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The Blacks have been worst hit by the foreclosure crisis. Many accusing fingers point at Community Reinvestment Act (CRA) that bans any form of redlining. The CRA stipulates that financial institutions find out and accordingly respond to the credit requirements of all in the regions within their jurisdiction, including those in the low to middle-income group. Accordingly they mandated to resort to sound lending practices that are safe.

According to Federal Reserve a mere 6% of highly toxic sub-prime loans made to those in the low to middle-income group originated from lenders that came under CRA. The bulk of these loans were contracted by financial institutions not covered by this law.

According to Center for Responsible Lending nearly 8% of the Blacks and Hispanics have seen their homes swallowed by foreclosure; in comparison 4.5% Whites have been affected. As per the estimates of United for a Fair Economy one third of Black families and 40% of the Hispanics are facing the danger from sliding down from the middle-class to the poor category because of the foreclosure triggered economic crisis.

Why was there this concentration of toxic loans and subsequent foreclosures in areas resided by the minorities? In Louisville at least the blame lies with the investors – primarily white speculators. They did not reside in these localities.

Research conducted by John Gilderbloom and Gregory Squires has found that in each of the years of 2007 and 2008 there were 2,000 foreclosure auctions. It measured to 39 foreclosures per census tract resided by Blacks and 20 resided by Whites.

In the Black area the count was 15 units owned by the investors experienced foreclosure while in the White area it was 2 units. Most of the foreclosed houses in Black localities were owned by Whites who resided far away from these places.

In Black areas the culprits were mostly the White investors seeking quick profits. Louisville is not the exception but rather the rule. It stands right in the middle of the chaos. It ranks 103 among 203 metro regions in recent foreclosure ratings.

There are many factors behind why a property is foreclosed upon and why the rates differ from one region to another; race is one of the reasons but not the only one.  The other variables that fuel foreclosure – crime, property values, family earnings, levels of income, vacancies and toxic loan numbers, are the same for all communities, White or Black. But where the investor factor was isolated race did play an important part.

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A drama is being played out in one of the foreclosed capitals of the country – Stockton City. The police union has taken up cudgels against the management. The city, starved of funds has targeted the police force with spending cuts. This has riled the group in an unprecedented way.

The first salvo against the administration has been protests through provocative banners. The second step was the purchasing of a house (the first property the union bought) right next to that of the city manager, Bob Deis. This targeting of the police by the city is happening at a time when crime has gone up in this inland port city. Stockton recorded the highest crime rate pertaining to violence in California in 2010.

The response of the city has been to sue the union regarding the purchase of the house and wants it to be sold. In documents submitted at court Deis stated, “I believe the SPOA purchased the property … for the sole purpose of coercing me in the exercises of my duties as city manager”. He said that one of the union members clipped trees during a party held in his house.

The police force that originally numbered 315 in 2008 has gone down by over 25%. The city compelled the force to accept reductions in wages and benefits while endeavouring to narrow a deficit of over $20 million.

The police union has brought legal charges against the city alleging that it has no right to use the fiscal emergency situation to break contracts. If the ruling goes in favour of the union then the city would have to pay arrear wages touching $10 million. The city is on the verge of bankruptcy and this verdict could well push it over the edge.

The city administrators did not make any comments on a pending legal suit. Meantime the union has rented out the house after indulging in loud noisy repairs to a retired person owning two dogs.

The angst is directed against the city spending on a sports arena, a hotel on the waterfront and other developments during sunny days. At night lights sparkle on a shopping plaza and movie complex. The theatre had sixteen screens but less number of customers hung around the neighbouring eateries.

Cops were often seen handcuffing offenders and for this the shop owner and residents were thankful. But with less numbers to patrol the streets they are apprehensive. Some want to move away.

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The anti-foreclosure Occupy moment has taken a new turn – it has started to occupy foreclosed units. In Seattle the activists occupied a warehouse that had been boarded up and was scheduled to be demolished soon. The protestors announced their plans of setting up a community centre. A party was held to celebrate the opening of the building. The police stepped in and arrested sixteen persons to clear out the occupation.

Sergeant Sean Whit comb speaking on behalf of the police said trespassing on private property is the same as trespassing on the downtown park for which they were evicted. Whit comb said, “It’s no different than when people were trespassing (in the park). We went nights and days, letting people camp in the park. We relied on education and outreach, rather than enforcing the law to the letter”.

In Atlanta the Occupy activists were greatly aggressive in trying to break up auction of foreclosed houses. During the auction proceedings they blew sirens and whistles making communication difficult for those participating in the auction said Tim Franzen, a spokesperson of Occupy Atlanta. He said, “We don’t know how many homes we saved for one more month during the holiday season. It was kind of a Christmas gift to the people”.

At River sidein California, Art de los Santo together with Occupy supporters numbering thirty six, returned with his furniture to his previous house. He broke the lock and re-entered to start living in the housing having three bedrooms and three bathrooms. This was his last step to get JPMorgan Chase given due attention to his repeated applications for loan modification. He is hoping that by protesting the bank will sit up.

After foreclosure the house had remained vacant while Art de los Santo together with his large family comprising of his spouse and four children squeezed into a rented apartment in Orange County. He has also had to rent a storage space. Forty six year old Santo said the house is full of memories. The children used to cycle around the place. The neighbourhood was pleasant.

The spokesperson of JPMorgan Chase Tom Kelly, said he has not yet heard about the particular case of Santo sand therefore could not comment; however he did not fail to mention that it was a case of trespassing.

In New York the Occupy protestors announced plans of allowing a homeless family to set up home in a vacant foreclosed house. In Portlanda woman facing foreclosure, with the help of the protestors, pledged she would never leave her house until forced by the authorities.

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The latest strategy of the activists is “Occupy Foreclosed Homes”; this is gaining momentum. In Brooklyn the neighbours complained that a house on Vermont Street has been lying vacant for many years.

Three years previously Countrywide refused to modify the loan referring to hidden terms and clauses that were nothing but traps. Bank of America then bought the mortgage and started foreclosure action. This neighbourhood in East New York is one of the poorest localities of America. The foreclosure ratio here is 16:1000 – it being the highest in New York City and one of the steepest across the nation.

The rate of foreclosure is faster than the rate banks are selling them. A report by Government Accountability Office noted that there are high rates of homes lying vacant is because of foreclosures and unemployment. The report noted, “Non-seasonal vacant properties have increased 51% nationally from nearly 7 million in 2000 to 10 million in April 2010, with 10 states seeing increases of 70% or more”.

The banks are mostly neglecting the vacant houses they have foreclosed upon. These crumble and cause blight to the neighbourhood. Walking down East New York it is easy to note that every 6th house is boarded up.

A Los Angeles based study noted that from 2008 to 2012 all the house owners will forfeit see the loss of value on their houses to the tune of $78.8 billion because of increasing foreclosures lying vacant pulling down prices of adjacent buildings.

One of the victims is Tasha Glasgow. For the most part of the last ten years she has been sans a home living life in and out of various shelters in New York City. She has an autistic daughter aged eight as well as a son aged five.

While looking after her children she has to find work. Her hopes were raised when she got a voucher from the city administration saying they would allow her shift from the shelter arrangement. But suddenly that vital assistance was withdrawn when the Mayor Michael Bloomberg started off on austerity measures.

The string of events has caught up with OWS movement. It is now matching the homeless with vacant homes. Recently, the organizers shifted Glasgow and her children to a vacant house on Vermont Street: the unit is now owned by Bank of America. It seems the only sensible thing to do since the banks did not nothing with the bailout money they got from the taxpayers kitty.

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The idea of occupying foreclosed houses has caught on. In Redwood City the protestors have been able to postpone the imminent auction of the house of septuagenarian Gloria Takla. On 6th December Takla together with thirty protestors forcibly entered a branch of Chase shouting slogans and waving placards.

For nearly two years Takla has been trying in vain to get her house loan modified. The original granter of the loan was Washington Mutual. Later Bank of America bought it off. Her monthly payment shot up to unmanageable levels from $1,450 to $2,650. She had bought it with her life’s savings of $1,450. Takla is not conversant with English and bemoans she has been victimized by predatory lending.

On 6th December, Takla demanded to talk to somebody “human” in the bank and not just a recorded voice. The employees linked her with agents in the customer service cell while the police of Redwood City tried to keep the situation calm outside the bank.

Ten protestors squatted in the lobby while the police remained silent spectators. Meanwhile, Takla helped by her daughter, spoke to the bank authorities. None was arrested. When the protestors had stormed the bank only minor scuffles had broken out.

Takla talked to Ramel Nalus of Santa Clara Home Ownership Center of Chase. He has probably given her till 14th February to have her loan modified or be foreclosed upon. None of the officials of Chase, including Nalus, responded to calls made by Daily Journal seeking comments.

Takla and the protestors came out of the bank after about an hour, claiming ‘victory’. Takla said, “We were able to postpone the sale date only because the people joining me in the action”.  Among those who had teamed up with Takla were Pastor Sandy Perry, Lili Liu, Christy Wong, Louis Vaughn and Aaron Castle.

Liu had recently been able to get her loan modified with the help of Alliance of Californians for Community Empowerment. She had come from Freemont to join the march. The group had organized the march and the protest before the bank in Redwood City. After ACORN filed bankruptcy, ACCE came into existence.

Vaughn said that the minorities have been targeted by predatory lending; the renters too have suffered. The tenants have been thrown out because the landlords were foreclosed upon. It was a trap for the people – they got sandwiched.

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City officials of Norwich have initiated foreclosure proceedings against many properties that are owned by Janny Lam, an eminent downtown developer. Lam said that she has been trying to sell a few of the 26 properties that she owns. This will help her to come out of the debt.

Lam owes above $300,000 in taxes that are listed under other names. Attorney Aimee Wickless had filed three foreclosure notices against several properties. One of them was the Heritage Discovery Centert hat borders Water and Main streets. There are 4 tenants in the building; one of which is the Norwich Community Development Corp. office.

The mayor had also announced that foreclosure action would be started against Lam’s properties. Wickless also said that this is only the beginning; more are yet to follow in the next few weeks. Lam naturally is very disappointed. She said that she has been singled out this week. At the same time, she regrets having fallen behind on payments. However, she is determined to work with officials and see that her properties are not foreclosed upon.

Lam also said that many properties are up for sale. However, the news about foreclosure notices has spread like wild fire. Now that will definitely hurt her efforts. The owner also said that a prospective buyer has brought down the price after the announcement.

Lam is of the opinion that the foreclosure action against Heritage Discovery Center at 77-85 and 87-91 Main Street show that the owner owes $16,264 on the two buildings. Lam, had, however, made a payment of $10,000 in October. Till 2010, the Heritage Discovery Center was registered as a single building. The taxes were, therefore, much lower.  Lam pointed this out to the assessor Donna Ralston and even brought out the purchase deed.

Ralston pointed out that the houses will be joined together again. This will be done only after a list of properties is made in February 2012. Ralston has also pointed out in the new bill, the addresses will be once more joined.  However, the change may not affect the total bill per se. After all, it is based on building usage and the square area. LAM may have to make an appeal to Board of Assessment Appeals. This board will meet in March 2012.

Also foreclosure filings were made against three vacant spaces located in 92 and 106, School Street amongst others.

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It is a tragic situation- middle class families that have Foreclosed on their properties are enrolling their school-age children for free or subsidized meals. Many families are pleading with school officials to keep it secret. Peggy Lawrence of School Nutrition (director) said, “We’re seeing people who were never eligible before, never had a need”.

One of the victims is Sheila Dawson, who is currently working as a salesperson at one of the Wal-Mart chains. Her husband became unemployed and their income went down by $45,000. She has a daughter who is fifteen. The family has been doing their best to save money– buying clothes at thrift stores, cutting down on movies and now enrolling the child for subsidized lunches at school.

There has also been a sharp rise in the numbers of school children enrolling for this benefit. The main reason has been the downturn in the economy. But there are other factors at play – one being direct certification.

The Congress in 2004 mandated that the 17,000 school districts of the country to match the lists of student enrollment with the records of local food-stamp agencies. Thus, those who get food stamps are directly enrolled for the meal projects. The number of districts doing this has gone up and as well as the number of school-age children from families that qualify for food stamps. It went up from 12 million in 2009-2010 to 14 million in 2010-2011.

Kevin Conway of Mathematica Policy Research (project director) said, “The concern of those of us involved in the direct certification effort is how to help all these districts deal with the exploding caseload of kids eligible for the meals”. Conway co-authored an October study has recently been submitted into Congress for review; the bill deals with direct certification.

In 1946, Congress enacted the National School Lunch Act following World War II. The idea was to reduce surpluses of farm products while giving food support to children going to school. By 1970, this project was giving lunches to 22 million students on any average day – a fifth of these meals were subsidized. Since then, the subsidized section has increased while fully paid lunch numbers have decreased.

Never so many school-age children have become qualified for free lunch meals like they did during the 2010 fiscal year. Currently, the program is costing the country $10.8 million and has offered a total of 32 million lunches.

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The realtor of Prudential America Sam Wagmeister made a study of those people who bought homes in the period between 2004 and 2008. The purpose of the study was to find out who were still living in the same house. And how many of these homes have been foreclosed upon.

The study is not very scientific as the one done by Sales Traq. The selection of communities has been very random, so are ZIP codes. According to the study most homes had been made since1994. These had common features like tile roofs and stucco exteriors.

The homes’ values have now slipped to 50 % of their original values.  It may take five years at least for the home values to go up. Wagmeister said, “The assumption that I have is that, eventually, these homeowners will choose to stop supporting the super banks by making payments on homes that they will probably never realize equity in, and either short-sell the properties or suffer the long-term consequences of foreclosure.”

That means more foreclosures are on the way. Everyone wants to know the answer to this question. Jacksonville based company, Lender Processing Services have come up with the report that 16 % per cent of homeowners in Las Vegas are saddled with mortgage that are delinquent by 30 days.

The situation is indeed very confusing. Many people are lagging behind on home payments. It could be 10% 17% or 27%, and many of them are heading to foreclosure. The situation is bad in regions like Nevada, California, and Arizona.

In Nevada there is a new law that may slow down the foreclosure process. But ultimately it will not stop them. An average of 4,000 notices has been sent in September. Default filings had dropped to 771 last month.

Tim Kelly Kiernan, Re/Max Extreme, said, “Some Realtors feel the world is coming to an end because the foreclosure process will take forever, while others feel it’s just a speed bump and things will be fine in a month or so. I met with my Bank of America contacts and they say it’s also just a speed bump. Who knows? Patience is a virtue, I guess.”

James Saccacio, CEO, RealtyTrac, said the law had indeed caused a drop of 75 % in default notices – the first step in the foreclosure process. In fact, defaults have dipped lowest since the real estate boom in 2006.

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Foreclosures are telling on the health of the nation according to a recent study. Economist Janet Currie of Princeton University has co-authored this study published by National Bureau of Economic Research. She said, “The foreclosure crisis is having a significant impact on mental health as well as on a wide range of preventable conditions that are susceptible to stress”.

The study covered four states of New Jersey, Arizona, California and Florida; these have been the worst hit by the crisis. Florida ranked second in the country while California ranked first. The ZIP codes of each state was analyzed. Comparison was made between visits to the emergency and hospital due to ailments related to stress during the period stretching from 2005 April till 2009 December.

For each clutch of one hundred foreclosed units in a neighbourhood the visits to the emergency rooms and admissions to hospitals increased by 7.2% for causes relating to hypertension and 8.1% for diabetes related trouble. The age of the group surveyed ranged from 20 years to 49 years.

Admissions and visits connected with anxiety went up by 12%. For ‘malaise’ (a broad term used for referring to stomach trouble and nausea) it shot up by 7.5% among the same age group. The numbers of attempts at suicide also went up.

Dr. Luis Allen of Florida Center for Behavioral Health (director) said, “The study confirms what we’re seeing in our clinic. We’re seeing more patients under financial stress whose mood, hypertension and diabetes are worsening. Often these patients feel so overwhelmed, they don’t do what they need to do to take care of their conditions”. Allen explained that when there is an increase in stress hormones then these conditions too worsen.

Allen added that because of the housing crisis families are being compelled to share accommodations and this overcrowding is leading to friction, arguments, increase in consumption of alcohol and abuse leading to anxiety, depression and even suicidal tendencies.

Mark Miller, a resident of Winter Park quipped that it is not necessary to have a scientist explain his condition. Fourteen months previously he had lost his job and nearly saw his house vanish.

To keep his house whose value had dropped by a third he exhausted his savings, retirement account and all else that he owned. He developed symptoms of stuttering, sweating, breathlessness while his eating and sleeping habits changed; he turned more to alcohol and drugs. However he was lucky to get help from counseling centre and the bank reduced his payment.

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George Hank of Madison City (housing inspection division) said foreclosed houses are not damaged structurally because these do not stay empty for long. The lenders are more alert on this issue than they were previously. Hank said that the city had attended to 120 vacant units this current year till November.

In most cases, a company has to be hired in order to trim lawns. It is rare for houses to be locked up or debris to be removed. The expenses incurred by the city are passed on to the property owners.

The biggest harm being done by foreclosures to Madison City is the decline in housing prices. A study covering 13 states involving 628,000 properties found that for each foreclosure nearby, the value of adjacent properties dropped by 1%.

Assessor Mark Hanson of Madison believes it is difficult to calculate the degree to which the housing market has been affected by foreclosures. According to Wisconsin State laws, foreclosed units are excluded when calculating for comparable sales.

Often short sale strategies prevent foreclosures from occurring. Foreclosures often push down property values in these areas. When foreclosures are in clusters, the risk of a decrease in home values is greater. In Madison, the assessed real estate property values fell by 3.5% in 2010 from the previous year. Hanson commented, “What effect foreclosures had, I don’t know”.

Many homeowners are waiting for the market to overcome the current bad spell. However, there are a good number of foreclosures available, claims Dave Gawenda, treasurer of the city. Through tracing the number of sales, he noted that in December 2009 228 houses changed hands in the city; 21 of these belonged to persons who lost their houses to foreclosure while 22 foreclosed houses were bought by individuals.

About 20% of these sales were linked to foreclosures. In general, the banks sold the units to private buyers offering a discount of 25% to 30%. Gawenda commented, “It’s going to be hard to see any appreciable increase in property values until we are no longer seeing this volume of foreclosed houses coming on the market”.

Russ Kashian of the Fiscal and Economic Research Center (University of Wisconsin – Whitewater) opined that there is no chance of foreclosure numbers dropping until there is a marked difference seen in the employment sector.

A study conducted in 2009 indicated that for each 1% spike in unemployment in the 71 counties of Wisconsin, foreclosures were seen to shoot up between 7% to 11%. Three years previously, there was a 3% to 6% hike in foreclosures for every 1% increase in unemployment.

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