The Foreclosure Document Mess: Cloward, Piven, and Their President Are Surely Pleased

The foreclosure document mess is a red-flag indication that a long-term leftist strategy to take down the nation as we know it is as close to "success" as it has ever been.

The latest, as of when this column was drafted, was this:

Officials in 50 states and the District of Columbia have launched a joint investigation into allegations that mortgage companies mishandled documents and broke laws in foreclosing on hundreds of thousands of homeowners.

Many banks, including Bank of America, have halted all sales of foreclosed properties. The state of Connecticut slapped a 60-day moratorium on all foreclosure sales earlier this month. Title insurers are backing away. A brazen gambit to get banks off the hook for many of their documentation errors, the "Interstate Recognition of Notarizations Act of 2010," zoomed through Congress and reached President Obama's desk last week. The president pocket-vetoed it.

"Mishandled documents"? "Documentation errors"? What's this all about?

The goal of the unsuccessful legislation was to force state courts "to give equal treatment to notarized documents ... that were notarized out of state." Apparently, many overwhelmed mortgage servicers frequently failed to have their foreclosure documents properly notarized in the states where their delinquent borrowers live; in some cases, they weren't notarized at all. In the courts, non-notarized or improperly notarized documents relating to real property usually aren't enforceable. There appears to be little dispute, to paraphrase Jerry Lee Lewis, that there has been a whole lot of wrong-state notarization and outright non-notarization going on.

The key word in the previous paragraph is "overwhelmed." In full context, mortgage servicers' inability to keep their foreclosure documents in order is best seen as a symptom of a system thrown into crisis by decades-long employment of a deliberately disruptive "progressive" tactic applied to housing and home lending. Its roots go back to 1960s radicals Richard Andrew Cloward and Frances Fox Piven.

The pair, in a 1966 Nation magazine column, announced a goal, as described here, to "persuade millions of Americans to get on the relief rolls -- to bankrupt the welfare agencies ... [in order to] provoke a financial crisis that would force Congress to enact a guaranteed annual income for all Americans." At the time, of the roughly 8 million Americans who were receiving public assistance, about 4.5 million were on "welfare," then known as Aid to Families with Dependent Children. Cloward and Piven believed that adding another 8 million to the public assistance rolls would bring about the desired crisis.

The growth in dependency did occur; it just took a while. By 1991, a quarter-century later, the welfare rolls alone had increased by 8.5 million to almost 13 million. The caseload peaked at 14.2 million in 1994. Meanwhile, the food stamp program, starting from virtually unnoticeable levels in the late 1960s, grew into a $20 billion behemoth with 25 million recipients.

Yet the system didn't buckle, partially because the increases didn't occur quickly enough, but primarily because the left's worst enemy, the USA's still largely capitalist economy, expanded during most of that period at a rate that enabled it to absorb these mostly unnecessary costs. The systemic threat ended when the 1996 welfare reform law took effect, after which welfare rolls shrank significantly. Darn.