Pity the banks, blame the homeowners

That’s what Jack Harper, the Republican Representative from Surprise and chair of the House Ways and Means Committee, wants you to do.

Mr. Harper believes the current law, one that allows homeowners who are underwater in their mortgages to walk away from their loans, is hurting banks and should be repealed. He’s quoted as saying, “the banks are taking all the risk and the buyer is taking none, other than what their down payment is.”

Mr. Harper is obviously unfamiliar with the vast majority of Arizonans who, if they walked away from their loans, would lose much more than a down payment. Nor does he understand that many homeowners who hand over their keys do so not to spite the bank but rather because they have no other choice.

Like 40% of Arizonans, I, too, am underwater in my mortgage. And I don’t feel as if I am at fault for the situation.

When I bought my house, I did all the things you’re supposed to do as a responsible homeowner. I put 20% down. I only borrowed what I could afford.

A year later I decided to do some extensive repairs to the “bones” of my home. Many of the improvements were paid for out of pocket, the rest with a home improvement loan.

At the end of my remodel, I had thousands upon thousands of dollars of equity in my home. Today, I’m thousands upon thousands of dollars underwater.

If I were to walk away from my house, I wouldn’t simply lose the 20% I put down (which was a big chunk of money for me), I would lose all of the money I put in to repair and refurbish my home. And that’s not all. I would also lose the opportunity to buy another home or a car or any other large purchase requiring a loan because my credit would be ruined.

But I’m one of the lucky ones because I’m able to pay my mortgage. For the thousands of Arizonans who lost their jobs in the recession, they have no such luck. And if they cannot afford to make monthly mortgage payments, how are they expected to pay for the difference between what they owe and what the house is now worth?

To be clear I’m not suggesting that all homeowners are blameless for the housing crisis. Zero down payments and equity loans used to pay off other debts certainly helped contribute to the mess we are now stuck with.

But again, these were not the types of loans banks were supposed to approve. Buying a home isn’t supposed to be as easy as buying a laptop.

Mr. Harper, however, fails to see how the banks played any role in the housing crisis and instead puts the blame squarely on the shoulders of homeowners. In a recent article by the Arizona Republic, Mr. Harper actually said the banks do not bear any responsibility for the bad loans nor should they have to absorb any of the losses when borrowers default.

That’s a pretty incredulous statement, even for an Arizona legislator.

Perhaps Mr. Harper has been bamboozled by the banks. Maybe he doesn’t know about the bundling of risky loans, the predatory lending, the bankers who encouraged homeowners to borrow much more than they could reasonably afford.

Or perhaps Mr. Harper is unaware of the reasons people are forced to leave their homes, or about the high unemployment rate in this state or the sky-high poverty rates.

Or maybe Mr. Harper didn’t hear about the millions in taxpayer dollars used to bail out commercial banks… bailouts that have everyone from the Tea Party to the Occupy Wall Street protesters up in arms.

Whatever the reason, Mr. Harper has decided to champion the banks while leaving homeowners stuck with the bills, both the bill to bail out the banks and the bill to cover the cost of depreciated houses.

I think it’s time homeowners in this state champion a cause as well… the ending of the careers of legislators more in tune with big banks than constituents.


  1. CAS

    Our politicians are absolute idiots. Buy guns and ammo we are going to need it to take back this country from wall st! I had high hopes for obama but he has been one huge disappointment for underwater homeowners. All he does is bail out banks (over the course of a weekend!), bail out gse’s and leaves us with the bill and underwater. Too bad the only thing obama turns out to be good at is lip service.

    1. Post
      Julie Erfle

      I can’t say I would agree with the guns and ammo comment. Yes, we need to take back the country from special interests, but we have the power to do so without violence. It starts at the ballot box and continues with the constant education of voters. Sadly, I think many of Mr. Harper’s constituents are unaware of many of the positions he has taken in the legislature. All of us need to take a more active role in government if we wish for things to change.

  2. Holly Mabery

    You are right on the money in this post. Unfortunately Rep Harper as a former loan officer thinks that the only way to improve the housing market is to punish homeowners and help the banks out, again.

    1. RonJ

      Not only a banking loan officer, He filed for bankruptcy in 2004, Google Crazy Jack Harper and read the rest of the story. Talk about a conflict of interest.

  3. State Representative Jack Harper


    You are absolutely wrong. The reporter paraphrased what I said and it wasn’t even close to what I actually said. That is why it isn’t in quotes. The media does that often.

    What I did say is that in many cases, the bank is being intimidated by the federal government to make risky loans in low-to-moderate income areas. The feds abuse the Community Reinvestment Act.

    You need to be honest or at least better informed. You need to recognize that when something is attributed to someone, but not in quotes, that is what the reporter wanted to write even if it wasn’t said.

    1. Post
      Julie Erfle

      Thank you for your response, Mr. Harper. I’m glad to know that you do believe the banks bear some of the responsibility. However, the following was in quotes, “the banks are taking all the risk and the buyer is taking none, other than what their down payment is,” and I do not think it is accurate. Homeowners are at risk of losing more than a down payment, but even a down payment can be quite significant. Changing the current law will negatively affect all homeowners underwater, and allow the banks to assume zero responsibility for the role they played in the housing crisis. Taxpayers have already bailed out the banks, we do not need to do so yet again.

  4. Ken Scruggs

    I haven’t seen Rep. Harper’s proposed bill, but assume it is similar to SB 1271, passed and signed, but later included in a Governor’s special session call and repealed. The bill was a “strike everything” amendment to an unrelated bill, missed by the Realtors, and passed. The amendment was sponsored by now Senate President Steve Pierce (who asked the Governor to put it in her call) and, of course, Governor Brewer supported its repeal. This bill has zero chance of passage, and I can’t imagine any responsible bank or industry lobbyist asking Mr. Harper to introduce a deficiency bill in this environment. I’m guessing Jack is all by himself on this one, which is where he increasingly seems to be.

    But let’s not dismiss the deficiency idea out of hand. SB 1271 was not aimed at homeowners like you who live in the home you own, but was intended to target speculators who buy up houses, not to live in, but to resell in a rising market. Speculation in Arizona real estate is an important reason why our real estate bubble was larger (and we fell further) than any other state except Nevada. In my opinion, there is a big difference in a person who buys a home for herself and her kids to live in, and someone wanting to make a quick buck in a hot market. SB 1271 was poorly drafted, and passed without discussion that might have made it better, but the central idea had merit. Too bad it never got a hearing.

    1. Post
      Julie Erfle

      Thanks for the comment, Ken. I agree that speculation is a big reason why the housing crisis hit Arizona harder than other states. Thoughtful reform in that area would probably be welcomed by homeowners.

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