Why A Homeowner bailout?

There are two parties to the mortgage contract, the homeowner (borrower) and the bank (the lender). During our recent financial collapse, only the banks and financial institutions received a bailout, while the homeowner was left holding the debt. The banks received free taxpayer money to write off their debt, raise credit card interest rates and overdraft fees, and making it very difficult to borrow. The homeowners received no relief and now are under "house arrest."

Millions of homeowners in the US are upside down on their mortgages due to the recent crash of the housing bubble. This crisis was caused in part, by reckless Wall Street speculation, irresponsible lending practices, and investor manipulation of the system. The US financial system collapsed, and the banks defaulted on their obligations to their customers.

Our financial system was rescued, and exists today only because the American taxpayer bailed it out.

The mortgage crisis was the spark that led to the collapse of our financial system. Yet, only one party to the mortgage contract was bailed out, the banks. The other party to the mortgage contract, the homeowner, was left holding all the debt. Additionally, the homeowner is now being asked to pay the price in increased taxes that will result from the huge deficits incurred from the bailout of the banks.

There was no homeowner bailout. Government programs designed to allow homeowners to modify their loans to take advantage of lower interest rates or to modify their loans to reflect the decrease in market value were categorically rejected by the banks . To add insult to injury, the banks took the bailout without having the requirement to change their corporate culture. The banks continue the same practices that led our financial system to collapse, taking the same risks with our money, while increasing fees, credit rates, and decreasing lending.

"The underlying core of the economy's problem is that the housing and mortgage market is still collapsing at record speeds," Anthony Sanders said in a December speech before the Dean's Council of 100, an advisory group at the W. P. Carey School of Business.

Both federal regulators and private lenders have tried tinkering with the mortgage market via proposals to reset the loans of struggling borrowers. The trouble is their methods -- freezing interest rates on adjustable-rate loans and extending mortgage lengths -- have made little difference. Most borrowers who've received these sorts of loan modifications have ended up defaulting anyway, Sanders pointed out. In fact, modified borrowers are re-defaulting at rates of between 50 and 60 percent.

Instead, would-be mortgage doctors need to focus their efforts on the real cause of virus -- disappearing equity. With house prices falling fast, more and more people are "upside down" on their mortgages, owing more than the market value of their homes. Any attempt to restructure these loans without adjusting the principal won't bring the market back into balance, Sanders said.

Homeowners Unite! We encourage you to join the Strike, the first organization in the country representing homeowner's interest. Please sign our online petition to get the banks to negotiate a reduction in the principle amounts of our mortgages to current home values!

Power in numbers, please spread the word.