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Tuesday, September 27, 2016

Why 'Free Market' Foreclosures Destroy Communities As Effectively As Any Central Planner

While central planners reshaped communities in their own image, mortgage servicers tear them apart to maximize their profits.

Today is National Day of Action on Foreclosures. Occupy Our Homes has created a list events at their site. Here’s a great video on what is going on in Brooklyn, which shows the devastation happening there:

Between 1853 and 1869, Baron Haussmann tore down and rebuilt major parts of Paris according to principles of hygiene and circulation. He installed roads, sewers, and other public works and demolished neighborhoods, rebuilding them alongside modern technology. These neighborhoods became more stratified by class and function and more easily controlled by state forces.

A general critique of city planners like Haussman is that they rebuilt their cities in order to make it, in James Scott’s phrase, seeable by the state. This reconstruction of Paris was focused on simplification, legibility, and centralized, managerial control, regardless of the local knowledge and practices destroyed in the recreation. Critiques like this extend across modernity, especially to those Americans like Robert Moses who built highways through major metropolitan areas.

Though Scott was looking towards models of embeddedness developed by those like Karl Polyani, most people who develop these critiques invoke Hayek and the price system of the market as the superior way of planning. The profit-motive of the price system coordinates information across a vast network of agents who will never know each other. This allows for the most efficient use of society’s resources. By seeking out profit opportunities, individuals will coordinate the whole.

  • Mikee

    The servicers have no skin in the game except their servicing fees. Thus they have a negative incentive to deal responsibly with the borrower or the underlying security property. And the present holder of the note (which may be a group holding a pooled assortment of these bad loans) has neither the time nor the inclination to do anything either. In fact, their primary ‘fiduciary’ activity is to foreclose and sell the property as quickly as possible, often for horrific losses to their pool of investors. Note, the ‘pool of investors’ eats the loss, not the servicer nor the bundler. Thus the destruction of communities, of the values and equities of surrounding properties, of even entire subdivisions and neighborhoods is of no concern to them – they are trying to get theirs at the expense of everyone else. Thanks for the unregulated free market…

  • 1olderbutwiser1

    If people would only buy what they can comfortably afford, there would be no problem. Let bums live in ghettos, the middle class in developments, and the wealthy in mansions. That’s how free enterprise works. I was watching a flip-this-house….the end buyers had to be idiots, the banker who financed it was another easy-money guy. Everybody wants easy money, the want to see the dollar as a means of worth destroyed so they can hog something out for themselves. In inflation, only true investors can come out ahead….and then, when it comes to housing. usually only from inflation. People today tend to live equity-free lifestyles, a truly live-for-today kind of people. What ever happened to buying a family home and living there to pay it off, then saving for retirement? People today have become shallow, and simply not self-sustaining. They always want more for less. There’s plenty of fault to go around, but the people at the bottom want to form a union of non-payers, and expect others who pay should bail them out. Not right at all. Let the losers lose and the winners win. Don’t give out participation trophies.

  • dpaano

    1Olderbutwiser1: As I’ve said a couple of other times…you are an idiot!! People bought their homes, not anticipating the economy sinking. Many bought homes they could very easily afford…however, they ended up losing their jobs or suffered a catastrophic illness, or some other reason that set them back. They didn’t just willy nilly go out and buy houses they could not afford! People are NOT shallow either! You are tending to bundle “all” people into one group, and it doesn’t work! A lot of us were lucky…we didn’t lose our jobs, but our homes have lost value. We suffered also, but in a different way. We had our mortgage modified by our servicer (after a year of constant turmoil) and they ended up lowering our interest rate on the balance. It has saved us about $750/month, but it works for us. So, to say that we are “living equity-free lifestyles” or are “a truly live-for-today kind of person,” is totally ludicrous! There for the grace of God go yourself!! I just hope that nothing comes up in the next couple of years to cause you any major headaches!!