Changing the Way We Help Underwater Homeowners | foreclosure

This opinion piece by LeeAnn Hall originally appeared in the Seattle Times.

By LeeAnn Hall and Will Pittz

While the recession officially ended in 2009, there are still over 9 million households across the country with homes worth less than the value of their mortgage. There are still neighborhoods in Seattle where more than 20 percent of homes are underwater.

How many more Seattle families need to lose their homes in the foreclosure crisis that continues year after year? There are solutions, but they need champions, and leadership – both locally and nationally.

Advocates are pushing the Seattle City Council to pursue a local principal reduction program to reset the value of mortgages based on their current market value. That local action can help thousands of homeowners in Seattle, but it must include strong buy-in from the City Council and include mechanisms to encourage big banks to participate. Proposals are outlined in a recent report by Reset Seattle and the Alliance for a Just Society.

Thankfully, members of the City Council are making progress. The council commissioned a short study on the feasibility of principal reduction in Seattle, and council members have publically expressed their intent to pursue a program similar to one in Oregon. This action comes too late for homeowners who have already lost their homes, but it can still help many families throughout the city with underwater mortgages.

While Seattle is making slow progress, other families throughout the country also need champions. Leadership was expected from Mel Watt, the recently appointed director of the Federal Housing Finance Agency (FHFA).

For more than 20 years, Mel Watt served the people of North Carolina as a member of Congress. During that time, he earned a reputation of being on the side of working families in his district, including those who were struggling to make ends meet. Watt advocated for struggling homeowners, co-sponsored mortgage reform, and promoted affordable housing.

However, as director of FHFA, Watt has done an about-face. While he once urged the president to enact principal reduction, he has done nothing to take steps within his power to make that assistance a reality. Such steps would not even require congressional approval.

It’s too late for millions of homeowners across the country, it’s not too late for leaders at the local and national level to step up and take action for those homeowners still struggling.

The foreclosure problem hasn’t gone away; the need for assistance remains critical in Seattle and nationally, especially in urban neighborhoods and among people of color. In many cases, these mortgages were the result of predatory lending practices in the years leading up to the market’s collapse.

By not acting, Watt is making matters worse. Local leaders on the Seattle City Council are considering a great step to help homeowners in Seattle and especially communities of color, as in the International District and Delridge, that still have high rates of underwater mortgages. However, both local and national action must happen soon before more families lose their homes.

It’s time for Seattle to move quickly toward a local principal reduction program, and it is well past time for FHFA Director Watt to remember the work that landed him in the nation’s capital and take action to help homeowners.

LeeAnn Hall is executive director of the Seattle-based Alliance for a Just Society. Will Pittz is executive director of Washington Community Action Network

Tools to Rescue Underwater Homeowners When Outreach Isn’t Enough

Photo by: Alan Pollock, Workers World

Photo by: Alan Pollock, Workers World

As previously discussed in Alliance reports, the housing crisis is over for some, but there are still millions of homeowners across the country struggling to pay off mortgages that are valued at more than the current worth of their homes. When combined with a sluggish labor market forcing many families to make due on less than before the recession, paying more than something is worth is not only dissatisfying, but often impossible.

In communities of color that still have high numbers of underwater mortgages, the effect on individuals overflows into the community, preventing entire neighborhoods from fully recovering from the recession.

During the height of the recession, there was sometimes a temptation to put the blame on borrowers who took out loans that they could not afford or with fine print they ignored, despite the fact that many homeowners were steered into these loans by banks looking to make a quick sale. Struggling homeowners were viewed as not smart with their finances and not reading or understanding the fine print, suggesting that it was the borrowers who needed to change.

As the crisis moved beyond subprime mortgages and property values dropped across the country, more and more “smart” people fell into foreclosure. Finally, the blame shifted appropriately to the banks, but solutions continued to focus on homeowners. Read more

Seeking Creative Ways to Help Underwater Homeowners

Chart by Haas Institute for a Fair and Inclusive Society

Chart by Haas Institute for a Fair and Inclusive Society

In 2007, the nation’s housing bubble burst, leading to the Great Recession of 2008 and a rapid drop in property values across the country. While the recession officially ended in 2009, more than 9 million homeowners across the country still have mortgages on homes that are now worth less than they owe.

These underwater mortgages not only leave homeowners strapped for cash as they struggle with the residual effects of the recession and slow job growth, but can depress the value of nearby properties when those homes are foreclosed on, and hamper communities’ ability to recover from the economic crisis.

In the Alliance’s 2013 Wasted Wealth report, detailed the devastating impacts of the foreclosure crisis in communities of color. As a recent report by the Haas Institute for a Fair and Inclusive Society similarly found, the communities of color have disproportionately high rates of underwater mortgages, compounding the existing wealth gap. Read more

‘Homeowners Bill of Rights’ Helps Fight Foreclosure in Colorado

62664_452204658127800_477689577_nAfter three years of persistent and tireless work by Colorado Progressive Coalition members, the Colorado legislature this month finally passed meaningful protections for homeowners at risk of losing their homes.

For years horror stories have abounded in the press of banks that lost paperwork, homeowners never speaking to the same person twice, promises of a loan modification while simultaneously foreclosing on the borrower. Abuses by the banks added to the immense stress homeowners – and added to the growing number of foreclosures that could have been prevented.

The package of protections passed by the Colorado legislature is known as the “Homeowners Bill of Rights,” and is similar to those passed previously in California, Nevada, and Minnesota. Read more

FHFA, Fannie and Freddie Stage A Last Ditch Effort to Squash Homeowners

The Federal Housing and Finance Authority (FHFA) is taking dramatic actions against homeowners, and cities working to fix the housing crisis.  Just, this morning, Mark Harris, a Desert Storm veteran in Atlanta, who was highlighted in the Alliance’s report Wasted Wealth: How the Wall Street Crash Continues to Stall Economic Recovery and Deepen Racial Inequity in Americawas forcibly evicted from his home at gunpoint this morning.  (Read Mark’s story here)

Read more

The Alliance Hosts Our First National Conference in Baltimore and DC

A week ago, to the day, the Alliance for A Just Society hosted our 2013 Summer Conference with all our national affiliates (#Justice2013). There was no better way to kick it off than taking close to 200 participants into Washington DC and hosting three separate actions on the Hill.

As of this year, we are proud to note the following states affiliated with the Alliance for a Just Society and Main Street Alliance: Washington, Oregon, Idaho, Nevada, New York, Virginia, Michigan, Ohio, Iowa, Maine, Florida, Colorado and Connecticut.

 

State affiliate.Alliance and MainStreet

The morning of July 18 began with The Main Street Alliance hosting a forum on “Too Big To Fail”—addressing the policy conundrum where favors are given to Big Banks at the expense of the common good. Senator Sherrod Brown (D-Ohio), FDIC Vice Chairman Thomas Hoenig, economist Simon Johnson, and a panel of small business owners and policy experts each spoke of the need for renewed attention to megabank limits in order to stabilize the financial system and support the Main Street economy. Read more

Homeowners Protest Dept. of Justice Failure to Prosecute Wall Street Crimes

17 Homeowners Arrested

On Monday, Alliance members from Colorado Progressive Coalition and Washington CAN!  joined over 500 homeowners for a day of action targeting the Department of Justice for its continued failure to prosecute Wall Street banks and their executives for major financial crimes.  In March, U.S. Attorney General Eric Holder told the Senate Judiciary Committee the banks were too big to jail. Read more

Colorado: Judge Rules that Homeowner Has the Right to Fight Impending Foreclosure…in this case.

A win for homeowners in Colorado!  Alliance affiliate Colorado Progressive Coalition has been working for two years to pass “Show Me the Note” legislation, which forces banks to prove they own the deed to a home before they can foreclose on it.  On Monday, U.S. District Judge, William Martinez, ruled that the unsworn testimony of an attorney for a foreclosing party was not enough to foreclose on Lisa Brumfiel, of Colorado. Read more

New Bottom Line’s 16-Month Campaign Takes Giant Step Forward To Removing:

The biggest roadblock to our country’s economic recovery”

 

Re-Posted with permission from The New Bottom Line

Since early 2012, New Bottom Line has driven the campaign to get President Obama to dump Ed DeMarco, acting director of the Federal Housing Finance Agency. Today, the organization celebrated the news that the president finally made a nomination for the permanent director of FHFA.  New Bottom Line also urges Congressman Mel Watt to support principal reduction at Fannie Mae and Freddie Mac in his new position, as well as supporting the vital role they play in ensuring homeownership and rental housing opportunities for all communities. Read more