Attack on Homeowners Founded the “Tea Party” Five Years Ago
There have been scores of books, news articles and in-depth research papers written on the causes of the housing market crash and the effectiveness of the government’s response to it.
But five years ago, CNBC’s Rick Santelli boiled it down to this: “loser” homeowners buying extravagant homes they couldn’t afford and the government’s offer to pick up the tab.
His five-minute rant from the floor of the Chicago Mercantile Exchange, sparked what later became to be known as the wildly-popular “Tea Party movement.” Santelli actually coined the phrase, urging “all you capitalists” to start organizing.
His now-infamous, off-the-cuff remarks were in response to a minor proposed homeowner bailout of about 3 million homeowners who were underwater on their mortgages and were destined to endure a foreclosure without help.
Of course, our Miami foreclosure lawyers know that Santelli’s rant grossly oversimplified the problem by placing the blame squarely on the shoulder’s of “irresponsible” homeowners who should never have signed on to mortgages they couldn’t afford. He alleged that the government bailout was “promoting bad behavior,” and said people didn’t want to pay for their “loser” neighbor’s mortgage.
One man on the floor yelled into the microphone, “How about we all stop paying our mortgage? It’s a moral hazard!”
What Santelli conveniently omits – even now, five years later as he says he has “no regrets” regarding his words – is the enormous role that the banks and mortgage servicers played.
Banks pushed these loans onto buyers, making them believe they could afford them, because the banks wanted to turn around and bundle those mortgage-backed securities in order to sell them to investors. Homeowners were led to believe these payments were manageable. They were made to believe the value of their home would continue to rise.
Should they have seen it coming? Should they have known they could never have afforded these payments?
Perhaps in some cases. However, large swaths of homeowners were entirely innocent. The economic fallout from the housing bubble resulted in soaring unemployment rates and stagnant economies, which compounded the financial burdens on people whose home values plummeted – regardless of whether the original loan amount had been reasonable.
And that homeowner bailout? It did little to actually help American homeowners get back on their feet.
As it now stands, the U.S. housing market is still mired in a foreclosure crisis. Overall, U.S. foreclosure filings were down 18 percent as of January 2014 as compared to a year earlier. However, that was offset by the fact that a number of cities saw a huge reversal in the downward trend. In Atlantic City, for example, there was a nearly 120 percent increase in foreclosure filings from a year earlier.
Florida still claims 8 out of the 10 communities hit the hardest by foreclosures. In the Miami-Fort Lauderdale-Pompano Beach area, one in every 239 homes received a foreclosure filing in January 2014. There were a total of 10,300 properties that were in some state of foreclosure.
While bankers have made out like bandits, homeowners continue to suffer.
The Tea Party’s fervor has somewhat fizzled in the last couple years. But one statement Santelli said in his 2009 rant still rings somewhat true: “Our founding fathers – Benjamin Franklin, Thomas Jefferson – they’d be rolling over in their graves right now.”
We believe so too, but not for the same reasons as Santellli. We think it would shame our country’s founders that we have allowed banks and corporations to take over our property and leave us homeless in the land our forefathers claimed – all so that financial giants can make billions at our expense.
“…The banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered… I believe that banking institutions are more dangerous to our liberties than standing armies… The issuing power should be taken from the banks and restored to the people to whom it properly belongs.” – Thomas Jefferson, 1802
If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call 305-358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.