The New York Times looks at Philadelphia’s way of dealing with the foreclosure crisis: Forcing homeowners and lenders face to face to try to hash out a modification before the bank can foreclose. This is good reporting that remind us how heavy this stuff is. This third generation owner of a home got a reprieve with the help of the city-provided attorney:
“Thank you so much,” Mr. Hall said softly, his body shaking with pent-up anxiety now tinged with relief. “It’s a lot of weight off of my shoulders.”
What’s stunning about this is how small the amounts in question can be. For Mr. Hall, an out-of-work roofer, the total balance on his note is $63,000, but he got into an adjustable-rate mortgage and his interest rate has skyrocketed, nearly doubling his payments to $950 a month. The Times doesn’t give us the information, which would have been nice, but that would imply an interest rate approaching 20 percent, which is just nuts when you can get a 30-year note for under 5 percent.
You’d think a bank would be smart enough to figure out it’s better to knock this guy’s interest rate back down to where it started so he has a good chance of paying it, rather than for sure losing most of its money through foreclosure costs. Philly’s policy forces them to consider these things, unlike Obama’s:
… in Philadelphia there is one crucial difference: the mortgage companies have no choice but to participate. They have to attend the conferences and negotiate in good faith or they cannot proceed with a sheriff’s sale.
Good story.
— Here’s interesting news that the Obama administration is setting up a task force to investigate the “unscrupulous executives, Ponzi scheme operators and common criminals” that helped unleash the financial crisis. Betcha this will turn out to be a plentiful source of stories.
— Anne Holland, whom Alan Mutter interviews here, reckons Americans shell out $15 billion a year for content. Little of that goes for journalism, of course. But I’m pretty sure World of Warcraft is not a health site, however broadly she defines that category.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.