So why are we having a crisis that may cost me my home?
Unless you've been living under a rock for the last five years, you already know most of the answer to this question. It's not really the foreclosure problem that the President and Congress are worried about. When the fear was that people who couldn't pay their mortgages would be evicted, the powers what be didn't pay much attention. Neither Republicans nor Democrats have ever been much concerned about that. The problem is that the mortgages that couldn't be paid had been sold to investors all over the world and the investors are in danger of losing lots and lots of money. These folks are the banks, investment houses and very rich folk that politicians respond to.
And the problem spread from the most precarious to people who had far more resources, like your landlord. Because housing prices have fallen rapidly in many parts of the country, homeowners and landlords can't refinance their mortgages and can't sell the building for what they owe on it. In some cases they're being forced to give up the building, while a few are just walking away. And landlords really have an incentive to abandon the property, as it doesn't threaten their homes, just yours.
The broader economic problem is that the credit system has become the substitute for decent wages for two-thirds of the population, as the powers what be sought to end stagflation and increase corporate profits by crashing worker pay. Having spent 30 years on this program, we're now back to the same place, but with a much more precarious population.
I pay my rent. Isn't the landlord supposed to use the money to pay the mortgage?
There's nothing in the law that requires that your landlord use your rent money to pay the mortgage. Landlord groups have been very successful in tying rent payments to the cost of maintaining rental units, but there's no necessary connection. A landlord can use the money to pay the mortgage, buy a Hummer, send his kids to college, or go on a really expensive vacation. Your obligation to pay rent has nothing to do with his obligation to pay the mortgage. It's not fair but, as you'll discover, the real estate interests buy lots of access and don't have to be fair.
And your landlord may have owned the building for a few months, or for many years, and still be facing foreclosure. Some landlords took out loans on their properties to deal with problems any of us could face (job loss, medical expenses, divorce, and the like), but it's more likely that he took out a new loan on your home to pay other expenses (vacation, new car, child's college tuition) or to purchase more property.
Many landlords, seeing their property values increase to astronomical levels, didn't realize that (a) what went up could come down and (b) that they shouldn't buy a building where the rent payments required that they put in a couple thousand dollars a month to pay the mortgage. Some were assuming that they'd be able to sell the building purchased with the proceeds of refinancing your home for a handsome profit, while others believed that rents would rise sufficiently, and sufficiently quickly, to cover their costs. When neither of these things happened, they either decided, or were forced, to let your home go into foreclosure.
