There’s a case to be made for a governor flitting about from one disaster scene to another, as Gov. Arnold Schwarzenegger did constantly during the fall fire season, in the interests of building morale.
But there’s a point where it becomes grandstanding, trying to make hay and boost a political image by taking advantage of the misery of others.
Schwarzenegger appeared last fall to have little idea of the boundaries between the two phenomena. And he did it again just last month, trumpeting through press releases picked up in all major California media that he had “worked with loan services from (four major mortgage lenders) to streamline ‘fast-track’ procedures to keep…subprime borrowers in their homes.”
A week or so later, President Bush did much the same thing, plumping for an interest rate freeze.
Only later did it emerge that at least some lenders were already doing the things Schwarzenegger and Bush implied they had devised.
And then it became clear that nothing covered in the governor’s press release or the president’s program would relieve the misery of the people most impacted by the ongoing foreclosure crisis.
What the governor hyped was an agreement by lenders including Countrywide Home Loans, GMAC, Litton Loan Servicing, and HomeEq to maintain initial lower rates for some subprime home borrowers whose mortgage rates are scheduled to jump significantly higher. Litton, for one, said it might extend the initial lower interest rates five more years. The Bush plan covers even more lenders.
But borrowers only qualify if they are up to date on making payments and can prove they can’t afford to make higher interest payments when their bump comes.
That does nothing for anyone whose loan hit the jump-up point awhile back and then fell behind on payments. It doesn’t help renters living in homes whose owners have defaulted on payments even though the renters made all their payments, on time. And it does nothing for homeowners feeling forced to walk away from properties when their values drop below the amount of the mortgages they are carrying.
These are the people who are about to be foreclosed on or evicted soon, not those who are up to date on all payments.
So Schwarzenegger’s press release headlining that he “Works with Lenders to Help Homeowners Avoid Foreclosure” was a bit of an exaggeration at best. Pure grandstanding at worst, at the expense of the real victims of the subprime lending crisis.
For it’s easy to get banks to agree on extending a break to homeowners whose payments are current.
Offering a hand to those truly in need is another matter; even though no bank likes to foreclose, partly because that necessitates spending money on maintaining houses at least for a time until they can be sold, and partly because foreclosure sales often bring less that the original mortgage amounts. Lenders lose an average of $58,000 per home in California between the time they foreclose and the moment they resell.
The people who really need help today are renters who pay on time to landlords that don’t. Homeowners who took loans with bump-ups after five or seven years also need help if their rates have already jumped. Many had figured their properties would appreciate enough so they could refinance to a better loan, but instead most homes in California lost value over the last year.
Schwarzenegger, Bush, and the banks are doing nothing to help them, and it would be no wonder if they felt deceived when they check on whether their so-called agreements will do them any good, only to learn they won’t.
This has been political grandstanding at its worst. But it’s far from the first time either Schwarzenegger or Bush has moved in to take credit either for work done by others or for things that aren’t quite as they seem.
Schwarzenegger, for one, likes to take full credit for California’s pioneering laws aimed at cutting both automotive emissions and overall greenhouse gases. In fact, he fought to get those bills softened considerably to favor his big-business campaign donors before they passed the Legislature, then was compelled to sign them because a veto would have made him look anti-environment.
He took major credit for vetoing a liquefied natural gas import facility off the coast of Ventura County last spring, when the plan was already dead because Lt. Gov. John Garamendi and the state Lands Commission had refused to allow promoters to run pipelines across state-owned tidelands.
Schwarzenegger has been a showman his entire stay in America, so when he grandstands, it is no surprise. The same for Bush, who takes credit every time the federal government performs well and runs away from all its flops.
It’s purely politics as usual when they take credit for moves already made or designed by others. But the grandstanding becomes shameful when it leads burned-out residents of fire areas to believe they might get more aid than will really be coming (as both Bush and the governor assured homeowners in San Diego County and Malibu that “we will take care of you” when all they’ll get is whatever their insurance covers, plus a possible federally backed loan) or when it leads victims of the subprime mortgage crisis to believe relief is on the way and there will be little or none.