The National Catholic Review
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Foreclosure Forgiveness

For four years the housing crisis has been dragging down the U.S. economy, impoverishing homeowners, preventing a robust recovery and stifling job creation. The Obama administration has taken a number of actions to relieve the situation: reducing principal for some homeowners through the Home Affordable Modification Program, urging mortgage companies to do the same through multistate foreclosure settlements and assisting distressed homeowners with refinancing. Still, these efforts have failed to forestall the cascade of problems gushing from the home-loan debacle. Economists, and now the Treasury Department, have begun to think the unthinkable: forgiving substantial repayment by homeowners whose properties are “under water,” that is, whose mortgages exceed their market value. Even Secretary of the Treasury Timothy Geithner has come to hold this view.

But Edward J. DeMarco, the acting head of the Federal Housing Finance Agency, the office that supervises the country’s largest mortgage lenders, Fannie Mae and Freddie Mac, has rejected the idea of principal reduction. Mr. DeMarco, analysts say, has taken his action to uphold the principle of debt repayment. In a country that can bail out its banks and permit mega-bonuses for bankers, it is unjust to hold the line on homeowners. Mr. Geithner has written Mr. DeMarco, asking him to reconsider. The secretary argued that reducing payments on principal would relieve “a significant number of troubled homeowners, help repair the nation’s housing market and result in a net benefit to taxpayers.” The F.H.F.A. should heed Treasury’s request, and if it does not, the administration would be well-advised to find new leadership for the agency.

Marketing Health Insurance

Despite a U.S. Supreme Court challenge, foot-dragging by opponents and 33 votes in the House for repeal, President Obama’s health care reform law is crawling toward the finish line of full implementation. Health exchanges, a sort of insurance supermarket to help people compare policies, are supposed to be up and running for consumers in every state by 2014. But as the November 2013 deadline for putting them in place draws near, only 13 states have applied to set up an exchange. Additional states probably will apply, but the federal government expects half of all the 50 states to abdicate their role in creating an exchange. So much for the federal “takeover” of health care. In some cases the failure is a blatant act of political rebellion, even sabotage, against the federal law; in other states noncompliance reflects budget woes, reduced staffing and other local setbacks.

The federal government must redouble its efforts and add to its own budget the cost of setting up so many state exchanges. It must also aggressively counter the political fallout sure to follow. For state detractors, even those who have abdicated their duty, can complain about whatever the federal government does or does not do. It is always easier to criticize than to lead, especially if local voters support tactical defiance. Resistance by states also helps those members of Congress who are already prone to starve the federal government of revenue and appropriations for health insurance.

Voters should look closely at the health care reform law. Basically it is a long-range plan to see that nearly all Americans are insured against the huge financial risk of illness and injury, whether chronic or sudden. The insurance exchanges, then, are vital to our nation’s health.

Status of Christians

In this age of over-sharing, many Americans are still keeping their religious identities to themselves—at least online. According to a new study from the Public Religion Research Institute, 50 percent of Americans refrain from describing their religious beliefs in their Facebook profiles. Of the half that choose to identify their beliefs, 20 percent describe themselves as Christian, 9 percent call themselves Catholic, and 4 percent identify as atheist, agnostic or nothing. In addition, only 5 percent of Americans say they follow a religious leader on Twitter or Facebook. White evangelical Protestants are the most likely to have engaged with a religious group or leader online. Nearly 20 percent have posted a status update about being in church (for Catholics, the number is 2 percent), and 25 percent have listened to a sermon online (compared with 6 percent of Catholics).

So should churches just give up on reaching out through digital media? Not yet. Younger Americans are far more likely to engage with religious groups and leaders online. Four in 10 Americans between the ages of 18 and 34 say they use Facebook multiple times each day. The same percentage of younger Americans say that their church provides a Facebook page or a Web site where people can interact, and 26 percent say their church encourages them to use social media. Still, it is possible to become too plugged in. Sixteen percent of young Americans admit to sending or reading e-mails during a worship service. In the end, it is real-life actions, not online identities, that define a person’s commitment to his or her faith. One hopes others will know we are Christians by our love—even if they cannot tell from our status updates.

Comments

TIMOTHY NAUGHTON | 8/29/2012 - 3:42pm
The Affordable Care Act is a tough read because it's written as a step by step instruction on changes to existing feudal statutes. The Senate leadership provided a pretty good 14-page summary, that you can find here [Dpc.senate.gov/healthreformbill/healthbill04.pdf].

The early federal rush to provide SOME solution to the foreclosure crisis foundered on the exhaustive standards that already reluctant servicers were required to satisfy. Generation Two of the solutions, mostly failed as well, asked note holders to take a haircut voluntarily, when they'd paid good money for their loans. Maybe their buying practices were shabby (though not all were), but remember, these loans were in mortgage investment packages that were rated for credit quality. In a thin margin business like mortgage lending, shortcuts equaled cost savings, so loan buyers relied on the ratings when buying. Thats why the ratings scandal that is part of all this has, IMHO, a much bigger level of responsibility than almost all of the other players in this American tragedy.

Bank bailouts, while a sympathetic sister response, are not quite the same as principal reduction. What WOULD be the same is federal buyout of the troubled loans. Whether principal reduction happened or not should be partly driven by the true fall in real estate values, something individual lenders and servicers have a harder time monitoring than a single, ad hoc federal agency. A more closely observed local market also could be aided by coordinated other state and federal action to make sure the hardest hit areas get the right level of attention.  We need to admit that pockets of the "Sand States" are as much disaster areas as those hit by storm or fire. Borrower guilt also could be rated by such an ad hoc agency. Borrowers in trouble due to medical, job or family pressures could get one level of support, and those who simply refi'd multiple times to keep the party going, could get less favorable workout terms.

But for both the parties sitting on these loans, and the governments waiting, hoping for some good news, it's time to recognize the relief a one-time sweep up of these Borrowers and their loans would provide. And remember, many of these Borrowers CAN repay, just not now, not on these terms.  If the market for these homes is depressed anyway, what sense does it make to force homeowners out, and have to maintain empty houses instead?
Kang Dole | 8/25/2012 - 11:42am
"In one provence in Canada, persons over 45 are inelegible for kidney dialysis."
I would find it enlightening to learn what province this is; can you provide a link to something documenting this claim?
Joseph Phelan | 8/24/2012 - 5:37pm

"Federal debt nears $16 trillion, with no easy way to pay it down."


"The debt is now lurking just under the $16 trillion mark - a number huge enough to be almost incomprehensible to the layperson. One way to visualize its magnitude: If you were to spend a dollar every second, it would take you 32,000 years to spend $1 trillion, or a mere one-16th of the debt." From USA Today August 24, 2012.

There is such a thing as being "generous to a fault". If we continue to take this route to unlimited debt, we will not be around to help anyone.




 

THOMAS SHAVER | 8/23/2012 - 11:26am

With all due respect, prinicpal reduction? Postponed or deferred, maybe, but if one takes on and promises to pay (promissory note) one should honor that promise, not look to the government to bail them out of a mortgage that probably should never have been made inthe first place.


The Affordable Healthcare Act is a travisty. Boards to determine and counsel one on dying? Abortion and contraceptives? Detrmining who lives and who dies? Where are we going? sounds like the movie Soylant Green.


 


 

LEONARD VILLA | 8/18/2012 - 9:48am
You drop the ball on Obamacare. A massive Federal takeover of health care is unsustainable. The county is broke. We can't even pay for current entitlements. Your editorial board does not understand fiscal math not the baby boomer explosion of demand on entitlements like social security. This law is forcing doctors to leave the medical profession. There will be bureaucrats rationing health care. Also there is an election coming up. If Romney-Ryan wins and the Republicans get control of the Senate Obamacare will be repealed. Even if not repealed Obamacare will fail because there is no money to sustain it.
Nicholas D'Agostino | 8/18/2012 - 9:46am
Bank bailouts, auto buyouts and the other government giveaways should never have happened. They are not the reason to bailout homeowners. There has to be a better way.
Katherine Schlaerth | 8/17/2012 - 7:26pm
With all due respect to Virginia, I would dispute her propaganda. Virginia, there is no Santa Clause. In one provence in Canada, persons over 45 are inelegible for kidney dialysis. Without dialysis,people usually die.  When one is dead, one cannot comment on the kind or adequacy of care rendered.
I trained at a medical school across the border from Canada. My medical school now has international institutes of cardiology and cancer, due to an influx of money from Canadians who knew that they would not survive the wait for treatment of serious illnesses in Canada. I am sure that if you have a cold in Canada you will be serviced quickly and well. If you are older, have as serious illness and want immediate advanced treatment, it may well e another story. I assume this occurrence is what drove all those Canadians withh cancer, heart disease, etc.to come to my alma mater with their hard earned money to get timely treatment which they paid for out of pocket.
By the way, we medical providers have noticed a significant decrease in civility on the part of some patients since they are now "entitled" to all the care they want. Usually this care involves narcotics, and other mind altering dangerous drugs, or perhaps tests which they think they need and don't. I really am tired of being sworn at, having my female residents reduced to tears and having to see so many patients and work such long hours entering data into ill formulated electronic medical records which don't let me enter an accurate diagnosis.
Many health care providers are retiring early.
Virginia Edman | 8/17/2012 - 4:54pm
I have been living for just over 50 years in Canada.  In all that time I have had excellent health care.  Some of it was expensive and major.  All of it was covered by the Canadian Health Insurance Plan, in Ontario called OHIP.  This plan is universal to Canada, although the provinces do have some involvement. 

I am aware that the media in the United States has given misinformation about Canadian Health Care, saying that you had to wait too long, and it was a flawed system, but I want to tell you that it is good and it is managable.  I think that is what is meant by "Voters should look closely at the health care reform law."  It would be a wonderful thing to put it in place in the United States of America.
PETER HANRAHAN | 8/17/2012 - 3:35pm
Sometimes I worry that the editors of America live on another planet. For example, who with any knowledge of the healthcare reform law would say,"Voters should look closely at the health care reform law." I have tried reading the 2000 page document and it is so disjointed as to be incomprehensible. The editors would serve us better if they digested the law themselves and passed on their understanding to the rest of us. As Nancy Pelosi supposedly said, "Lets pass the bill and then find out what is in it" or something similar. It will take an army of lawyers, interns and appointees to interpret the intent of this vast document. I cannot even imagine the overall process of making the law workable. The cost of setup and staffing alone will be horrendous. Can you imagine the government efficiently managing this new empire? I wish it were possible for the voters to "look closely" at the healthcare reform law.

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