| A growing trend during the current recession is | | | | mortgage may lower the rate temporarily to 4% or |
| squatters moving into bank-owned homes and living in | | | | less to assist homeowners who demonstrate a |
| them rent and mortgage free. Although this seems | | | | long-term ability to keep their loan current. While this |
| astonishing, with the inflated real estate bubble not yet | | | | may be a temporary loss to the lender, it will not be a |
| completely burst, lenders reluctant to recognize losses | | | | total loss, as is the case with many foreclosures. And |
| on such properties, and so many abandoned homes | | | | this agreement could be worked out between the |
| available, it was a likely result of the collapse. | | | | owners and bank voluntarily, with foreclosure as the |
| With real estate developers having built far more | | | | last resort. |
| houses than could ever have been sold, real | | | | But right now, banks have every incentive not to |
| homelessness does not have to be an option for | | | | dedicate extra resources to helping borrowers. Instead, |
| foreclosed homeowners or laid-off workers. Instead, | | | | they can let homes go into foreclosure and try to keep |
| they can often just move into an empty property and | | | | real estate prices artificially high. When this plan fails |
| take further advantage of the bubble in real estate | | | | and they are forced to recognize total losses on loans, |
| building. | | | | they simply blackmail or threaten legislators into handing |
| Rents and selling prices in many areas of the nation will | | | | over billions of dollars to paper over losses. |
| still need to come down to reflect a return to more | | | | This keeps foreclosure rates high and pushes |
| reasonable real estate values. But banks, which were | | | | homeowners out of properties, all the while forcing |
| too willing to lend 100% of the value of an inflated | | | | them to contribute to the bailing out of the mortgage |
| property, are now reluctant to acknowledge their | | | | holders. Obviously, the banks feel entitled to looting |
| mistakes and allow borrowers to sell for less than the | | | | taxpayers for trillions of dollars and Congress and the |
| total amount owed on the mortgage. | | | | Federal Reserve acquiesce to such demands time |
| Banks' unwillingness to allow short sales is forcing | | | | and time again. |
| selling prices higher than the market value of | | | | Thus, who can blame foreclosure victims or the |
| properties, especially properties in default. In some | | | | unemployed for feeling as if they are entitled to share |
| areas of the country, a large number of homes are | | | | in the bank's wealth (i.e., the taxpayers' wealth) and |
| selling for $300,000 to $1 million, but rentals are | | | | take over bank-owned foreclosed properties? People |
| available for $600 to $1,200. Landlords must be losing | | | | are being forced to bail out financial institutions, so they |
| large amounts of money every month. | | | | force their own way into a piece of the bailouts by |
| Lenders are also reluctant to help homeowners stay in | | | | squatting and living rent free. |
| their houses by modifying mortgages or offering other | | | | Either the bailouts need to stop for everyone, or |
| realistic solutions to help avoid foreclosure. This makes | | | | everyone should get a free home. Over $10 trillion has |
| it almost inevitable that borrowers will have to sell, but | | | | been appropriated by Congress and the Fed for |
| then they run into the problem of getting a short sale | | | | solving the financial crisis so far, which amounts to |
| approved by their mortgage company. | | | | over $33,000 for every person in America. That could |
| So real estate prices are still overvalued compared to | | | | be enough to allow people to live mortgage and |
| the rents that properties are generating, and | | | | conscience free inside an empty house for a long time. |
| foreclosure rates are higher than they would | | | | Squatting in an abandoned or foreclosed home is |
| otherwise be if banks willingly worked with | | | | clearly wrong (at least morally, since legal |
| homeowners. In a freer market than we have now, | | | | determinations mean nothing anymore), and not an |
| banks would have an incentive to work with | | | | activity anyone should engage in. But banks squatting in |
| homeowners to stop foreclosure if there was a | | | | the American economy, threatening destruction of the |
| realistic expectation of having the loan paid back in | | | | entire financial system, and living parasitically off of the |
| time. | | | | productive is wrong on an even bigger scale. Putting |
| For example, banks charging 6% interest on a | | | | an end to the latter may put an end to the former. |