Saturday, December 13, 2008

Schumer warns against housing scam

Schumer described the predatory equity scam: "The entire predatory equity enterprise is a house of cards built on a foundation of fantasy and greed. The whole thing collapses when there is any depreciation—or even leveling— in the property's value, which is the reality we now face. It is a dangerous trend that is damaging both the quantity and quality of our stock of affordable housing and we must take aggressive action to stomp it out."

Schumer said the danger to the tenants living in such a building arises once the deal is done and the new owner has to start paying the huge premiums and interest payments attached to the overpriced mortgage. Then, he said, the developer must do one of two things, and sometimes both, that are catastrophic for the tenants living in the building:

1) The landlord has to kick out enough of the tenants to increase the rental income enough to pay the debt service, or

2) In order to meet the debt service and maintain profit levels, the landlord has to cut services and maintenance, allowing the building to fall into disrepair.

The upshot of how the predatory equity scheme plays out, Schumer said, is that both options open to the landlord diminish the stock of affordable housing in the city and diminish the quality of life for the tenants.

This is an enormous impact that predatory equity schemes could have on the city's regulated housing stock in a few years, Schumer said, which underscores the need to take action to head off the crisis.


Schumer Sounds Alarm About Serious Threat To Existing Affordable Housing Stock

14 comments:

Taxpayer said...

This is the same Schumer who, in the mid-90s cried wolf about banks' redlining borrowers by race and refusing to lend them money.

He instigated the threat to have the feds crush those banks who refused to lend money to the jobless or to people who never repaid any debts previously, so that they too could enjoy the American Dream.

He and a band of other leftist-Socialists mandated that banks start lending to people who wouldn't/couldn't pay the mortgage.

Naturally, these predatory legislators guaranteed the bankers that the taxpayers would pick up the tab for the slackers who failed to pay.

The predatory banks were delighted with this arrangement. They just wanted guaranteed payment for high-risk mortgages. Does anyone think the bankers or the politicians cared where the payment money came from?

We are all now intimately familiar with the results: The slackers voted for the politicians who made their life so easy. The bankers got rich and contributed generously to those politicians who eliminated the risk from the mortgage business (by passing that risk to the taxpayers).

Now, these same politicians are actually thinking of rescuing the auto industry by mailing a check for up to $5000 to people (including the illegal aliens) so they can purchase a car. By the way, the politicians will be now designing the cars that can be sold.

The result of that mailing? Auto executives will get richer and contribute generously to those politicians who take the risk out of manufacturing and selling cars.

The unions will contribute heavily to those politicians who can guarantee that all the sweating over cars will be by the auto owners and repairmen who have to clean up the predictable mess.

Now, if only Schumer and his leftist-Socialist cronies can now require that the Lotto guarantee that every ticket will produce at least a $50 million payout - upon purchase. There should be no risk or delay in buying a Lotto ticket.

If we can all get $50 Million in instant winnings each time we purchase a ticket (purchase? the Lotto tickets should be free!), peace will envelop the land. No more time away from family by working for rich, arrogant capitalist pig bosses, free food and movies, prostitution made free and mandatory (after all, if politicians are to prostitute themselves, why should anyone be allowed to avoid that public service?). Free homes, free cars, free gas, free everything. However, free speech and religion must be prohibited, they are very risky notions. Unions will be happy. Everyone will be required to join a union. Taxpayers will pay all union dues and expenses.

Hooray Schumer! Keep up the leftist-Socialist progress!

georgetheatheist said...

Taxpayer, Brilliant!

www.aynrand.org
www.nra.org

Anonymous said...

then how come the City of NY allows landlords to get away with not paying fines when they push the buildings they own into disrepair?

Anonymous said...

This is the same Schumer who, in the mid-90s cried wolf about banks' redlining borrowers by race and refusing to lend them money.

That's one thing...

He instigated the threat to have the feds crush those banks who refused to lend money to the jobless or to people who never repaid any debts previously, so that they too could enjoy the American Dream.

... and that's an entirely different... thing.
Really? You expect us to believe he threatened to have "the feds CRUSH" (that's guvment-fearin' rhetoric) any bank that wouldn't lend to the jobless? Back that $hit up!

Taxpayer said...

"then how come the City of NY allows landlords to get away with not paying fines when they push the buildings they own into disrepair?"

How come the tenant can stay in someone else' property without paying rent - or, this is mighty rich - offering at least $1 TOWARDS the rent, for years on end?

In the soviet style landlord-tenant property owners (Landlords) have no right to collect rent. This I know to be undisputed fact. When landlords don't receive rent payments regularly, it's the natural result that the landlord will not use personal money for maintenance and repair. A landlord has no obligation to a tenant beyond what the tenant pays for with regular payments of rent. Failure to pay rent is theft. Failure to maintain and repair when all rents are paid regularly is theft.

No city official gives a good goddamn about landlords or tenants.

Here's the fundamental question: What is the city, NYC or any other city, doing regulating rents? Anywhere rent control exists, it is a failure for both landlord and tenant. It's simply an excuse for a bloated bureaucracy to interfere.

It serves no purpose other than to disrupt the housing market, which does quite well in other major cities that have no rent control. Thus, it disrupts the housing market for landlords and tenants.

Taxpayer said...

"... and that's an entirely different... thing.
Really? You expect us to believe he threatened to have "the feds CRUSH" (that's guvment-fearin' rhetoric) any bank that wouldn't lend to the jobless? Back that $hit up!"

I won't do all your homework for you, but, I will give you an assignment that will get you where you will more clearly comprehend current events:

Look up: "The Community Reinvestment Act" (CRA) which required banks to make high risk loans to minorities and others who could not have qualified for a home loan or business loan under normal circumstances.

When you hand in your completed homework, you may return to class.

And, yes, that's Go'mnt fearn talk, but this all-too-powerful Goment that we've all allowed to fester IS something for all to fear.

Anonymous said...

I dont know if Schmucky ever said he would crush banks that didnt follow his lead, but look what he did to IndyMac. Skunk.

Taxpayer said...

"I dont know if Schmucky ever said he would crush banks that didnt follow his lead, but look what he did to IndyMac. Skunk."

Leftist Socialists want to "crush" all private enterprise. Leftists despise capitalism. It fosters and rewards successful competition.

Competition leads to winners and losers. These winners and losers are chosen by the "masses" who really haven't the slightest idea of how to scientifically decide among competing products/services/ideas. The losers are frequently those who the elites would prefer to win.

The elites ALWAYS know far better than the unwashed what is good and useful for the unwashed. A clue to that notion is the expression: "the choices are too many and too confusing".

By applying some laws here and some regulations there, the choices can be simplified, say the elites.

Applying laws and regulations on thousands of small to mid-sized businesses can be messy. "Inefficient" governing so much variety.

So, the natural path is on to gargantuan corporations. "More efficient" economy say the elites. Easier to control a few competitors. They can be regulated and steered to be better to the consumer than thousands of smaller organizations.

When Schumer wiped out IndyMac, people asked: why. Answer: A demonstration of power. Get with it now, or this will happen to you too. Management of IndyMac was probably getting a little too uppity to suit Schumer. So, to show other financial institutions how fragile their survival is, and where their bread is buttered, "crush IndyMac".

Now, on to the automobile industry. Then food (Commissar D&T has made headway there - trans-fats, salt, baloney hanging in a deli window, calorie counts on menus ...) oil is well under government control, as is the airline industry, and education, from pre-K to the university. Your behavior in the workplace, in school (don't upset anybody with your independent thoughts), in airports and on board a plane are all matters of interest to one government agency or another.

We all have only a short time to assert control. We make all the decisions on the economy, or the predatory politicians will.

Here's an irreversible fact: Someone will control the economy. So, who should that someone be? You or Schumer? Is he or any other elected/apponted employee really all that smarter than you? Should someone like Dennis Gallagher ever have power over you and your family?

Anonymous said...

my someone has lots of time on their hands, an RSA troll probably.

get thee to housing court, a housing preservation action. See, watch, observe how the city HPD lawyers act & ignore the law and HPD code violations that landlord
commit over and over again. Watch as immigrant landlords harass a woman with cancer & two toddlers, hear a tenant describe how her landlord killed her dog, look at the hundreds of no heat and hot water actions. the same ones that are back on the calendar again and again.

In Queens the immigrant landlords are the scummiest, Crapper ought to give those beasts a golden toilet. and somebody ship them out of Queens, please. I shudder to think what the Russians would do to these animals, if you want to talk Soviet style.

nice, American citizens are homeless yet immigrant property owners are destroying our communities.

tenants should not pay rent as long as landlords continue to refuse to do repairs and create slum conditions in order to destroy communities and neighborhoods and our city.

they bought these buildings at low prices due to rent control and rent stabilization, then drive out decent tenants by not doing repairs and routine maintenance. the new tenant get higher rents with more problems, abuse from the super when they ask for simple repairs or what should be routine extermination.

Anonymous said...

Leftists despise capitalism. It fosters and rewards successful competition.

Yes, as exemplified by the fine capitalist Bernard Maddoff! Hopefully your life savings was not entrusted to this pillar of Wall Street.

Here's an irreversible fact: Someone will control the economy. So, who should that someone be? You or Schumer? Is he or any other elected/apponted employee really all that smarter than you?

Actually, yes. Schumer probably is smarter than most of the people here. That's why we elect our representatives, and why you have not yet been elected.

Anonymous said...

I won't do all your homework for you... Look up: "The Community Reinvestment Act" (CRA) which required banks to make high risk loans to minorities and others who could not have qualified for a home loan

Heavens, no. I wouldn't expect you to do my homework when you can't even finish your own satisfactorily.

You are correct that the CRA was designed to coerce banks to issue home loans to minorities, but not that CRA included "high risk loans" to those who would not have otherwise qualified. On a number of other points you also seem misinformed. Since I'm a nice person, here are some facts to clear up your confusion:

CRA was originally designed to counter the practice of redlining, true. And that's a good thing - government regulation at its best.

Say you're a bank. You take deposits from residents of a neighborhood, it's only fair that you give home loans to those very same residents, regardless of race... IF they're on financially sound footing. That's what CRA was - reinvestment in redlined communities that had been starved of loans for home repairs and purchases. It encouraged responsible loans to minorities (or whites!).
Good thing.

Schumer was not involved then. He entered the picture later, when the Congress under Clinton was attempting to rend the regulatory fabric of the financial world. Heard of Phil Gramm? Gramm and his buddies repealed a crucial element of the 1933 Glass-Steagal Act - that which separated commercial and investment banks.

Okay, so we're still not threatening to CRUSH banks that don't loan money to jobless minorities. But we're allowing all financial institutions into the same pool, and instead of simply encouraging local banks to loan to deserving people of any race in their neighborhood, large lenders that don't know Jim from Joe are getting involved. They take excess risk on subprime loans - because they can - and then bundle these into mortgage-backed gobbledygook in ways that avoid SEC oversight.

(By the way, taxpayers were never to pick up the tab for predatory lending. As long as home values continued to rise - which was the assumption - banks would never lose their money if a subprime defaulted.)

Yay, deregulation! Do you hear ANYONE raising that cheer lately?

If you want to talk current events, Schumer might have been complicit as a friend of Wall Street. I don't know. But it wasn't CRA itself that created or burst the bubble. Nor was it loaning to poor minorities. In fact, if you look at the areas hardest hit by the subprime mess - suburban Las Vegas and exurban California, Florida, etc. - you'll find these are all middle class white areas.

Taxpayer said...

"But it wasn't CRA itself that created or burst the bubble. Nor was it loaning to poor minorities."

You get an "F" on this assignment.

How the hell can mandating banks to lend large amounts of money to jobless, or low income, or people with lousy credit records be anything but the start of the collapse?

In the late 1980s, (1987, if my memory serves) the market dropped 500 or so points on a "Black Tuesday". Among the consequences was the rapid drop in home (new and used) sales, which resulted in a drastic fall in the sales price of homes.

Gradually, those prices rose, and the CRA was implemented, with open threats against banks to lend or be crushed.

No sane or even insane person actually believed that prices were hereafter going to rise, never to stall or fall again.

When any loan is executed, the borrower is required to take out insurance that will kick in and repay the loan when the borrower fails.

AIG became the monster size insurance company for selling, among other policies, mortgage insurance.

Under ordinary conditions, when banks lend to responsible buyers (low risk), payouts from this insurance fund is stable, predictable, from year to year.

Enter Schumer, Barney Frank, and Dodd (as the ring leaders), to force Fannie MAE and Freddie MAC to "GUARANTEE" (with tax dollars) the high-risk loans.

The banks, in the meantime, were profiting splendidly, and were creating ponzi-like financial instruments (packages of high mixed with low risk mortgages) to sell worldwide as well as to Fannie MAE and Freddie MAC (Taxpayers). AIG entered the fray, composing its own instruments.

The entire financial community was well aware of the fraud, as were Airhorn Schumer, Blowhard Frank and Hairboy Dodd. The only question left was how to cover up the mess and the story to tell when it all unraveled.

All knew that we taxpayers were about to be crushed, not the banks after all.

All participants got richer: banks, insurance, Fannie MAE, Freddie MAC, and the corrupt politicians.

One element of the cover up is to split the two sides, taxpayers Vs the defaulting borrowers (largely poor minorities). Get those two sides quarreling and name calling each other, and, once again, the guilty count their money and smirk.

Now, all these housing and financial "experts" are turning their eyes on the automobile industry.

The politicians who gave us the financial collapse, will fix that by causing the auto manufacturing collapse. The politicians have decided that their expertise now encompasses auto design, manufacturing and sales.

The free market is crumbling. Politicians will now be in charge of the house you own, the car you buy and the fuel you use in both home and car.

Achtung! Control is now changing hands!

Artful Dodd-ger said...

Thought our fanancial 'expert' Wade would wade in on this.

Afterall, is not a neighbor of Bloomberg the perfect person to discuss housing for the rank and file of NYC?

You might think the typical NYer is just rank, but a House of Cards is still a House of Cards, eh?

Anonymous said...

"But it wasn't CRA itself that created or burst the bubble. Nor was it loaning to poor minorities."

You get an "F" on this assignment.
How the hell can mandating banks to lend large amounts of money to jobless, or low income, or people with lousy credit records be anything but the start of the collapse?


Jeezus, your skull is THICK!!!

You might have a few correct facts buried in that diarrhea of text, but, for the last time, CRA was NOT about mandating that anybody lend anything to low income families or the jobless. It's very confusing, but you really should sort out the various threads in your own mind.

CRA started before the 80s and Schumer's involvement. Okay?

Next, turn your brain on for just a second.
Since this financial collapse started, how many stories have you heard about welfare recipients losing $500,000 homes? Zero. About how jobless minorities are ruining our economy with their foreclosures on jumbo mortgages? ZERO. Isn't that enough evidence for you? The subprimes to worry about are to those to the middle and upper-middle classes. That's where the money is. Or isn't.

The financial collapse started with deregulation that allowed large investment banks to start fiddling with mortgages and bundling them in ways that nobody comprehended. Oh, and the ratings agencies that gave them all AAA free passes. No oversight there!

You know what? Screw it.
Go back to sipping your koolaid.

You're absolutely right. It's always the fault of the poor, never the grabby subsidy-sucking "free-market capitalists" on top.

The jobless of America have caused this multibillion-dollar collapse of the financial system, and you are the only genius who really gets it. Bernie Madoff? You know he was trolling soup kitchens for investors.