Foreclosures and Policing

A recent story on the TV news magazine, 60 Minutes, aired on January 27, 2008, discussed in detail with various industry experts the effects of the current residential real estate collapse and some well thought out theories as to why this may be happening. The most common occurrence of course is folks simply cannot afford the higher payments that came with adjustable mortgages which, in some cases, increased their payments as much as 25% to 50% greater than the original monthly payment. While the obvious financial issues remain, another aspect of the current downturn wasn't as obvious. During the 60 Minutes segment, one couple openly admitted that while they could afford the increased payments, it made no sense to continue to pay the mortgage and they planned to simply walk away from the home and let it go into foreclosure. Their reasoning was the value of their house dropped so much that they would most likely never see their home rise to the same level they purchased it at so why bother making payments on a house that would always be "upside down".

The 60 Minutes reporter asked them straight out, "But you signed a contract, understood the contract and agreed to make the payments. Doesn't it bother you that you're breaking a promise you made?"

The couple responded back very honestly, "No."

So what does this have to do with policing and fighting crime? Everything and nothing, depending on how you look at it. Going back to the 60 Minutes story, one analyst brought up an interesting point reflecting back in history. It wasn't too long ago when the companies that made loans for consumers were your traditional local banks, savings and loans, etc. where the branch manager actually knew the names and faces of their customers. Further, when that local bank made the loan, the loan actually stayed with and was serviced by the same branch. If a customer was late on their monthly payment, they would see the face of the very person who made them their loan every time they went into the branch to conduct banking business. It's kind of like borrowing $20.00 from a co-worker for lunch because you forgot your wallet, every day you see this person and are reminded, either directly or indirectly that you owe them $20.00. In some cases they may not let you forget either.

In today's world economy, the majority of home loans are made by large national companies who, after making the loan, immediately bundle that loan, along with thousands of others and sell them off to large investment firms who in turn sell those loans to other institutions in the form of bonds or investments known as CMOs or Collateralized Mortgage Obligations. After selling off these loans, another company, completely unknown to the home buyer, then "services" the loan by collecting the monthly payments, adjusting the rates, paying the insurance and taxes out of the loan escrow account, etc. In the end, the home loan company that made you your original loan has nothing to do with your account anymore and with that, the local and personal connection is gone, as is their concern for you.

Once again you ask, so what does this have to do with policing?

Referring back to an article I published in 2006, as Sir Robert Peel, the father of modern day policing said, "the people are the police and the police are the people". These words stem from his belief that police are members of the public who are paid to give full-time attention to duties which are incumbent upon every citizen in the interests of community welfare and existence.

Sir Robert Peel believed that by assigning his bobbies, aka police officers, to specific geographic zones he could make them responsible to prevent and suppress crime within the boundaries of their zones. He based this strategy on his belief that the officers would become known to the public, and citizens with information about criminal activity would be more likely to tell a familiar figure than a stranger. In addition, by becoming familiar with the people and places within their beats, the officers would be better able to recognize suspicious persons or criminal activity.