“Fixed?” we asked.
“Acorn. He’s got Acorn in his pocket. That’s what, 20% of the votes?” the neighbor said.
“Huh?” we wondered. The neighbor spoke with such conviction and belief, yet this was the first we’d heard of such a conspiracy theory.
“You’ve heard of Acorn?” he asked.
“Well yes,” we both agreed.
“I know it’s a non-profit,” said my husband, “but I don’t know what it is exactly.”
“I don’t know where you get your information, but I’ll look it up when I get home,” I promised, and began to leave.
I found out later by researching on the internet that Acorn stands for “Association of Community Organizations for Reform Now.” Their mission statement explains that they are the nation’s largest community organization of low and moderate income families, working together for social justice and stronger communities. Acorn’s current campaigns include helping homeowners facing foreclosure; assisting with Gulf Coast recovery after hurricanes ravaged the area; immigration; advocating for workers to get a living wage and paid sick days; and increasing voter participation in elections.
The latest anti-Obama spin, which I was able to only find on Christian, conservative and “right-to-life” websites, claimed that Obama was single-handedly guilty of causing the mortgage meltdown because he had worked with Acorn. Acorn had advocated to help low income, moderate income, and minority families get loans when old standards disqualified them. The connection between Obama and the crisis on Wall street is a stretch, at best.
Acorn was not the only advocacy group to assist minorities in getting loans. A Massachusetts Community and Banking Council (MCBC) report from June 2004 studied the rate of home loan denials and found that as recently as 2002, blacks were denied loans about two-and-a-half times more frequently than whites. The 50 Banks participating in the MCBC agreed to take a “second look” at denials to ensure that fair lending procedures were followed. However, no special exceptions would be made in granting loans to applicants who do not qualify. Low credit scores continued to be the primary reason for denial.
But my neighbor wasn’t done, yet, and he asked me, “Tell me this. What did you think of the bailout?”
“You mean the latest one?” I asked, “The $700 billion bailout?”
“Yes, the one this morning,” he said.
“Well, I didn’t think they had a lot of choice, this late in the game,” I said, “They had to do something.”
“Well, I didn’t like it,” he said. “You know, I’ve been waiting for this. All those Fernie mac loans defaulting – “
“You mean Freddie Mac and Fannie Mae?” I asked.
My neighbor was confusing the $200 billion bailout of Freddie Mac and Fannie Mae on September 7, which Treasury Secretary Henry Paulson of the Bush administration did independently and without oversight, to the more recent $700 billion bipartisan bailout agreement of Wall Street on September 28, geared to save banks from collapse who have extended credit for everything from student loans to home loans to investment capitol needed to start a business.
“Yeah, just call ‘em Fernie Mac and you’ll know what I mean. Which are mostly to minorities –"
“No, there aren’t enough minorities in the entire country to encompass all of those loans,” I said, “Maybe there’s 10 % minorities in the overall population.”
My neighbor pondered this and agreed, “That’s true. Where I come from, you don’t see many.”
I checked the facts and the numbers are: 24% of the US population is comprised of minorities, according to the 2006 census.
“And my loan is insured by a Fannie Mae/Freddie Mac program,” I said, “In January, when I qualified for the loan, I didn’t have to pay a down payment. But by the time May rolled around when I actually found a house to buy and closed, not only did I have to put money down, the rates went up. Plus, I now have to pay PMI (Private Mortgage Insurance), not because of anything I did, but because of what other people did,” I explained. My PMI payments add an extra $100 per month to my mortgage.
Freddie Mac and Fannie Mae are government sponsored private businesses who underwrite mortgages written by the banks which grant the loans. You can actually buy stock in both companies and many stockholders are located overseas.
According to a July 11, 2008 New York Times article, $12 trillion has been loaned out as mortgages to borrowers in the United States. Freddie and Fannie currently "own" $5.2 trillion in loans, which is slightly less than half of the total $12 trillion total.
Of the $5.2 trillion, $3.5 trillion of that amount is in guaranteed mortgages. The other $1.7 is in unsecured debt, according to a Sept. 11 Bloomberg news article.
Only 1.15% of Fannie Mae loans have defaulted, according to a July 23 Bloomberg news article which paints a very descriptive picture of the eleventh hour before Fannie and Freddie theoretically crashed.
I was unable to find any statistics on the percentage of loans that were taken out by minorities, nor the percentage of their default rate compared to those of whites. However, I do know that after searching high and low for a house to buy in Florida, only one of the 72 foreclosed homes I looked at were owned by names which implied them to be of Hispanic or Asian descent. In fact, most of the homes on the foreclosure list in January were owned by “flippers,” individuals who mostly reside in other states, bought up several homes at once, usually by not paying a down payment, then attempted to resell the homes quickly at a higher price as the housing market increased at a record pace. When the price of the homes escalated to the point where an ordinary buyer could not afford them, that's when the flippers were left holding the keys. Consequently, the banks were left holding the loans with little to no hope of repayment. Banks tried to sell the homes, but discovered that the values they were basing the loans on were imaginary – falsely inflated by the excitement of speculative flippers.
My landlord, who lived in New York and had a name indicating Italian descent, was a perfect example. My property manager said that “he is in trouble” and “still owns over five houses he’s trying to sell in this county alone.” He bought the house I was renting on spec from a developer for $339K in late 2006. He sold it at a loss for $210K in 2008 after the developer lowered the prices on identical new homes – that’s when I had to move.
I then bought a house listed as a short-sale, or “pre-foreclosure” sale. The man who owned it was also not a minority by any stretch of the imagination. He was a native Floridian, had been given the house by his parents and borrowed against it to fund a business enterprise which unfortunately failed, thereby requiring him to sell his assets.
In fact, I only know one individual personally who has lost their home to foreclosure in the past three years. My friend Shelley is not a minority, unless you consider being a woman as being a minority. She lost her home after her mother, the primary breadwinner in her family, died unexpectedly due to a flesh-eating bacterial infection.
The belief that only minorities are defaulting on their mortgages is just another symptom of our racist and prejudiced population. In fact, Florida law still prohibits Asian immigrants from buying homes in the state of Florida, per the Florida Alien Land Law of 1926. Voters will have an opportunity to repeal this law in the November election.
My neighbor continued with his argument.
“I’ve been watching the real estate market and waiting for the homes on the beach to come down to the right price so I can buy them up. I want them to come down to $50,000, but they’re not there, yet. This messes me up,” he said.
“Oh, you want to flip them?” asked my husband.
“Yeah, but they’re not low enough, yet,” he said, “And now they never will be ‘cause of the bailout.”
We argued extensively about other issues, everything from the details of the bailout to whether or not John McCain lied when he said he was not planning to attend the debate on Friday. In the end, the movie was starting and my neighbor wanted to go. We let him have the last word, but it made no sense.
You always know you’ve won an argument when your opponent resorts to shouting nonsensical blabber.
