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What do we do about renters' debt?
GreenRiverGatorz
Member Posts: 10,165
https://gothamist.com/news/nyc-tenants-owe-billions-unpaid-rent-what-happens-now
This talks about NYC specially, but it's a microcosm of the larger script that we all saw coming a year ago, and it's continuing to play out all over the country. Locality/state forces lockdown, low income service workers get fucked the hardest, rent doesn't get paid, landlords get behind on their mortgages. We've now pit the low income renters versus what's often a working class landlord. Not to say that mildly well-to-do folks with investment rental property are undeserving of empathy either.
Theoretically there's billions of dollars lined up from Biden's stimulus to pay the overdue rent. But we're not dumb observers of history here, and we know a significant portion of these low income renters won't get access to funds for some varying reasons of shitty bureaucracy. And they'll get evicted. And they'll become homeless. And they'll end up having been fucked by forces way out of their control. Such is the story of the underclass.
Meanwhile the stocks of the lending banks of the aforementioned mortgages have exceeded their pre-pandemic levels. SBC is vesting like nothing happened. They still laugh over $70 martinis about the bonuses they received in 2011 after a well-earned recovery propped up by Uncle Sam. Karmic justice, or any sort of demonstration of morality by the universe would say these fat cats can hold the bag just this once. I don't know what the exact combination of legislative or executive levers the feds could pull is, but I'm sure there's an avenue for them to take that'll ensure renters and landlords both come out whole at the expense of the billion dollar banking titans.
But I don't think that's in the script.
This talks about NYC specially, but it's a microcosm of the larger script that we all saw coming a year ago, and it's continuing to play out all over the country. Locality/state forces lockdown, low income service workers get fucked the hardest, rent doesn't get paid, landlords get behind on their mortgages. We've now pit the low income renters versus what's often a working class landlord. Not to say that mildly well-to-do folks with investment rental property are undeserving of empathy either.
Theoretically there's billions of dollars lined up from Biden's stimulus to pay the overdue rent. But we're not dumb observers of history here, and we know a significant portion of these low income renters won't get access to funds for some varying reasons of shitty bureaucracy. And they'll get evicted. And they'll become homeless. And they'll end up having been fucked by forces way out of their control. Such is the story of the underclass.
Meanwhile the stocks of the lending banks of the aforementioned mortgages have exceeded their pre-pandemic levels. SBC is vesting like nothing happened. They still laugh over $70 martinis about the bonuses they received in 2011 after a well-earned recovery propped up by Uncle Sam. Karmic justice, or any sort of demonstration of morality by the universe would say these fat cats can hold the bag just this once. I don't know what the exact combination of legislative or executive levers the feds could pull is, but I'm sure there's an avenue for them to take that'll ensure renters and landlords both come out whole at the expense of the billion dollar banking titans.
But I don't think that's in the script.
Comments
However it’s dealt with, it won’t be fair, it will hurt, and could potentially have long term ripple effects.
Of course, there will be TONS of lawsuits.
I don’t know, maybe having a debt jubilee for EVERYONE.gif like in biblical times is the only answer.
I doubt that more than 5 cents on the dollar ever gets to who needs it
Wild ass guess but still
I have lost track of how popular mortgage backed securities are. Are banks still bundling them and selling them to wall street who sell them to fixed income investment streams? Is that the next shit balloon that is set pop?
One of the reasons I've not jumped on free money and gone @pawz with a better house is because the cheap mortgage isn't going to take the sting out of overpaying for something by a few hundy if the 2008 housing crash is about to happen. I'm kinda worried about that. The housing shoe has to drop sometime.
The other one who is being paid to got to school (and whose room/board/expenses are being covered under the Creepycoug Direct Installment Plan) got one too. Only no letter telling her she was paid 1/2 what she was actually paid, like her sister got.
When I file their taxes (yeah, I still do that), they are each going to get $1,000 education credit just like that. No warning. Just cash. And I'm going to claim a credit for the one who didn't get the first $1200 last summer (even though there is no tax profile difference between them at all), and I'll bet you they send her that one too.
Yeah, these guys have their shit together alright. It is only because of the piles of cash I've paid in taxes that have gone to even worse nonsense that I sleep just fine about these undeserved little windfalls. Fugit.
Don't even get me started on my Chief Spending Officer's adventures with unemployment after getting laid off her "something to do" job. You would think they would look at household income and say "no". Is it any wonder that these dumbfucks got ripped off by the Nigerians to the tune of, what was it? Several billion? Lolz. It's a shit show.
In the Tug we blame the politicians...on this bored we blame the Federal Reserve.
The back rent money is obviously flushed down the toilet. My assumption is the banks will just pick up where they left off on the mortgages as if the last year didn't happen.
Solved.
Next?
But I'm willing to venture that most of us here, across both political aisles, have seen the movie where those very same banks that loaned the money were previously bailed out to the tune of hundreds of billions of taxpayer dollars. So if the people concur, why not make the banks eat this one? Give the little guys a small, one-time win before we return to our previously scheduled big bank socialism. Jamie Dimon might not even notice.
Take back the property and sell it again
1. I stand to be corrected, but they never get us? into anything we? don't want to get into;
2. While I agree with your stance on the bailout whole heartedly, nobody has ever shown me the way for how we function as a society without them; and
3. Remember that most of us are investors in those banks, so I'm generally not in favor of kicking myself in my own ass.
Re the bailout, in particular, I hear you. I think the banks need to be regulated. My legal practice before going in-house involved A LOT of securitization work, particularly mortgage loans. I had a healthy banking practice. Part of my solution then to the problem wound up actually happening with post-2008 legislation, whereby the Tier 1 capital requirements for chartered banks was set and periodically checked by regulators. The other part I don't think ever made it into the DC sausage making - can't remember or didn't care then because I went in-house shortly after the pop - and that is, make banks hold and service a significant % of the loans they originate for a minimal period of time. No selling off the servicing and no selling off the loan. Yes, I know that will hamper liquidity to some degree. But if the banks can underwrite shit and sell it to someone else who is willing to lie to investors, then we're going to be back to 2008 again.
Executive summary is, while I'm not generally a huge regulation person, I recognize relying on the market to solve bad actor problems has some "it's too late" limitations. Banking is one such area IMO. Nuclear waste is another. Regulate them well so you don't have to bail them out.
But fucking them for the morality of it ... I can't get there.
The government already told at-risk renters to get fucked - you're losing your job because we're mandating closures. So the regulation has already happened one way or another, that cat is out of the bag. So we can close our eyes and say now is when the free market gets to start operating again, or we can stop the charade and admit that we're picking the winners and losers one way or another. I've always had a soft spot for the little guy being the benevolent soul I am, so I know who I'm rooting for.
You stepped in the Box, swung for the fences and struck out. It happens. The sun will come up tomorrow.
Next time, develop your contingency plans around a wider swath of hypothetical issues.
The happy couple buying your house at auction win.