Another Wave of Foreclosures?

According to this 12 minute 60 Minutes piece, the current mortgage foreclosure crisis is just the beginning. Over the next 3 years, two types of adjustable rate mortgages (Alt-A and Option B) are due to reset interest rates at a higher level starting this winter. This means that the monthly payments will go up, and its predicted that will produce another massive wave of foreclosures.

Unfortunately this piece represents the holders of these mortgages as people living in several million dollar condos who wantonly entered into agreements because of flattery on the part of the lenders. According to this article in the New York Times unlike the so call subprime mortgages, alt-A loans were typically made to people with good credit but without verifiable income. The ARM crisis is likely to affect different people, people who were able to maintain better credit scores, but just who those people are is not discussed. As a point of reference, an unverifiable income could include independent contractors (like taxiworkers and other workers who have been forced into flexible work arrangements...also including domestic workers, farmworkers, etc).

In Obama's speech on the home mortgage crisis he said:
"So this part of the plan will require both buyers and lenders to step up and do their part. Lenders will need to lower interest rates and share in the costs of reduced monthly payments in order to prevent another wave of foreclosures. Borrowers will be required to make payments on time in return for this opportunity to reduce those payments."
A little later in the speech he says:
"Individuals must take responsibility for their own actions. And all of us must learn to live within our means again."

We must not accept any suggestion that this crisis is the fault of American workers incapable of living within their means. By now we have heard the real story: wages in this country have been stagnant for the past 30 years while the cost of living has been rising. In the recent few years especially, we know the cost of living has been rising precipitously, not for luxury items like condos, but for BASIC items like FOOD, housing, transportation...We must refuse any attempt to blame people for problems that are in fact structural inequalities, not individual failures or character flaws.

Given that help is reportedly arriving when the profile of those affected moves from subprime (poor credit, or low income) to the prime market there is a crucial question to be asked. With millions of homes already past foreclosure, what is being done to help those working people who have already lost their homes due to predatory lending, falling wages and job insecurity? Obama's plan focuses on prevention, but it seems to disregard the fact that so many people have already been dispossessed. Where the subprime crisis has left whole neighborhoods near-empty it is as if the banks provided a sort of Katrina effect, stealing land from working people.