The Housing Crisis That Austerity Built

The news for Milwaukee's housing situation and the skyrocketing number of foreclosures keeps getting worse and worse:

Mayor Tom Barrett's multipronged effort to address the city's foreclosure crisis also confronts an unfortunate reality.

Just as the city has had moderate success selling some homes it took over in tax foreclosure, hundreds more may end up in city hands by the end of the year.

"The one thing to remember...is that we are three years behind the housing meltdown," said Aaron Szopinski, a former city budget analyst whom Barrett promoted to take over as the city's housing director. Normally, it can take several years between the time a homeowner stops paying taxes and the time when the city takes over the property.

"So what we took in last year (in tax foreclosures) is essentially what went delinquent in January 2011," he said. "We probably have a couple more years of this. We anticipated that when we put our plan together."

Barrett put $11.7 million in the city's 2014 budget for his Strong Neighborhoods Plan. The stated goal is to sell 350 homes in the city's inventory and demolish as many as 300 blighted or unsafe homes.

As of now, the city owns approximately 1,200 homes taken through tax foreclosure, most of them on the north side. At the same time, there are approximately 1,400 properties in bank-owned foreclosures.

The city treasurer's office estimates city lawyers will file foreclosure actions on as many as 1,100 more properties by the end of the year. Not all of those homes will end up in city hands; homeowners sometimes find a way to pay outstanding tax bills so they can keep their homes.

That so-called redemption rate — homeowners who avoid tax foreclosure by making good on their tax bills — has dropped in recent years, according to City Treasurer Spencer Coggs and Deputy City Treasurer Jim Klajbor.

In 2002, the redemption rate on homes headed for tax foreclosure peaked at 76%. In 2013, only 32% of the properties headed to foreclosure avoided it.

While the percentage of homeowners avoiding foreclosure has dropped, the percentage of homes taken over by the city has increased. Last year, almost 68% of the properties headed for tax foreclosure ended up in city hands.

The reason for the sharp increase in foreclosures and abandoned houses, as one could have guessed, austerity:

But the reason homeowners end up missing or not paying their tax bills hasn't changed much since the housing crisis of 2008.

"It is the economy," Klajbor said. "If people don't have the income, they can't pay the bills. Some people have not seen a raise, even if they are employed. That's still affecting things. And even if you are employed, you could be underemployed. Many people have had their hours reduced."

In other words, Scott Walker's agenda is still working! Through Act 10 and tax hikes on the poor, in order to pay off his campaign contributors and cronies, Walker has taken billions of dollars out of the economy.

And lest we forget, Walker has taken $26 million in federal money meant to help with the foreclosure crisis to fill holes in his budget created by his corrupt corporate welfare schemes.  Walker then commandeered  another $3.5 million that was meant to help raze the dilapidated homes.

Things are even worse in Milwaukee with Chris Abele doubling down on the austerity agenda by taking even more money from county workers and cutting more aid than even Walker.

But don't worry, the plutocrats are doing just fine.  They're building a 44-story Bic lighter on the lakefront, moving freeway ramps to make it easier for the 1% and are working hard on finding a way for the people to pay for a new arena even though they can't afford to keep their own homes.

The real kicker is when I point out these misplaced priorities, I get told I'm rooting for the city to fail.  If supporting people is failure, I hope we do fail in epic fashion.

Walker's Surplus

I have repeatedly pointed out that many of the things Scott Walker is doing as governor can be traced back to the misdeeds he did as Milwaukee County Executive.  I tried to cover some of the big things the other day when I looked back at the past ten years as my fellow Milwaukeeans and I fought to keep him from doing even more damage that he's already done.

Today, I was reminded that I missed at least one.  And that was the way he lied about the budget to put the hit on workers.

One of the most glaring examples came in 2009.  Walker started the year by immediately declaring a fiscal emergency, claiming there was a $15 million hole in the budget he had crafted.  And there was one because he had purposely, and illegally, included about that much money in concessions from the union.  Never mind that Walker never sat down with the unions to ask for the concessions.  Instead, he would run to squawking head Charlie Sykes and to the right wing media, crying about his self-imposed deficit and blaming the unions for it.

By midyear, he claimed that the deficit, still at that $15 million mark, required him to take emergency action and he ordered all county workers to take a reduced work week for an indefinite length of time.  The unions showed that they are still absolutely necessary, despite the right wingers' claims that they aren't needed anymore, by filing a grievance with the arbitrator.

The arbitrator heard the case.  During the hearing, it turned out that not only was Walker's attempted indefinite reduced work week illegal, but that there was no deficit, or if there was one, it was so negligible that it did not call for the drastic actions Walker was proposing.

At the end of the year, even though no concessions were given, the county still ended up with a surplus, thanks to the resourcefulness of the County Board.

Now flash forward to today.

Walker, in a desperate gambit to keep his job, Walker suddenly figured out that the state is allegedly on course for a supposed $143 million surplus next year.

Yeah, I was skeptical, but it wasn't until I received this statement from Team Barrett that things clicked into place:

"While Walker and his right wing allies gives themselves high-fives, the people of Wisconsin should know these numbers are built on sand.  Almost half of this amount comes from delaying payments that will ultimately cost taxpayers more in interest.  And these figures ignore the significant shortfall in the state's health programs.  If there is any extra money, Walker needs to explain if he will return any of the $25 million he raided from victims of the home foreclosure crisis, or the $105 million he added to the cost of college through increased fees, or reverse the taxes he raised on seniors and low-income people."

Bingo!

When they were finally able to reach a settlement with five of the nation's largest mortgage lenders, the state was to receive $140 million of it.  Of that money, $31.6 million coming directly to state government, Walker decided he was going to keep $25 million, per this article from Forbes (emphasis mine):

Walker is directing the State of Wisconsin to keep a large chunk of the money from this week’s national settlement with five of the nation’s largest mortgage lenders —money intended to help compensate those who were victims of the illegal mortgage practices that caused so many to lose their homes and to aid in the rebuilding of stricken neighborhoods—so that the state’s budget gap can be closed and Gov. Walker can head into his recall election able to claim that he has balanced the state budget.

Not coincidentally, immediately after this, there has been a drastic drop in home values, some people losing as much as $20,000 to $30,000, turning their mortgages upside down.  Likewise, it's not surprising that foreclosures are spiking.  I'm sure that the realtors who have thrown their support for Walker are very pleased with the results.

Likewise, he's throwing 17,000 people under the ambulance as he shoves them off of Medicaid programs.  And that's about a quarter of the number of people he originally wanted to cut out of receiving services.  Just as this move was also unnecessary, it could have been a lot worse if he didn't have the federal government keeping his sociopathic tendencies from running even more amok.

Add to this the college kids that can't go to school anymore because it's become unaffordable; public sector workers, some of whom are now eligible for financial aid because of his misanthropic Act 10; and the poor, elderly and disabled as he unnecessarily raised their taxes.

None of these things needed to happen. They only did because of the Republican's avarice and their need to feed the avarice of the people that buy their seats for them.

But don't worry, folks. If Walker holds true to his county executive days as much as he has already, you won't be seeing any of that surplus, if there really is one.  That money has already been earmarked for his favorite campaign contributors.

The only surplus that Walker has that he is willing to share with the people of Wisconsin his hypocrisy and dishonesty.

The Walker Budget Is Already Working! Part XV

Thanks to Scott Walker and his Republican legislator buddies, it's not just jobs that we are hemorrhaging, it's also our homes:

After slowing down this year, foreclosure filings spiked in Milwaukee County in August, setting the pace for an overall 34% increase in foreclosure actions in southeastern Wisconsin from July.

The major culprit: A lack of new jobs to cut into the high unemployment rate.

"Foreclosures typically drop as employment picks up," said economist Brian Jacobsen, chief portfolio strategist for Wells Fargo Advantage Funds in Menomonee Falls.

Russell Kashian, an economics professor at the University of Wisconsin-Whitewater, said "people lack the shovel to dig themselves out - they need a job."

"There are only so many family members to help, and so many IRAs and so many 401(k)s you can liquidate, and then you're done," Kashian said.

It won't be long before Walker hits the tipping point in popularity. When enough people are feeling the pain of his malificent budget and misconduct in office, even the Republicans will be ready to sign his recall petitions.