ALL OF OUR PUBLIC ASSETS ARE BEING HANDED TO RICH DEVELOPERS FOR NEXT TO NOTHING IN AREAS SLATED TO HAVE HIGH PROPERTY VALUE. IF KEPT PUBLIC PROPERTY------THAT WOULD BE PUBLIC WEALTH. EVERYONE SHOULD BE CONCERNED BECAUSE THIS IS NOT ONLY ABOUT GETTING THE WORKING CLASS OUT OF CITY CENTERS....WOMEN AND CHILDREN
IT IS ABOUT TAKING PUBLIC LAND AND ASSETS THAT MIDDLE-CLASS TAXPAYERS BUILT.
The Obama Administration is privatizing all that is public faster than Bush and that includes the Housing Urban Development agency HUD. Federal policy sends all kinds of taxpayer money to dismantle public housing and projects with the idea that these are bad for the poor and communities. This is likely true------concentrated poverty in these projects is not a good idea. The problem is that there is no intention of providing any other opportunity and in fact, the policies are leaving even more people homeless and impoverished AND THE MONEY IS BEING FUNNELED INTO THESE CORPORATE DEVELOPMENT PROJECTS.
Below is a good article giving a long view of public housing policy. I include just the Obama years because we need to look at again, a neo-liberal saying they are going to do something progressive and not doing it. So, with public housing like with fraud,......supposedly we cannot easily seek justice because the definitions are left vague. OBAMA HAS LEFT PUBLIC HOUSING DISCRIMINATION VAGUE AS HE HAS IGNORED FRAUD.
What I want to emphasize is that tons of Federal money is coming for public housing and being funneled into projects that are making the rich richer and doing nothing for the people paying the taxes. Here in Baltimore, consolidation of real estate into the hands of a few is indeed aided by these funds and it is all illegal. So, the low-income lose and the taxpayers lose.
ALL GOES TO THE PEOPLE AT THE TOP. WE NEED THAT MONEY BACK. IT IS THE PUBLIC'S MONEY.
Living Apart: How the Government Betrayed a
Landmark Civil Rights Law
by Nikole Hannah-Jones
ProPublica, Oct. 28,
2012, 11 p.m.
A 2009 internal HUD study found that many communities were not even bothering to complete the required fair housing paperwork when they applied for block grants.
In a sample of 70 applicants, 35 had not provided an "analysis of impediments" to fair housing, prompting HUD to conclude that they were "apparently not performed at all." Nearly all of the reports received were considered substandard, the review found. A year later, investigators from the Government Accountability Office confirmed what civil rights advocates had long known: HUD's system for ensuring compliance with the fair housing law was a sham.
GAO officials reviewed documents filed by 441 recipients of
block grants, a step HUD officials do not routinely take.
They found that about one-third of the fair housing materials were out of date. More than one in 10 hadn't been updated since the '90s. Communities in the Midwest and Northeast — the most-segregated regions of the country — performed
The GAO dismissed the analyses of impediments to fair housing that some communities provided as worthless because of their "brevity and lack of content." Most did not offer time frames for when the communities would
eliminate barriers to integration or include the required signatures of the relevant elected officials.
Investigators noted that 25 recipients of block grants had filed no analysis, "raising questions about whether some jurisdictions may be receiving federal funds without preparing the documents required to demonstrate that they have taken steps to affirmatively further fair housing."
According to the GAO, HUD staffers in seven regions had read the key documents for just 17 of 275 block grant recipients. Efforts to ensure "the integrity of the AI process...were not common," the report said.
The GAO made a number of recommendations. But HUD didn't even adopt the simplest one: to require that grantees submit their analysis of impediments for HUD to review.
In interviews, many HUD officials acknowledged they have no idea how to enforce the provision for affirmatively furthering fair housing. Already overstretched, they focus on what is clear: the disability accommodations provision of the Fair Housing Act. It's simple, they say, to check off whether
an apartment door is wide enough for a wheelchair or if a parking lot has enough handicapped spots.
But compliance officers stumble when it comes to race and segregation. One said she received little training on how to apply the 1968 act to block grant recipients. "The one week of training I was sent to, you focus on the civil rights law as a whole," she said. "You're not focused per se on
segregation." The official said she did not review broader issues such as the impact of discriminatory zoning "because I don't even know what they are."
Rolando Alvarado supervised fair housing enforcement for HUD in New Jersey for more than a decade. When asked to define "affirmatively furthering fair housing," he exhaled and then paused. Ten seconds passed. "That is tricky. There is no exact regulation, it's a gray area," said Alvarado, who retired in 2009. "I've never seen anything that clearly defines
that in my time at HUD."
Alvarado said he relied on his staff to ensure enforcement of the mandate. But how could his subordinates enforce something he himself could not explain?
"You are right. I don't know," he said. "It was reliance on if staff had conducted enough investigations and compliance reviews they would have an inkling of what to look for."
Alvarado said he could not recall a single instance in which he challenged a community's assertions about its efforts to further fair housing. When it comes to these issues, he said, "You are basically taking them at their word." After the Westchester settlement, in which the judge criticized the
department for failing to enforce the law, the word came down from HUD leaders that there should not be a recurrence. Officials say that directive was not accompanied by any training, additional staff or instructions on what practices
should be examined.
"The message is that we need to be more aggressive but absent the new rule, there is very little guidance as to what would constitute a failure to affirmatively further fair housing," said a senior fair housing official. "There's a car here and nobody knows how to drive it."
Trasvina promised Congress in January 2010 that by the end of the year the agency would release a rule requiring communities that receive money from the
agency to "promote integration." More than two years later, those regulations have not been issued. HUD has declined to say when they might appear or give a reason for the delay.
The focus of HUD's civil rights work appears to have veered away from race. In March, the department issued a rule banning discrimination against gay and transgender people in HUD-assisted housing and by lenders receiving guarantees
from the Federal Housing Authority.
Asked what they are doing to fulfill the Fair Housing Act's mandates, HUD officials pointed to Joliet, Ill., where HUD has withheld block grant funds over the city's attempt to demolish a mostly black federally subsidized apartment complex. HUD also has withheld block grant money from Westchester County, which the Justice Department says has failed to live up to the terms of its settlement agreement.
Brian Sullivan, a spokesman for the housing agency, said in an email that HUD "very nearly" cut off block grant money for Galveston, Texas, and threatened to do so in Delaware's Sussex County. But other communities with serious questions about fair housing continue to receive federal housing dollars, and fair housing officials say the agency still
brushes civil rights concerns aside. One senior housing official pointed to New Orleans, which hasn't lost its block grant despite the Department of Justice lawsuit. "If that's not enough to reject a grantees' funding," he said. "Any finding from the fair housing office will not ever be sufficient."
Another example is Waukesha County, Wisc. HUD launched an investigation of the 90 percent-white county last year following a complaint from a fair housing group. The group accused the county of allowing its nearly all-white communities to block rental housing to keep out African Americans and Latinos from neighboring Milwaukee. African Americans and Latinos account for 57 percent of
the city's population. Yet the agency treats Waukesha County no differently from racially integrated Montgomery County, which has a 30-year track record of placing affordable
housing in its most prosperous neighborhoods. Waukesha still receives its automatic influx of HUD dollars.
"It is fair to say, it is accurate to say, that the only situation in which HUD is doing anything effectively to affirmatively further fair housing are situations where there has been litigation," said Florence Wagman Roisman, a law professor at Indiana University. "Then it does as little as possible, as
grudgingly as possible."
Prospects for substantial change appear dim.
Obama administration officials say that if the president is re-elected, they will complete work on the long-delayed rules defining what it means to "affirmatively further fair housing."
At a private fundraising event in Florida in April, Mitt Romney said he would consider closing down HUD if he wins the election."I'm going to take a lot of departments in Washington, and agencies, and combine them," he said. "Things like Housing and Urban Development, which my dad
was head of, that might not be around later."
Have you experienced discrimination under the Fair Housing Act?
Share your story with us.
ProPublica's Kirsten Berg contributed to this story.
NEO-LIBERALS HATE ALL WAR ON POVERTY AND NEW DEAL POLICY AS MUCH AS REPUBLICANS. SO LABOR AND JUSTICE ARE BEING ATTACKED BY NEO-LIBERALS. DO NOT BELIEVE THE TOKEN PROGRESSIVE BONES BEING THROWN.
What to do with public housing and the people they support. Well, logic has it that you can demolish the high-rises with the Federal money and invest in low-income housing within all Enterprise Zones. That is what should be happening. All of those public housing are on property in the city centers that will become valuable as development continues so keeping them public.......a park, public community/recreation centers, etc are what public interest requires. Yet, in Baltimore, all of this public land is going to developers.....again in large parcels to control all of how the community will be developed. MARKET-RATE IS THE THEME!!!
Below you see exactly what they intend to do in Baltimore and Maryland-----what this does is eliminate any future use of that property for the public AND IT KEEPS THE PRIVATE CORPORATION FROM PAYING PROPERTY TAXES ON THIS DEVELOPMENT. In Baltimore, they will even get deferment on all other taxes and they will get tax breaks for remodeling the building. It's like placing public garages under private buildings to have public subsidized private parking. Remember, all of this public housing property will become high-end as development continues saving tons of money in property taxes.
EVEN IF YOU WANT TO BE RID OF LOW-INCOME PUBLIC HOUSING....THINK OF THE PUBLIC LAND INVESTMENT AND WHERE THESE PEOPLE GO----IT ALL CREATES THE ENVIRONMENT OF CRIME AND VIOLENCE AS PEOPLE LOSE JOBS AND HOMES.
New York Public Housing Land To Be Leased For Pricey Apartments
By MEGHAN BARR and JENNIFER PELTZ
03/08/13 03:17 AM ET EST
NEW YORK -- New Yorkers pay dearly for the privilege of living in one of the world's great cities. But would they shell out top dollar for an apartment on the grounds of a public housing project?
That scenario could play out across Manhattan under an unprecedented proposal by the city housing authority to lease out public housing land and allow developers to build market-rate apartment buildings – intended for much wealthier residents – on areas currently occupied by basketball courts, parking lots and outdoor plazas.
City Council Moves to Stall Land Leases at Public Housing
Published: October 10, 2013
The New York City Council and a group of tenants sued
the Bloomberg administration on Thursday over plans
to lease land in public housing developments for the creation of market-rate apartments.
The lawsuit, filed in State Supreme Court in
Manhattan, stems from a long-running controversy over the New York City Housing Authority’s proposal to
raise revenue for repairs and capital projects by allowing private developers to build on the grounds of eight public housing projects in Manhattan.
Housing officials have given developers a Nov. 18
deadline for proposing ideas — so-called expressions of interest — but it was unclear whether they would be able to select construction projects before the change in administration that will follow the November mayoral election.
Lawyers for the plaintiffs say the lawsuit is intended
to forestall any deals with developers before Mayor Michael R. Bloomberg’s term is over. “The city has the ability to designate a developer and tie the hands of the incoming administration,” said Steven Banks, attorney-in-chief of the Legal Aid Society, which is representing the tenants. “The new administration would be without remedy.”
Democrat Bill de Blasio, the leading candidate for
mayor, has not ruled out developing land owned by the housing authority, but he has said he favors building affordable housing, not market-rate units. The public housing system has more than 400,000 residents and $6 billion in unmet capital needs.
The Council objected to being left out of the
decision-making regarding the plan to build on public housing grounds. In their lawsuit, the plaintiffs seek to have the city rescind the request for expressions of interest. They argue that under state law, housing officials have no authority to lease public housing land for high-income residents and that
they must submit their plan to the Council for approval.
“There’s still a need for more low- and middle-income
housing, and that should be the city’s priority,” said Rosie Mendez, who heads the Council’s committee on public housing.
In response to the lawsuit, the housing authority
issued a statement saying that it “has heard significant interest from developers and looks forward to receiving their proposals next month.”
“It’s unfortunate that the City Council is attempting
to block a proposal that would generate significant revenue for the New York City Housing Authority — money that would go directly into developments and repairs for residents,” the statement said.
FEDERAL MONEY YET AGAIN FUNNELED TO THE SAME INVESTMENT FIRMS/DEVELOPERS GETTING TAX BREAKS FOR DEVELOPING IN UNDERSERVED COMMUNITIES AND ALL THE PEOPLE LIVING IN THESE COMMUNITIES WILL BE DISPLACED.
What Rawlings-Blake and O'Malley with City Hall
are doing is privatizing all that is public. Public employee unions are busted and pay is lowered to poverty. This is what happened as MTA is privatized with VEOLA and it is what is being tried with longshoreman unions at the Port of Baltimore. It is all union-busting and impoverishing of labor. So, why are unions backing all of Maryland's neo-liberals every election rather than running labor and justice?
The US Constitution protects equal opportunity and access in housing and education. What Baltimore is doing is illegal because they not only ignore equal access, they try to pass laws that say 'we will accept Federal funding for development but not honor equal access and opportunity laws'. They pretend they can do this and they cannot. It is public malfeasance.
Below is a good analysis of Baltimore's situation. It is too long to copy but check it out. I would just like to emphasize throughout is the disregard of real data and deliberate disregard to Rule of Law and adherence to Federal requirements. This is important in getting the public's wealth back and hopefully helping those displaced with justice. Breaking these laws is not only public malfeasance but fraud on the part of the developers knowingly failing to meet terms of Federal and State contracts.
Volume 20, Number 4
What we think about, and what we’d like you to think
THE ABELL REPORT
Published as a community service by The Abell Foundation
Erroneous reporting leads to a
lack of public concern
“Baltimore Housing currently serves
over 40,000 residents in more than
14,000 housing units.” This statement
appears (as this study is being written) on
the city’s public housing website. HUD
also reports a similar number — 14,446.
But the true numbers of public housing
units being used in Baltimore are far
lower and can be found in the Housing
Authority’s most recent annual plan, as well
as City Hall’s Citistat Reports.
Nevertheless, the Housing Authority and
HUD continued to use these outdated
numbers in 2007. The HUD official
who oversees Baltimore’s housing
authority appeared unaware that as of
spring 2007, Baltimore only had 10,748
available units in its inventory (with
1,123 of them vacant).
The absence of accurate and consistent
reporting and the lack of analysis of
the loss of public housing has served as
a convenience in a political climate
where even a suggestion of building a
small number of public housing units
can cause a neighborhood uproar.
A lack of public
Housing advocates have complained
of a lack of public input in the demolition
plans, despite federal law requiring
a housing authority to “conduct reasonable
outreach activities to encourage
broad public participation” in its annual
public housing plan. At a sparsely
attended April 17, 2007 hearing on the
future of Baltimore’s public housing,
several advocates protested that they
found no public notice of the event, and
questioned why it wasn’t posted on the
Housing officials said sufficient
notice was given when they advertised
in The Baltimore Sun and the Afro-
American in March and at the Enoch
Pratt Free Library. The Baltimore Sun
notice, however, was a tiny, one inch by
three- and three-quarter-inch ad buried
in the classified ads that ran for three
days, a month before the hearing. During
the hearing, no copies of the 100-
page plan were available (though an
electronic copy was on HABC’s website),
and housing officials gave no
overview or public explanation for their
decision to demolish projects. One
advocate accused housing officials of
trying to “circle its wagons” against
public participation and called the plan
“a roadmap for the continued decline of
public housing.” Each of the eight
people testifying was given two minutes to speak. The hearing was over in a half hour.
Equally important for citizens of Baltimore is the
fact that Baltimore HUD is probably the most corrupt of all corrupt agencies in Baltimore and as such all kinds of red flags will go up with these public properties. Keeping this property in city central that will become valuable as
development occurs is the only thing to do in public interest. We could build multi-income housing, parks, public community centers with this public
land. Since Baltimore HUD is corrupt, they will hand it off undeveloped for cheap to a connected investor who will make tons of money on this property when development of this area is finished. See why it is public malfeasance.
The second part to this is the workers who represent a
dying middle-class in Baltimore with the attack of middle-class jobs and leaving Baltimore families desperate and poor. Extended families depend on these strong
jobs and it is this policy of killing Living Wage jobs that give us Baltimore's high crime and violence culture as people turn to drug dealing et al to survive. All for no good reason.
The City of Baltimore loses billions of dollars
to fraud and corruption and rebuilding public justice in the city would fill the city's coffers and allow for a healthy public sector. Handing all that is public to private ownership or public private partnerships is what fuels all the fraud and corruption. We will need to investigate these sales to assure this is not yet another example of public malfeasance. You see, these residents know the history of these promises to the underserved....the Federal money is used but none of the requirements to help the low-income are carried through.
Workers nervous about layoffs as Baltimore Housing Authority sells off buildings Residents say they want protections from private developers in writing
Below you see the other side of what this privatization brings-----more public sector jobs
lost with the prospect of private jobs paying nothing.
The Lakeview Towers
on Druid Park Lake Drive are among the first of 22 housing complexes to be
offered for sale under a plan by the housing authority.
(Kim Hairston, Baltimore Sun / August 10, 2005)
Union officials warned Thursday that as many as 200 maintenance workers and building monitors at Baltimore's public housing properties could lose their jobs under a plan intended to infuse the buildings with private money.
Employees such as maintenance mechanic Lucky Crosby Sr., who has worked for the Housing Authority of Baltimore City for a decade, say they took the jobs with the understanding that the pay was relatively low, but the work was secure.
"By working for the Housing Authority, we joined the credit union so we could buy homes that we have to finance," said Crosby, 46, of Sandtown-Winchester. "We bought cars that we have to finance."
Housing Commissioner Paul T. Graziano acknowledged that some jobs might be lost as 22 of the agency's 28 properties are sold to developers over the next
two years. He said the Housing Authority is keeping some positions vacant and filling others with temporary workers to reduce the potential number of
layoffs. Graziano said the agency is encouraging the developers to hire some of the workers, and to keep them apprised of the latest information as soon as it's
"This is a very large change, a massive change in the way we're doing business, and I understand change does create anxiety," Graziano said. "We're trying to provide whatever assurances we can." The Housing Authority has identified 11 developers to buy the buildings. Several of them declined to comment Thursday.
The federal government is offering tax credits to developers who buy and renovate public housing.
Officials say the effort is intended to improve the lives of low-income Americans. But in the case of the maintenance workers, Anthony Coates said, it's
doing just the opposite.
Coates, president of AFSCME Local 647, said members who lose their jobs could lose their homes.
"We're the working poor," he said. The maintenance workers, who earn between about $15 and $20 an hour under their most recent contract, want the Housing Authority to tell them how many workers face layoffs, Coates said.
He said knowing the scope of the layoffs is especially important for the older maintenance workers on staff, who may find it harder to get new jobs.
Coates accused the agency of stalling contract negotiations. Senior housing
officials rejected the accusation, and said a meeting is scheduled for next week. They said inclement weather forced them to postpone some meetings.
Anthony Scott, executive director of the Housing Authority, said the federal
program has unfolded rapidly. The Housing Authority began preparing its
application to the U.S. Department of Housing and Urban Development over the summer, submitted it in October and found out it had been approved in
"We informed our employees as quickly as we could," Scott said. Graziano said the agency already has a "significant number of vacancies," but declined to say how many.
It's "a moving target," he said.
On top of that, he said, at least 10 percent turnover is expected each year. He said Housing Authority workers would be attractive employees for the
Neo-liberals are working for control of all real estate by a few. The good news is that most of the wealth lost to the middle-class is through fraud and needs to come back. Think of the tens of millions of homes caught in the subprime loan fraud and foreclosed....many families need these homes replaced. So, the middle-class is still the middle-class.....just waiting for justice!
If you notice the list below include the same financial and investment firms that created and profited from the massive subprime mortgage frauds and indeed, they all still owe trillions in total fraud. We can rebuild all public housing by simply recovering the fraud. Yet, the plan was to steal the homes through fraud and then hand all the city center property to those same people and that is what these Enterprise Zone and Public Housing deals do......with taxpayer subsidy as the cherry on top!
THE LOW-INCOME LOSE, THE TAXPAYERS LOSE, AND THE MIDDLE/WORKING CLASS LOSE ALL TO NEO-LIBERALS WORKING FOR WEALTH AND PROFIT.
10 Largest Private Equity Real Estate Firms
Macalaster • February
The PERE 30 (from Private Equity Real Estate Magazine) revealed that the top 30 real estate private equity firms raised $211.9 billion over the past five years, up from $190 billion as calculated by last year’s ranking. Listed are the
top 10 largest real estate private equity firms.
As a note: the top two largest firms raised $25.6 billion and $20.15 billion respectively in dedicated real estate funds between January 2004 and April,
2009. Together the pair raised a fifth of all the direct-investment capital secured by the world’s 30 largest real estate private equity firms.
10. Westbrook Capital Partners
Westbrook has raised and invested $10 billion of equity in over $35 billion of real estate transactions in major markets throughout the world. Westbrook’s investment equity is
committed by a broad base of institutional investors, which includes public and private pension funds, endowments, foundations, and financial institutions.
9. The Carlyle Group
The Carlyle Group is one of the world’s largest private equity firms, with more than $87.9 billion under management with funds across four investment disciplines (buyouts, growth
capital, real estate and leveraged finance). Carlyle has committed more than $3.6 billion of its own capital to its funds.
8. Tishman Speyer
Tishman Speyer has acquired, developed and operated over 325 projects totaling over approximately 116 million square feet and more than 92,000 residential units,
and a property portfolio of US$50.2 billion internationally.
7. LaSalle Investment Management
LaSalle Investment manages approximately $39.9 billion (as at Q3 2009) of private and public property equity investments. Their client base includes public and private
pension funds, insurance companies, governments, endowments and private individuals from across the globe.
6. Lehman Brothers Real Estate Partners
Lehman Brothers Real Estate Partners has raised over $10 billion in capital over the last five years with a total of $44 billion in transactions among 1,150 properties.
5. Beacon Capital Partners
Since its inception in 1998, Beacon Capital Partners has sponsored six investment vehicles representing over
$8.5 billion aggregate equity capital from various endowments, foundations and pension funds. Beacon Capital Partners was established after the predecessor public company, Beacon Properties Corporation (a New York Stock Exchange listed
company), merged with Equity Office Properties Trust in a transaction valued at $4 billion.
4. Colony Capital
Colony Capital is a private, international investment firm based in Los Angeles, California. The company focuses on real estate opportunities around the world either on its own, through funds run by the company, or in joint ventures. The company is run by billionaire Tom Barrack.
3. Goldman Sachs Real Estate Principal Investment Area
The Real Estate Principal Investment Area (REPIA) manages a series of global opportunistic real estate funds, known as the Whitehall Funds, and other niche products. REPIA, through the Whitehall Funds, offers Goldman clients the opportunity to co-invest in real estate and real estate related assets
2. Morgan Stanley Real Estate Investing
Morgan Stanley Real Estate has the longest uninterrupted real estate industry presence of any Wall Street firm. MSREI has raised over $20 billion in capital in the last five years and has completed over $58 billion in transactions.
1. The Blackstone Group
Blackstone’s real estate fee earning assets under management totaled $23.7 billion as of September 30, 2009.
Assets include office, hotel, healthcare, retail and multi-family properties around the world. Blackstone has the world’s leading hotel portfolio, as well as one of the largest portfolios of office buildings in the United States.
Blackstone’s real estate group currently has over $12 billion of equity capital available for investment, the largest pool of capital for real estate investments available today.
For a full list of the top 30 real estate private equity firms with an executive summary click here.
Below you see reverse mortgages as a tool to make sure homeownership does not go beyond this generation for most of the middle/working class. Land ownership is for the gentry you know! Reverse mortgages are not always bad. We had our mother's retirement supplemented by reverse mortgage. The problem these least several years is that people are not having the money for retirement because it was stolen and not because they did not save. These are the people being forced into reverse mortgage now.
THESE HOMES SHOULD NOT BE LOST TO FAMILIES AS FRAUD AND DAMAGES HAVE NOT BEEN RECOVERED TO THE PUBLIC.
Remember as well, Obama's Administration is deliberately allowing a manipulated inflation rate of near zero lower all of the public's COLAs by hundreds of dollars. So seniors and vets owning homes are losing hundreds of dollars in monthly payments because of what is a 'manipulated' inflation rate. Never in the history of public programs has the COLAs not been 3-5% as inflation never has been lower. Please look at my blogs on faulty inflation data if you cannot see that what you are buying at the store is costing much more.
Low-income people are being hit from every direction in fraud and corruption making sure they do not have what they need for retirement and neo-liberals are in office to see this happens. It is not only republicans.....it is neo-liberals running as democrats!
Sun Aug 18, 2013 at 06:45 PM PDT
Reverse mortgages: The final blow killing middle class
byEgberto WilliesFollow forDaily Kos
Many fellow Americans that have worked their entire lives, weathered several
recessions and depressions, put their children through school, helped many in
need, and faithfully paid their mortgages for decades are now being taken advantage of once again. Most have followed all the rules necessary to be considered fiscally responsible, yet because of "legal fraud" by the financial sector and policies effected by purchased politicians, their years in retirement
will be compromised.
The Plutocracy, the one percent has walked away with a large percentage of their 401Ks, their SEPs, and to some extent their financial security. Because of stagnant or falling real wages, much of the working middle class have maxed out on their credit in the attempt to maintain their standard of living. For a Plutocracy that feeds on perpetual growth, from where will it feed now? An old and well-crafted financial instrument known as the reverse mortgage is being marketed on steroids to a baby boomer population.
Before any reader of this article that may have already taken out a reverse mortgage gets upset, please note that it is understood that for many this is the
only option left. That said, every American should be fighting for a system that allows all the ability to build a nest egg that can be transferred to the next generation.
Back in 2010, Sen. Fred Thompson was a spokesman for AAG and was pushing their government back reverse mortgages. I was writing my book when the
commercial came on and I wrote the following in a chapter right then.
While taking a short coffee break from writing this book I saw former Republican Senator Fred Thompson, an AAG spokesman hawking reverse mortgages. He
“Hi folks, I am Fred Thompson. Now like me you probably heard a lot about
reverse mortgages but weren’t quite sure how they worked or whether they would
be the right financial solution for you. Well take my word for it and hundreds
of thousands of other Americans who have used the Government Insured reverse
mortgage as a safe effective financial tool. If you are 62 year or older and own
your own home, give AAG a call and find out how a reverse mortgage can help you.
I am extremely proud to be associated with AAG, a national reverse mortgage
lender that is helping seniors overcome their financial worries and live the
lives they’ve dreamed. Why don’t you find out more by calling AAG today? Find
out how much call you may qualify for today.”
My first thought was how could a former Senator, a senior, a person who likes to tout morality be so callous to entice the elderly to splurge their wealth away. Most Americans have a large portion of their wealth in their homes. Having
some wealth to transfer to one’s offspring helps the next generation to the next financial level.
Unfortunately, yet another financial instrument designed to use the ignorance of the average American citizen’s knowledge of our economic system to donate
their money up the wealth tree to the rich. At the end of the reverse mortgage’s term, the elderly is left without an asset to transfer to their offspring at the time of their death.
Ironically as this piece is being written Fred Thompson is back on with the 2013 version of his "working middle class pilfering" commercial. The most deceptive part of the ad is stating that the owner of the house retains ownership of the home. You cannot own something that you cannot give to
someone free and clear. Even more ironic is that Thompson, a professed small government conservative, is pushing a product that depends on the good faith and
capital of the United States government.
Most Americans amass most of their wealth within their homes. Each generation in a responsible family is better off when the previous generation wills their assets forward. Reverse mortgages are yet another financial instrument that
stunts the growth of the middle class by encouraging home owners to extract the capital out of their homes and use it as a supplement to their retirement or to simply splurge. Inasmuch as most reverse mortgages are federally regulated, their upfront costs are very high. These costs amount to free cash for the bank and mortgage insurance companies, your money transferred to them for a marginal service.
The big dirty secret is that reverse mortgages, like student loans pre-Obama, are nothing but a no-risk gift to the bankers, a wealth transfer engine from the masses to a select few. When the "owner" of the home dies, the government pays
the bank any difference between the amount owed (interest plus principal) less the sale price of the home. If the heirs want to keep the home, they must pay the loan off in full. If the amount owed is more than the value of the home, the
heirs must pay 95 percent of what is owed to the bank with the government paying
the rest. What is the reason for the bank being in the transaction? It is there simply to extract from the government and the homeowner. They have absolutely nothing at risk for the profits they make.
Reverse mortgages mask a systemic problem that affects the American worker, a backward and inhumane retirement system. Every American worker makes a vibrant
economy possible by providing 40, 50 or more years of work, taxes, and spending. It is appalling that a worker is incapable of having Social Security capable of providing a decent living. No one should have to deplete all of their assets to
The trajectory in this country has been that the wealth and income of the very few at the top grows faster than the growth of the economy as a whole. This means that some of that growth is directly coming out of the pockets of the
working middle class in the form of lower wages, extractions from the government (tax dollars, interest payments, etc.), reverse mortgages, higher tuitions as states lower taxes, commercial student loans, etc. This is an unsustainable path
and it is leading to a country where the vast majority of citizens will have no assets. They will be functionally indentured servants. They will be nothing but a commodity, a unit of work and service.
Wake up America. Taking this country back from the Plutocracy will require education, resolve and action. Taking this country back will entail taking back what was stolen through well designed redistribution mechanism that foments a vibrant working middle class.