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Whitewater – Hillary’s Own Real Estate Scam

First let’s see what Hillary is now saying about the unfairness of the current mortgage crisis, via yesterday’s press release:


Hillary Calls For Quick Action To Stop The Foreclosure Of The American Dream

1/24/2008

Outlines Visions For Tackling America’s Immediate And Long-Term Economic Challenges

Just days before the State of the Union Address, Hillary Clinton urged the current administration to take immediate action to jumpstart the ailing economy. She outlined the solutions that can be taken now to fix the mortgage crisis and get more money in the pockets of Americans who need it the most. She also provided a vision of how she would lead the country to robust economic growth as President.

“Our economic problems are complex. But there is one thing we know for sure: the problem with our economy is not the American people. Instead, the problem is – in part – the bankrupt ideas of President Bush and the Republicans that rewarded the few and left so many people to fend for themselves in a time of great change,” said Clinton. “I’ve been listening to the voices of the American people as I’ve traveled this country. The voices of people who work hard all day – then on the night shift – but it’s still not enough. They’re simply overwhelmed.”

In her remarks, Clinton criticized the Bush administration for ignoring and neglecting the growing signs that the economy was in trouble. She noted that typical family incomes have dropped nearly $1,000 over the past seven years, while health care premiums nearly doubled and gas prices more than doubled. The economic anxiety of Americans has been compounded by the mortgage crisis and is one of the main drivers of the economic downturn that has had ripple effects across the world. Yet President Bush has presented a stimulus plan with tax breaks for corporations but next to nothing for families at risk of losing their homes.

“It’s time for a President who believes that leading an economic comeback is a fulltime, hands-on job. Who renews our commitment to the middle class and brings business, labor and government together to restore America’s competitiveness in a fast changing world,” said Clinton. “We need a President who has a vision for a twenty-first century economy based on shared prosperity – where we measure our success not by the wealth at the very top – but by how broadly wealth is shared and where hard work is rewarded and the American Dream is within everyone’s reach. We need an economy based on the foundation of investments that allow each of us to live up to our God-given potential.”

Hillary Clinton is the only presidential candidate with a comprehensive plan to end the foreclosure crisis and ensure that it never recurs. Since last March – at a time when the Administration was assuring Americans that the housing problem was “contained” – she has warned about the economic consequences of rising foreclosures and she announced policies to address the problem before it became a crisis. On December 5, 2007, Hillary became the first presidential candidate to say that it was time to consider an economic stimulus plan and on January 11, 2008, she was the first leading Democratic candidate, to offer a fiscal stimulus package, which included $110 billion in measures to jumpstart our economy.

Now let’s take a stroll down memory lane, courtesy of Peter Schweizer’s (oh so aptly titled) book, Do As I Say (Not As I Do), pp 106-109:

Do As I Say (Not As I Do)

… Then consider the Whitewater investment. Forget for a minute about all the scandal associated with the word and the convoluted financing arrangements. Look at it for a minute as a pure investment—the biggest business venture that the Clintons had ever been involved in prior to the presidency.

Back in 1978, Bill Clinton was a popular Arkansas attorney general running for governor. He was campaigning as a reformer, an advocate of “consumer protection” and “rights for the elderly.” Like Hillary, he was concerned about unscrupulous “private corporations.” And as he has so often done in his public career, he made a point of claiming the moral high ground over his opponent.

An old friend and political operative, Jim McDougall, came to Bill and Hillary with an investment idea. He wanted to purchase 230 acres of land situated along the White River in the Ozark Mountains of north Arkansas and subdivide it to sell lots as vacation sites. McDougall promised huge returns, on the order of 20 percent a year. The Clintons thought it sounded like a great plan. Hillary in particular had high hopes for the property. While publicly criticizing Ronald Reagan’s tax cuts, she wrote McDougall in 1981: “If Reaganomics works at all, Whitewater could become the western hemisphere’s Mecca.”

The Clintons put no money into the investment. But Hillary, as an attorney in private practice, played an important role in establishing and running the venture. And what a venture it was meant to be. Whitewater was not designed as a regular real estate company. The plan was to sell lots, mainly to elderly retirees and middle-class families, by advertising in small-town newspapers. (They advertised several times in Mother Earth News.) Ordinarily, of course, when you buy a piece of land and finance the purchase, you receive a copy of the deed. If you start missing payments and can’t work things out with the finance company, they will eventually repossess the property. After paying off fees and debts, you will get back any remaining equity.

But the Clintons and McDougall did things differently. When customers wanted to buy a lot, they signed a simple purchase agreement. But this was no ordinary real estate contract. The small print at the bottom read: “In the event the default continues for 30 days … payments made by the purchaser shall be considered as rent for the use of the premises.” In other words, the buyers did not actually take ownership of their property until the final payment was made. If a buyer missed just one monthly payment, all their previous payments would be classified as rent and they would have no equity in the land at all.

This sort of contract was illegal in many other states, because it was considered exploitative of the poor and uneducated!’ One look at the experience of those who bought into Whitewater and you can see why.

Clyde Soapes was a grain-elevator operator from Texas who heard about the lots in early 1980 and jumped at the chance to invest. He put $3,000 down and began making payments of $244.69 per month. He made thirty-five payments in all—totaling $11,564.15, just short of the $14,000 price for the lot. Then he suddenly fell ill with diabetes and missed a payment, then two. The Clintons informed him that he had lost the land and all of his money. There was no court proceeding or compensation. Months later they resold his property to a couple from Nevada for $16,500. After they too missed a payment, the Clintons resold it yet again.

Soapes and the couple from Nevada were not alone. More than half of the people who bought lots in Whitewater—teachers, farmers, laborers, and retirees—made payments, missed one or two, and then lost their land without getting a dime of their equity back. According to Whitewater records, at least sixteen different buyers paid more than $50,000 and never received a property deed. The Clintons continued this approach up until the 1992 election, when they tried to quietly get out of the investment.

I say “the Clintons” did these things because Hillary was at the center of it all. Monthly payment checks were sent to the Whitewater Development Corporation in care of Hillary Rodham Clinton. In 1982, Hillary herself sold a home to Hillman Logan, who went bankrupt and then died. She took possession of the home and resold it to another buyer for $20,000. No one was compensated (and she didn’t report the sale on her tax return).

Hillary has always very indignantly maintained that she and her husband “did nothing wrong” with regard to Whitewater. After all, they lost money in the deal. But they have always avoided discussions about how the business was structured, and how it exploited the very people they have often professed to help. In the meantime, Sen. Hillary Clinton has gone on to champion the cause of going after banks and other lenders for “predatory mortgage lending practices.” In an amazing feat of moral dexterity, she cosponsored the Predatory Consumer Lending Act, claiming that mortgage fees are too high. (No, the law does not outlaw the type of financing scheme she was involved in.)

Just bear this in mind when you hear Hillary shedding her crocodile tears about predatory lenders and unfair mortgage foreclosures — or even “slumlords.”

This article was posted by Steve on Friday, January 25th, 2008. Comments are currently closed.

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