Stimulus Can't Slow Black Foreclosures
Final Call/New America Media, News Report, Charlene Muhammad Posted: Feb 28, 2010
Editor's Note: This story, which originally appeared in the Final Call, was produced as part of NAM's Stimulus Watch coverage and was funded with a grant from the Open Society Institute.
Equity rich but cash poor black households hardest hit by the crippling subprime lending scheme have benefited less than predatory financial institutions from stimulus dollars meant to help them recover, fair lending advocates and loan modification analysts say.
President Barack Obama created the Making Home Affordable Program as part of his $787 billion stimulus package. The idea was to help about seven to nine million struggling homeowners keep their homes by allowing them to either refinance or modify their mortgages to lower terms.
Greg Akili, field organizer and national training director with the National Association for the Advancement of Colored People (NAACP), Los Angeles, said that’s easier said than done because the bailed out banks are still holding people captive.
“The money should have gone to direct payment to homeowners, just like they did with the banks,” Akili said. “They should have subsidized people who were close to foreclosure or in foreclosure so they could keep their homes right away.”
According to Realty Trac, foreclosures, scheduled auctions, bank repossessions, and default notices were reported for more than 315,000 homes in January 2010 alone. By contrast, very few struggling homeowners have received help.
“Supposedly the help is there but the problem is it’s in the pipeline, and the pipeline is a funnel, so the closer it gets to the bottom, the more it gets slower and slower,” Akili said.
According to ProPublica, an independent, non-profit news agency, Bank of America, JPMorgan Chase, CitiMortgage and Wells Fargo together account for more than 60 percent of the 3.4 million mortgages eligible for the Making Home Affordable program, yet they have only converted a small percentage for permanent modifications since the trials began three or more months ago.
“It’s not like … these organizations are being forced to undo these bad loans,” reduce interest rates, or lower loan amounts,” said Jeffrey May, principal with International Development and Planning, a New Orleans-based minority-owned planning and consulting firm. “Participation by the banks is voluntary.”
May said that like many of Obama’s initiatives, the foreclosure prevention program may have been his idea, but he had no control over the development, crafting, or execution of it. Beyond compromises made in Congress, he said, issues have also arisen in the agencies that oversee the programs. May predicts that at some point, there will be mass evictions of people whose homes have been sold out from under them.
Sharon Black, co-coordinator of the National Network to Stop Foreclosures & Evictions, said the number of clients her organization has helped since the foreclosure crisis hit has tripled. She is bothered that the federal government lacks incentives for big banks to reverse their bad practices. For instance, she argued, if banks foreclose on homes, Freddie Mae and Freddie Mac bail them out and take the loss for the full amounts.
“It’s a form of theft, like $1.9 trillion, that has been stolen from devaluing people’s property, particularly in the African-American community, which relied on their homes as wealth. There’s gotta be a change in mindset. That’s the people’s money. That money should belong to the people,” Black said.
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User Comments
Josy Hilaire on Mar 01, 2010 at 00:09:25 said:
PAID Countrywide/BOA $130,000.00 on a $235,000.00 home. My deceased mother, and I sold properties to come up with the money. She became very sick shortly after, and had to be placed in a nursing home. She died a few months ago, and now the bank wants me out. The house is now worth maybe $130,000.00, and I have an interest only $800/month mortgage at 8%. I have been negotiating with Countrywide since October 2008 a month before mom went to the home, and was put through hell. I have been trying to get a modification from BOA since April 2009 with ACORN's assistance , and have submitted the same documents a dozen times. I have to mail the same documents to the bank, and then to the lawyer. BOA hired a law firm in Tampa (Shapiro), and I have been bombarded with papers. I have received piles of documents by regular mail, certified mail, Fed Ex, and process servers. I have zero money, bad credit, and no place to go. I just found a new roommate after almost a year looking for one. I lost the previous two, and BOA scared them away. They were there shortly, and were afraid to be homeless. They were present when the bank served me with foreclosure papers, and decided not to stay. I have a 3 bedrooms, and 2 baths so I need one more roommate. I cannot even afford to rent an apartment on my $300/week income, and nobody would rent to me due my negative credit report. You can go to jail for a very long time if you steal a pack of cigarettes, but you can take $130,000.00 from poor people without any consequences. I intended to sell my condo to pay the balance of the mortgage, but lost it to GMAC/DITECH. It is an another long, and sad story. GMAC, and DITEC decided to foreclose on my 2BR/2BTs condo over $800 in late payment on a HEL. I ended up paying them more than I borrowed including their lawyer's fee, and I spent years paying them $237.00 a month. I intended to sell the place, and pay off the mortgage but Ditech started to foreclose after I missed four months. I was able to sell it, and pay off the loan. I did not make any money to pay on my new loan like I planned to do, and made zero profit. What am I suppose to do? Let's not even talk about the property taxes in Orlando. I have been fighting the tax collector office for three years, and I still cannot get the portability that my mother was entitled to after she lived in her previous property for ten years . The tax collector office evaluated my home for more than it is really worth, and brand new homes the same size in the area costs $100,000.00. It is an extremely stressful situation, and I have not been able to mourn my mother due to BOA. I did not even put her in the ground when the foreclosure process started, and papers are still coming from BOA's powerful attorneys. I cannot afford to fight back, and at 52 face the real possibility of being homeless. They intend to kick me out, and will not give me a modification. I am going to send the same set of papers again this week including my budget, because they need it to throw me in the streets.
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