Governments and Housing: Mortgage Reform in the US and Formalization in Quito Norte

housing in Quito Norte

Quito     Housing was on my mind.

I spent hours yesterday in a pickup riding the steep roads and byways of Quito Norte with our team and local barrio leaders in the area, four up front and three in the back.  We traveled more than a dozen kilometers up, down and around the mountain sides, often with breathtaking views of the rest of the city or the airport or forested areas too steep still for squatting.  No matter what my colleague, Marcos Gomez from ACORN Canada, and I had been told about the roughness of the area, the fear of crime that led to constant questioning of our insistent advocacy of a door-to-door (puerta a puerta) program here, within a half hour I found myself whispering an aside in English to Marcos, that this had to be the best constructed – and serviced – major low-income barrio that I might have ever seen in Latin America.

Certainly, rebar stood everywhere reaching to the sky with its usual plaintive hopes for the future of the family struggling underneath, but these were sturdy, concrete and brick houses.  Some of the side streets were unpaved and we had to abandon one steep dirt road stretch even with 4-WD, but in the main, the streets were nicely cobbled with pavement bricks and even curbs.  As always in the slums, the higher reaches with more recent arrivals, squatting as they built, were rougher than those below, and, interestingly, in Quito Norte these areas seemed disproportionately populated with Afro-Ecuadorians than other areas, but they were still a long way removed from cardboard and plywood castoff structures I had seen in so much of the world.

Talking more to the local leaders and later to an interesting membership based organization, Banco Comunitario Atucucho, with block leaders in 174 blocks paying $1 per month, who had reacted to a cutback in municipal funding by creating a self-sustaining revenue source that sold several crops of maize per year, it became clear that the real differences emerged when they kept mentioning that the settlements on the mountain tops were “still informal.”  The City of Quito and it’s Mayor had finally concluded that the way forward in Quito Norte was to finally formalize almost all of the squatted areas, so we were in something of a construction boom and area-wide normalization led by soon-to-be home-and-landowners and a city finally not fighting, but actually moving in to accelerate the support and building of a public works infrastructure.  There were areas without sewerage still, but these were at the top.  Electricity was common.  Potable water was either there or around the corner with water trucks delivering only at the highest ground.  Government was making a difference by helping these tens of thousands of lower income and working families to become homeowners and build some citizen wealth rather than continuing in the gray area of informal and precarious status.

All of which made me read in full the Times editorial today which correctly identifies the bank toadying and inaction of the Treasury Department and other government outfit as the single largest failure of the domestic program of the Obama Administration.  We now have millions of Americans who are living in an “informal” status as well.  Twelve million as the Times cites, that owe $600 Billion more than their homes are worth.  Three million still awaiting foreclosure.  These are big numbers.  They should be able, just as in Quito Norte, to finally get their government to not just help, but do its job.

So much is undone for US homeowners still mired in the housing mess, fashioned on Wall Street and Orange County, and now aided and abetted by a president who knows better and needs to finally at least work his own administration to his and the peoples’ will, that we have to demand that, finally, we see real action, rather than empty rhetoric about foreclosures and homeowners.   The Times is right:

“…the foreclosure crisis, and its damage to homeowners and the economy, is still paramount. In the next term, the focus should be on debt reduction, refinancing, enforcement and true consumer protection.”

talking with folks of Banco Comunitario Atucucho

sign that says essentially that anyone caught burglarizing a home will be burned

 

 

Spanish Banks Move to Freeze Foreclosures Sounds like a Plan!

Protests against evictions in Barcelona

New Orleans   Watching the banks back track and squirm in Spain over foreclosures that ended in several well-publicized suicides that are now roiling the political establishment in that country is a good lesson in how financial institutions can actually be moved when political will begins to coalesce.   In the USA we certainly do not seek dramatic suicides, but it would be wonderful in the wake of the recent election if we could finally build the political weight to offset the banker’s financial interests, contributions, and army of Washington lobbyists.

The headline in the Wall Street Journal oversells the Spanish action (“Spanish Banks Freeze Foreclosures”), but still spoke eloquently to the Spanish banks’ recognition in their foreclosure crisis that they had to spin another way, rather than continue to flip off mortgage holders and foreclosure victims which has been the standard USA operation procedure.  The banks there claim that they will “suspend” foreclosures for two years due to “humanitarian reasons” when homeowners are “in extreme financial need.”

They had little choice and this voluntary offer might not be enough to meet the political crisis in Spain over this issue.  Both of the major political parties have come together, as we have noted elsewhere, to revise bankruptcy laws, which are the impediment in refinancing in Spain, just as they are for many here in the United States, to allow homeowners to reorganize to the market values, which is also a huge part of our crisis.  Advocates there are arguing that “the government should implement a law halting all planned evictions of indebted families acting in good faith,” which also sound like a great step forward.

With Geithner finally on his way out at Treasury and the likelihood of removing some of the officials that are standing in the way of restating home values to market in the name of “moral hazard,” even though Wall Street and all banks have eternally sworn off moral hazard for their own accounts years ago, it is worth seeing the issue of housing being part of any agenda for potential bipartisan activity.  It can’t be wrong to finally make bankers accountable to the government.  It can’t be wrong to finally hold banks and mortgage holders accountable for wrecking the economy and setting back the prospects of “citizen wealth” for millions of families.

Spain is showing the way we need to move.  Now is the time!