One Valley family after another is losing its house, especially in Hampden County. Between Jan. 1 and Nov. 30, 2007, 427 homes—more than one a day—went into foreclosure. That's twice as many foreclosures as in the first 11 months of 2006. In December and January, over 714 foreclosures were initiated in Hampden County; in Hampshire County, over 80; in Franklin County, over 50.
In Massachusetts as a whole, the picture is even more alarming: foreclosures have increased 187 percent in the first 11 months of 2007 over the comparable period in 2006. Nationally there were an average of 68 percent more foreclosures in November, 2007 than in November, 2006, including dramatic spikes in California, where the percentage increase was over 200, and Florida, where it was over 300.
U.S. Rep. Barney Frank of Massachusetts is not too diffident to point the finger at those he considers partly responsible for the foreclosure tsunami, as he did in a statement of January 13 entitled "Why America Needs A Little Less Laissez-Faire": "In 1994 a Democratic Congress—the last before the Republican takeover marked the arrival of the deregulators—passed the Homeowners Equity Protection Act, giving the Federal Reserve the power to regulate all home mortgage loans. The avatar of deregulation, Alan Greenspan, then Fed chairman, flatly refused to use any of that authority."
Frank has administered a dose of castor oil to the mortgage industry with legislation which, among other things, bans so-called "yield spread premiums," payments to brokers who persuade borrowers to accept higher interest payments than they might be eligible for; holds companies that package investments liable when they buy loans that violate federal lending standards; and, in some cases, lets courts rewrite mortgage terms.
Frank's bill passed the House in November, though a howling pack of lenders claimed it would raise the costs of loans. The industry prefers the White House's corrective plan, which helps investors rather than borrowers, but a counterpart to the Frank legislation is being sponsored in the Senate by Connecticut's Christ Dodd.
