The Globe jumps on the bandwagon today, editorializing on a Herald story about how Hendry Street, in Boston’s Dorchester neighborhood, is “ground zero” in the subprime mortgage mess.
There’s not much to the editorial, other than saying things are bad (there) and something needs to be done.
They repeat one error, though:
More than 700 properties in Boston fell into foreclosure last year, mostly products of a subprime mortgage market that lured financially unstable buyers with low introductory rates. Unfortunately, the time has passed for debating whether venal mortgage brokers or gullible buyers are to blame.
They don’t provide any proof for that statement, but I guess if you say something enough times, people will start to believe it.
In one study, the City of Boston’s Department of Neighborhood Development estimated that as many as 60% of homeowners defaulting on their loans never made it to their first reset date; they were unable to keep up with payments from the beginning.
So, I have to disagree with the editors – I think it is important to find out what caused this: If we accurately understand who is in this situation, we can figure out what steps should be taken to mitigate the disaster.
If the owners could never afford to own the homes, from the very beginning, then we need to stop helping them out – unless you’re going to give them the homes, there’s no way that any sort of interest rate freeze or reduction will be enough to keep them from facing default.
If the owners were investors, then, again, you gotta let them walk away – and quickly.
Should the lenders be held responsible for this? Beyond making sure the properties are secured and safe from vandalism, what do you expect them to do?
Mortgage brokers alone didn’t cause this mess, in my opinion. It was simply a confluence (?) of events. Yes, it doesn’t matter, to a certain extent, who did cause it. But, if people are calling for action, and that action is going to require money from my / our pockets, serious questions need to be asked … and answered.
Regarding this case, specifically, what you are seeing is classic urban studies – a neighborhood that was on the edge, to begin with, was on the cusp of renewal. Then, unfortunately, the economy / market took a downturn. As a result, this area, as well as many others throughout Boston and the country, weren’t able to battle the storm, and fell, first.
There’s nothing new about that.
Source: A foreclosure virus spreads – The Boston Globe