand little about investments bubbles and bursting. The fund will be utilized for setting up animal shelters and organizing rescue groups right across the country. In sympathy with the specific nature of the tragedy many humane humans in business or otherwise have loosened their purse strings to help. The HSUS is operating as the Clearing House for these funds rolling in.

The Meijer chain of stores in the Midwest decided to come forward with $5,000 for the foreclosed pets. The money was collected in a unique way by taking $1 per customer who enrolled for the shop’s Pet Photo contest flashed on its website.

At this juncture this group that claims to represent the hunters entered the scene. It has a grudge against HSUS for the restrictions placed on it for targeting guns at captive hand-fed creatures fenced in enclosures. The hunters were actually after guaranteed trophies and as such anything the HSUS or HSLF did, came up against their ire. They have gone to the insane point of sentencing doomed foreclosed dogs and cats to horrendous death. The Meijer was threatened to such an extent that it has withdrawn from the good work it was doing for the foreclosed victims.

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