Occupy Our Homes Hits Foreclosure Crisis

[FayeforCure]

November 30, 2011, 2:53 pm
Foreclosure Crisis Isn’t Even Halfway Over, Analysis Finds

By ANN CARRNS


Click to enlarge.

A new analysis suggests that the tide of home foreclosures isn’t going to recede soon.

The report from the Center for Responsible Lending, “Lost Ground, 2011,” finds that at least 2.7 million mortgages loaned from 2004 through 2008, or about 6 percent, have ended in foreclosure and that nearly 4 million more home loans (roughly 8 percent) from the same period remain at serious risk.

Put another way, “The nation is not even halfway through the foreclosure crisis,” says the report, which analyzed 27 million mortgages made over the five years.



While most of those who have lost their homes are white, the report found, African-American and Latino borrowers have been disproportionately affected. Roughly a fourth of all those borrowers have lost their home to foreclosure or are seriously delinquent, compared with just under 12 percent for white borrowers.

And across the country, low- and moderate-income neighborhoods and neighborhoods with high concentrations of minorities have been hit especially hard, the report found.

The Center for Responsible Lending is a nonprofit group that works to eliminate abusive financial practices.

Its report also noted that certain types of loans have much higher rates of completed foreclosures and serious delinquencies. They include loans originated by brokers; hybrid adjustable-rate mortgages, option ARMs, loans with prepayment penalties and loans with high interest rates (subprime). African Americans and Latinos were more likely to receive a high-cost mortgage with risky features, regardless of their credit. For example, among borrowers with good credit (a FICO score of over 660), African-Americans and Latinos received a high-interest-rate loan more than three times as often as white borrowers.

Accompanying the report is an online map showing foreclosures and delinquencies by state.


http://www.responsiblelending.org/mortgage-lending/research-analysis/disparities-in-mortgage-lending-and-foreclosures-maps-data.html

Florida:

Loans seriously delinquent or in Foreclosure, 17.9%

Completed foreclosures, 8.4%

http://bucks.blogs.nytimes.com/2011/11/30/foreclosure-crisis-isnt-even-halfway-over-analysis-finds/

[FayeforCure]

A recent study by the Center for Responsible Lending found that we may be only halfway through the foreclosure crisis. Can you give us a status update on how bad things are right now?

We have this $10 trillion problem. Total outstanding mortgages in the U.S. on houses went from $4 trillion to $10 trillion â€" it almost tripled â€" in the decade before the crisis. Since 2007, mortgage debt has barely dropped.

While home prices have dropped by 30 percent, the amount we owe on our houses has only dropped by 5 percent. So there’s a huge mortgage debt overhang.

There are 6 or 7 million homes where people are behind on their mortgages or in foreclosure. That’s triple to quadruple any kind of levels we’ve seen since the Great Depression.

The foreclosure process is slow, and the process of working out loans one by one in our retail system has been painfully slow. We’re still foreclosing about a million more houses a year. So I think the logic of the Center for Responsible Lending report was right: When you look at all these numbers â€" the number of people who are behind, the rate at which we’re foreclosing on houses, and the rate at which people are being given alternatives to foreclosure, we’re looking at another five to 10 years of this.

Some Occupy protesters are starting an Occupy Our Homes campaign Tuesday on the foreclosures. They’re calling for banks to write down mortgage principal to current home values. Is anyone in Congress or Washington talking about legislative relief?

In Congress, no. President Obama made a campaign promise that he would support amending the bankruptcy code to do exactly what the protesters are calling for: reduce mortgage principal to the value of the house. He immediately backed off that promise when he got to office. The idea of realigning mortgages with home prices has met with stiff, stiff resistance from the banking industry. So far â€" amazingly, given the financial crisis â€" people in Washington and the administration and Congress have continued listening to the complaints of the industry. The fact is, we’re going to do this sooner or later. We can reduce mortgage balances to the value of homes either through the painful process of foreclosing houses, at 100,000 per month for the next 10 years. Or we could have a more systematic program and write the mortgages down for the people who are in the houses now.

The Occupy protesters are talking about eviction defenses where they block sheriff’s deputies from entering a home. Do you think this tactic will make a difference on any level?

It certainly could, if you have enough homeowners saying, “I am here. I can’t afford my mortgage, but I can afford my house.” IF enough people are involved and it’s a broad enough movement, it could bring attention to the fact that we are wastefully evicting and foreclosing and prolonging the crisis. I think it’s absolutely worth doing. The issue of writing down our mortgage debt is a very political issue. Getting the minds of the American people changed is very important. We need to stop seeing it through Rick Santelli’s eyes, and starting seeing it as an issue of helping our neighbors who are in trouble â€" and also helping ourselves by helping anybody who has steady income stay in their house and pay what they can rather than dumping more houses into an oversaturated market.

Turning to the Coakley lawsuit, a lot of people have the general idea that there’s been fraud in the foreclosure market but don’t understand the specifics. Can you explain?

Foreclosure lawyers have been pointing out for a while that banks didn’t have the paperwork to do the foreclosures correctly.

They were foreclosing on people who weren’t behind, they were foreclosing on people who were supposed to be in loan modifications, and they were foreclosing in the name of the wrong company. There were significant false statements being made in court filings to foreclose. There have been settlement negotiations led by Tom Miller, the attorney general of Iowa, along with some of the federal agencies, that’s been going on for over a year now. A couple of the state attorneys general have now said, enough is enough, we’re not getting anywhere.

The idea is that since the industry is foreclosing in ways that are in many cases improper, there needs to be a real foreclosure prevention program and have it funded by the banks. They’ve been talking about a multi-state settlement in the $20-25 billion range. But some of the attorneys general are not persuaded that the banks are really prepared to deal with the problem. The banks have asked for releases from the states that would give them a free pass on anything they did wrong in making the loans in the first case and in foreclosing them.

How big a deal is it that some of the state attorneys general are dissenting from the idea of a comprehensive settlement?

It’s a huge deal. The direction that we’re going to go in solving the foreclosure crisis is tied up to a great extent in the ongoing state-federal regulator negotiations. If the Obama administration had a wholesale mortgage reduction program instead of this retail, one-at-a-time, painfully slow process they have â€" the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP) â€" you could combine it with the negotiation with the banks.

There’s leftover money from TARP.  The foreclosure programs the administration designed were partly funded through the TARP bailout. And the only bailout money that hasn’t been spent is the bailout money for homeowners. You could take the unspent bailout money and combine it with the money from a bank settlement and start to make a dent in our $10 trillion problem.

http://www.salon.com/2011/12/03/foreclosure_battle_a_new_hope/