STOCK MARKET WATCH -- Thursday, 14 June 2012

[Demeter]

26. Homes That Survived the Crash By Sarah van Gelder

http://www.nationofchange.org/homes-survived-crash-1339596772

As the housing crash of the last few years unfolded, something odd happened in community land trusts across the country. Or rather, something didn’t happen: There were few short sales. Sheriffs didn’t show up to put people’s belongings out on the curb. No homes sat abandoned. Neighborhoods stayed intact. Community land trusts experienced foreclosures at a tenth the rate of U.S. housing overall, even though residents are mainly low- and moderate-income. And here’s another thing that didn’t happen. No one made a killing flipping land trust homes or using them to back exotic mortgage-based securities. No one got a multimillion-dollar bonus for selling credit default swaps created as bets on which securities would fail.

Community banks also fared well. The FDIC reported last year that community bank borrowers had “far fewer” foreclosures than those who borrowed from big banks. Their secret? Both local banks and community land trusts did what they were designed to do—got people into decent, secure homes at affordable prices.

The Wall Street players, on the other hand, used home finance to make mega-profits for the 1 percent.

And they’re still at it. Today big companies and speculators are buying up foreclosed homes in bulk at fire-sale prices in competition with would-be homeowners, and renting them out to the growing group of people cut out of home ownership. If home prices go up again, it will be these companies—not ordinary families—that will get the windfall. Instead of evicting residents and creating yet another speculative market for homes, mortgages for those underwater should be modified to reflect current market value. Homes already foreclosed should be sold to community land trusts, other nonprofits, or families looking for affordable homes.

We’ve seen where we get when we use houses as gambling chips in the global finance casino. In this issue of YES!, we look at what it would mean to use this moment of transition to instead create housing systems that work for people, not as a way to create more profits for the 1 percent. The community land trust model gives us a starting place—housing works better when it’s taken out of the speculative market...