All Articles Tagged "homeownership"
Minority and low-income families were hit the hardest by Hurricane Sandy, found an analysis of the Federal Emergency Management Agency’s (FEMA’s) data. And the research shows that they continue to face the toughest challenges in recovering from the massive storm.
Of the more than 500,000 households who have registered for FEMA assistance, 43 percent have household incomes of less than $30,000 a year. In New York City, 52 percent of renters affected are people of color and in New Jersey – 56 percent, according to a press release.
The study was done by Enterprise Community Partners and NYU Furman Center for Real Estate and Urban Policy.
“These data show that Hurricane Sandy was devastating to many low-income families and that many of them are likely to be still struggling to recover,” said Sherrilyn Ifill, President and Director-Counsel of the NAACP Legal Defense Fund, which has joined together with other civil rights organizations to express concern over the findings. ”Given that low-income families in the NY-NJ region, who are more likely to be people of color, were already facing severe affordable housing shortages, FEMA and other federal aid for Sandy recovery must prioritize aid to these families and help them find housing that they can afford.”
“When a natural disaster strikes these communities, the results are often even more devastating for the residents who have fewer resources and fewer housing options, this comes as a direct result of past housing policy,” notes the Poverty & Race Research Action Council.
According to the data, among FEMA registrants in New York City owners are 62 percent white, 20 percent African-American, seven percent Asian-American, and eight percent Hispanic. Most renters are racial and ethnic minorities: a quarter African-American, 19 percent Hispanic, and eight percent Asian-American.
Many of those affected homeowners are facing the threat of foreclosure. The foreclosures are on hold right now. Since the storm, the Federal Housing Administration and Fannie Mae and Freddie Mac placed moratoria on foreclosure filings and foreclosure sales on damaged homes until April 30, 2013. After this, more people–mostly homeowners of color–may lose their homes.
The American Civil Liberties Union (ACLU) has filed a lawsuit against Morgan Stanley, charging the Wall Street financial institution with targeting black customers with risky loans that they couldn’t afford, then repackaging them and selling them to pensions and other large investors as securities. According to The New York Times, the lawsuit, filed in New York, alleges that the company violated The Fair Housing Act and the Equal Credit Opportunity Act. They are seeking class-action status, saying that 6,000 homeowners in Detroit may also be victims.
The lawsuit is focused on loans made between 2004 and 2007 through the now-bankrupt New Century Financial Corporation. Customers and former employees have stepped forward with allegations. Wells Fargo and Bank of America have paid hundreds of millions of dollars to settle similar claims of discriminatory lending practices. Two years ago, Morgan Stanley paid $102 million to end an investigation into its mortgage lending practices in Massachusetts.
“African-Americans living in the Detroit area were 70 percent more likely to wind up with a subprime loan than were white borrowers with similar financial characteristics, according to an analysis, contained in the lawsuit, of New Century loans made between 2004 and 2006,” the Times reports.
“This is the first case of Main Street holding Wall Street accountable,” said Anthony Romero, executive director of the ACLU during a press conference available on the organization’s website. You can also download a copy of the organization’s report “Justice Foreclosed: How Wall Street’s Appetite for Subprime Mortgages Ended Up Hurting Black and Latino Communities.”
The National Consumer Law Center, which helped file the suit, is hoping this case will lead to others against other banks. “If successful, the lawsuit could inhibit the lucrative process known as securitization that has long lubricated Wall Street profits but was sidelined until recently by the financial crisis,” Reuters reports. Morgan Stanley, of course, denied any culpability and says the case will fail.
This is a very important issue for the black community as so much of black wealth and middle class status is tied to homeownership. Rubbie McCoy, pictured above, said during the press conference announcing the lawsuit that she was trying to keep the situation from her four children even as she fights to hang on to her home. She says the costs and fees for purchasing her home were “excessive.”
“Having a house was a way to keep my kids grounded,” she said, adding that she was told to “fudge” her income on her application.
More and more Americans are looking to refinance their homes to take advantage of lower mortgage rates. Reuters reports on data from the Mortgage Bankers Association, “Applications for home mortgages dipped last week, though demand for refinancing rose as mortgage rates fell to a record low.” Applications for mortgage refinancing rose 81 percent.
But African Americans looking to refinance their homes may find they have more obstacles than white homeowners, states an article in the Charlotte Post. “Lenders consider credit score, timely payments, property values, and employment in mortgage refinancing. They also make it harder for blacks especially to swap out old loans to reduce their interest rate,” it says. The magazine bases these conclusions on a national study, “Paying More for the American Dream V,” and concludes, “Across the board, the new report finds that financial lenders have significantly decreased access to conventional refinance lending in communities of color, which bore the brunt of the subprime mortgage foreclosure crisis.”
Besides refinancing, African Americans start out as homeowners with more hurdles than average. In fact, many minority communities have been prone to foreclosures because of ridiculously high rates and outrageous conditions.
Considering all of this, black homeowners may find themselves prey to scam artists who are looking to benefit from their desperation. As we previously reported, “Through December 31, 2011, the Federal Bureau of Investigation (FBI) had more than 2,500 pending investigations into mortgage fraud around the country. Although the scope of losses for homeowners, legitimate businesses and to the economy caused by mortgage fraud are difficult to calculate, CoreLogic, a research and analytics company, has estimated that losses due to mortgage fraud in 2011 were $7.4 billion.”
If you do want to refinance, SmartMoney gives some tips. Among them:
• Check the payoff. Even with a lower rate, a new mortgagee isn’t always the best move.
• Consider time in the home. It’s not worth the closing costs or taxes if you’re only going to stay in the house for two more years.
• Be mindful of debt reduction. Refinancing doesn’t get rid of debt it just restructures it.
• Don’t go with a loan provider who solicits you. Homeowners should be weary of lenders who come knocking at their door.
SmartMoney also has an online Refinance Calculator to help you figure out your rates and odds. Refinance Calculator.
The Mortgage Professor offers a variety of calculators based on specific refinancing situations.
(NPR) — When Clyde Jackson’s wife took a $6 hourly pay cut several years ago, it was the beginning of his rapid descent from two-time homeowner to renter in an apartment complex in the working-class Washington, D.C., suburb of Greenbelt, Md. Jackson, 51, is an African-American father of three who works for a local government sanitation agency. In December, he lost a three-bedroom brick home to foreclosure. He purchased the house for $245,000 in 2004. He has separated from his wife and now lives in a two-bedroom apartment. Jackson had to downsize so much that his 16-year-old son and 18-year-old daughter — both from a prior relationship — were forced to share a room. ”That was the biggest hurt of all,” Jackson says. “When you build up something, and then all of the sudden you lose it. Yeah, it takes a toll on you.”
(AJC) — Tucked into the 20-plus new requirements for how Georgia handles property assessments sits a lesser-known provision that may prove costly to taxpayers. For the first time, owners of non-homestead properties worth more than $1 million have the right to appeal via a hearing officer. Metro Atlanta counties expect commercial and industrial land owners to use the new appeals process more than wealthy second-home owners. Instead of going before the regular citizens on a Board of Equalization, those property owners will have a shot at a review by a certified appraiser – on the county’s dime. “It doesn’t cost them anything, so they may as well file,” said DeKalb Chief Appraiser Calvin Hicks of the expect influx of appeals. “The great unknown is how many of them will.” In DeKalb alone, there are 1,100 property owners who could ask for a hearing officer.
(Smart Money) — Already plagued by stubbornly low home prices, homeowners soon may be facing another blow: rising insurance premiums. After five years of relatively stable premiums, some of the country’s biggest insurers have raised rates or say they plan to. Premiums vary by state, but last year, State Farm Mutual Automobile Insurance Co. says it increased homeowners rates 7.3% on average and, this year, has raised them in 18 states, including a few by more than 7%. By contrast, it cut rates in just two states. In Florida, upscale insurer PURE Risk Management raised premiums 11% this year. Fireman’s Fund Insurance Co., a subsidiary of Allianz (ALV.XE) SE, says it has started to raise premiums in some areas. For some Pennsylvania homeowners, premiums shot up 33% last year.
(Smart Money) — For generations of Americans,It’s a Wonderful Lifepretty much sums up the benefits of home ownership. George Bailey takes over his father’s savings and loan in Bedford Falls, builds Bailey Park, an idyllic affordable-housing development, and issues mortgages. In the alternative universe where George never lived, there’s no savings and loan or Bailey Park; the townspeople have fallen into debauchery as tenants of the usurious Henry Potter; and quaint Bedford Falls, now renamed Pottersville, is home to sleazy nightclubs and pawnshops. Director Frank Capra’s vision has dominated public policy ever since. Republicans and Democrats have competed to extol home ownership as a sound investment and source of moral virtue, stability and community.
(New York Times) — IN the years since the financial crisis, adjustable-rate mortgages, or ARMs, with their low initial interest rates that changed over time, have been considered riskier than fixed-rate loans and shunned by most buyers. But these days more people are being persuaded to give the loans a try. This time around, lenders are rolling out more conservative ARM products — without the gimmicky extra-low “teaser” rates that adjust every six months, or the “pick-a-pay” and “option” features that allow borrowers to pay less than the monthly interest, only to be hit with a huge bill down the road. Those ARMs were hallmarks of the subprime mortgage boom that fueled the soaring rate of mortgage defaults and home foreclosures nationwide. “An adjustable now is basically a prime product,” said Michael Moskowitz, the president of Equity Now, a lender in New York. “There’s definitely a comeback in their popularity.” Bank of America, for example, had nearly twice as many ARM transactions last month as it did a year ago, according to Terry H. Francisco, a spokesman, and ARMs now account for 10 percent of all its home loans.
(Washington Post) — As the economy emerges from the recession and the national debate turns to limiting the cost of the social safety net, only one in four African Americans and one in six Hispanics reported owning stocks, bonds or mutual funds, a new poll shows.In addition, only 46 percent of blacks and 32 percent of Hispanics said they had an IRA or any other type of individual retirement account, according to a new Washington Post-Kaiser Family Foundation-Harvard University poll. Half of whites said they had stocks, bonds or mutual funds and two in three said they had IRAs, 401(k)s or similar securities.
The relative paucity of investments held by blacks and Hispanics tracks with previous studies, something that experts call an outgrowth of the gaping wealth disparities separating the races. Not only are African Americans and Hispanics less likely than whites to own retirement accounts or investment securities, they also are far less likely to own homes, which remains the largest engine of wealth creation for most Americans.
(Wall Street Journal) — The down payments demanded by banks to buy homes have ballooned since the housing bust, forcing many people to rethink what they can afford and potentially shrinking the pool of eligible buyers. Last week, the Obama administration called for gradually raising down payments to a minimum of 10% on conventional loans, meaning those that can be bought or guaranteed by mortgage giants Fannie Mae and Freddie Mac. And mortgage data show that private lenders are already pushing sharply higher the required down payments, mainly to mitigate their risk as home prices continue to fall.
The median down payment in nine major U.S. cities rose to 22% last year on properties purchased through conventional mortgages, according to an analysis for The Wall Street Journal by real-estate portal Zillow.com. That percentage doubled in three years and represents the highest median down payment since the data were first tracked in 1997. The move to force home buyers to lay out more cash is driven mostly by banks, who have found that larger down payments discourage delinquencies by increasing the buyers’ exposure to loss and reducing the impact of declining prices. Many home buyers placed little, if anything, down during the boom.