Foreclosure Learning Center

The Hispanic middle class has been decimated by foreclosures. There hardly has been any study of the impact of this crisis on groups. Foreclosures understand neither race nor ethnicity. It has spread its tentacles irrespective of gender, age or class but the effect has varied from one group to another. As per the findings of National Council of La Raza (NCLR) the Latinos has been badly impacted. Over 17% have either lost their homes or will do so. The news is alarming. The middle class among the Hispanics have invested a disproportionate amount of their wealth in house ownership. The problem is not only housing. The Latinos have lost their equity – something they needed for their future. Consequently their retirement for tomorrow and education for today has been affected. One million has been affected – the middle class is on the way to being wiped out. The situation has become further complicated with unemployment. It has made it impossible for them to modify loans. Those without work are facing a long term bleak future. The NCLR has suggested that the Latinos be permitted a longer grace period than others – extending beyond the typical three months. Faced with triple attacks from foreclosures, loss of equity and unemployment the family relationship within the group is under great strain. The children are finding it difficult to continue with regular schooling. The NCLR suggests that housing advocates help those who have been denied loan modification wrongly. The banks should resort to foreclosure as a last recourse. The judges dealing with bankruptcy should try to reduce the principal on the loans taken on primary residences. If foreclosure has been done then the families should be allowed to rent it back with the hope that they can own it once again in future. Among the Latinos and Afro-Americans 17% and 11% respectively are in foreclosure related trouble as per the findings sketched out in “Foreclosures by Race and Ethnicity”. These steps spell relief to those facing foreclosure threats anywhere but for the Hispanics these are vital as they have been worst hit. Photo by Master Isolated Images.

Foreclosures are causing damage to the health and grades of children. Nearly 80,000 kids in Ohio have seen their houses swallowed up by foreclosure while innumerable others are facing this risk as per a recent study. Foreclosures cause the family stress levels to increase. It results in households moving to poorer localities having higher crime rates and weak neighbourhood bonds as per the findings of First Focus of Washington D.C. The affected children do not perform well in school and begin to slide back; health issues too are connected with foreclosures. Bruce Lesley of First Focus (president) said, “It is a huge, traumatic issue for families. The implications for kids’  long-term well-being are really poor”. In Ohio nearly 98,000 children are at risk of being thrown out of their homes as the mortgage dues are over 60 days pending as per this recent report. Across America millions of children have been evicted with their families and millions more are facing the same fate. They double with relations and friends but this leaves an emotional and psychological scar that tells on family bonds. Senior research fellow at Urban Institute Julia Isaacs said, “The financial pressure on parents tends to affect interactions with each other and with their children, and a less supportive parenting style caused by stress can have negative consequences on children’s behaviour and their overall development”. She has authored this report. The children suffer from changing schools and such move causes them to fall behind by as much as a month. The families postpone medical visits and avoid buying essential medicines. The foreclosure is not a single isolated event. It takes sometimes 600 days to run its course said assistant professor Cyleste Collins of Center on Urban Poverty and Community Development (Case Western Reserve University in Cleveland). She explained that many of the households hang on in a kind of limbo state for prolonged number of months. It is agonizing to live with the sword of Damocles hanging over one’s head. The families try their best to keep the families in the same schools while clinging on to their homes at least till the school year comes to an end. But the task is challenging to shield the kids from the harsh reality of survival. First Focus suggests that the government policies should be shaped bearing in mind the plight of the children. Loans should be modified and more projects should be launched so that the households are easily able to avail of affordable homes. Photo by Renjith Krishnan.

William Quintana, a plumber, attempting to avail of a scheme of the federal government to modify his mortgage loan never thought that this move would cause him to end up in bankruptcy and poised to lose his home to foreclosure. Quintana and his wife, residents of Antioch submitted an application to modify their housing loan through HAMP. He had surmised that the process would be straight. He urgently needed the lowering of the mortgage since he became disabled following an accident while working. But the application led to an unexplained maze of payments lost, repeated pressure for unjustified late fees and inordinate delay in processing the application. PNC Mortgage did acknowledge in their letters sent to Quintana that the letter was eligible for modification of loan but even then to save his house from being sold at a foreclosure auction he sought bankruptcy protection. A “No Solicitors” notice was hung before the door to discourage realtors and potential buyers. Quintana said, “They say owning a home is the American dream, but it’s become the American nightmare. I’m not a failure or a loser. I’m a complete victim”. Many housing advocates have shown interest in this case together with Rep. John Garamendi (Democrat/Walnut Grove). Garamendi said that this is indicative of the general malaise in the mortgage world and with HAMP. Although about 950,000 have sought assistance through this programme, critics contend that it is failing to help the victims substantially. Cinna Green of Center for Responsible Lending said, “The banking industry had a machine that could crank out these bad loans, but it doesn't have anything that can fix them”. Dennis Wilhite-Thomas of REACH based in San Ramon said this case is nothing new – one among innumerable ones that she handles where the homeowners are hapless victims facing bullying banks. Quintana is a simple person who knows how to labour with his two hands but this is beyond his understanding. How to handle it? They neither enjoy costly holidays nor foray into expensive improvements on their ordinary home. Initially Quintana failed to qualify for the modification even after being disabled because he had not lagged behind in his monthly payments. On the advice of National City Mortgage, his lender he decided to skip payments for two months. This trick made the road clear for the bank to foreclose while duping him with expectations of modifications. Photo by Jscreationzs.

Foreclosure numbers are at the lowest since the last four years – since 2007 July. News to celebrate? Not necessarily. It is 4% drop from last March and 17% drop from March 2011. A detailed look will show that the real estate market is complicated. It indicates that things will become worse before any long term betterment really takes place. Including in the foreclosure group are default notices, scheduled auctions and bank repossessions. Foreclosure ‘starts’  numbers have gone down but the number of auctions have increased for three running months. There has been a 7% increase in March from last February. In generally the market seems too rosy to be real. The house owners are continuing to lag behind on their housing loans at a fast pace although the banks have slowed down on their repossession operations. There are apprehensions that this is just the lull in the storm – that will soon break out in full fury. Why is it so? The banks are now more conservative while Washington and many of attorneys general of states are crying foul over foreclosure abuses. But now that the settlement for $25 billion has been reached it seems that the foreclosure mills will start churning again. It will lead to more evictions and bank takeovers. Brandon Moore of Realty Trac (CEO) said, “The dam may not burst in the next 30 to 45 days but it will eventually burst, and everyone downstream should be prepared for that to happen – both in terms of new foreclosure activity and new short sale activity”. The worst hit markets will bear the first thrust later in 2012. In Nevada the foreclosure start-ups spiked by 153%; in California default numbers went up by 14% in March from the previous month and in Florida the foreclosure filing ratio is 1:123. The point to note is that property is always something local. Florida is most vulnerable but in Miami the prices went up by 1.2% from the last month. It could be because of an increase in vacation homes – it went up by 7% in 2011 as per National Association of Realtors. According to Trulia prices have been going up in many places in Florida apart from Miami – West Palm Beach as well as Cape Coral - Fort Meyers region. The scenario in California is different. The sale prices for houses are dropping across the state. In Sacramento and Fresno the drop is by 8.3% and 6.8% respectively while in Los Angeles and San Francisco the drop is by 5.4% and 2.9% respectively. Photo by Cooldesign.