All Articles Tagged "housing crisis"
The 2006 housing explosion left the country in shambles — with a disproportionate number of Black homeowners unable to pick up the pieces. The Washington Post zooms in on Fairwood, the wealthiest Black county in America, to reveal the crash’s devastation on Black American wealth.
Fairwood, located in Prince George’s County, MD., was vaunted as “The Promise.” The median household income in the neighborhood, which was 73 percent Black, hovered at $170,000. It was, according to the WaPo, one of “the most aspirational black communities in America.” The keyword, though, is was.
Now, Fairwood is just a symbol of how the mortgage crisis bulldozed Black Americans into a rut, according to an analysis conducted by the WaPo:
- 50 percent of the newly constructed homes in Fairwood, during the housing boom, ended up in foreclosure — that’s 723 of 1,441.
- Despite its wealth, Fairwood had the second-highest foreclosure rate in the country.
- Home loans to Blacks in the country have dropped from 14,679 in 2004 to 3,766 in 2013
- 173 homes purchased wound up foreclosed between 2006 and 2008.
- Just seven out of those 173 defaulters received “prime lending” — lower-interest rate mortgages given to creditworthy borrowers.
- Out of 1,441 loans made to Fairwood residents between 2006 and 2007, 416 were subprime — “riskier loans that carry higher fees and interest rates that adjust frequently,” WaPo added.
It was those pesky subprime loans, according to WaPo, that really did Fairwood in. “Borrowers were steered to loans that were more expensive and abusive, when they could have qualified for much better loans,” said Debbie Bocian, a researcher at the Center for Responsible Lending based in North Carolina.
And this isn’t something that only ails Fairwood; analysts have concluded that Black homeowners are more likely to be beguiled into getting subprime loans and pay greater fees — they’re also less likely to receive any mortgage relief. Out of Black Americans who earn more than $200,000, one-third were sold sub-prime loans, “twice the average of the overall population,” WaPo said.
Fairwood, or “The Promise,” has now reneged on its residents as many watch their equity vanish while suffering under hundreds and thousands of dollars of debt. “Houses once valued at $700,000 are going for $350,000,” WaPo noted.
“I would not be able to live here if the bubble had not burst,” said Kris Marsh, an associate professor of sociology at University of Maryland. “I did not make enough money.” Marsh paid just $365,000 for a house in 2009 that sold for $656,000 in 2006.
The crisis has not only made the neighborhood less affluent, due to fewer Blacks receiving loan approval, but it’s also made it less Black: “The percentage of black people in the county in recent years has stopped growing for the first time since the civil rights movement,” WaPo said.
As Black communities seem to bear the brunt of the housing bubble aftermath, Marsh wonders: “Would the same magnitude of predatory lending have taken place in Fairwood if it were a predominantly white middle-class area?”
What do you think?
Just four years ago during the housing crisis, minority homeowners were more likely to have their homes foreclosed than white homeowners. But now minorities are pushing homes sales numbers up in the United States.
In fact, according to a new study, minorities will account for more than one-third of U.S. households by 2025 and make up nearly half of first-time homebuyers. The study by the Joint Center for Housing Studies of Harvard University estimated the number of households currently stands at slightly more than 122 million. It will increase by something in the range of 11.6 million and 13.2 million between 2015 and 2025, reports The Huffington Post. And by 2025, 36 percent of households will be headed by minorities, an increase from about 31.6 percent in 2013.
Almost half will be in the 25-34 age bracket and first-time buyers. But the study warned all of this depends on mortgage availability, which can be difficult for lower-income minorities.
Still, from 1993 and 2013, according to the study, the number of white first-time homebuyers dropped significantly from 86 percent to 77 percent. The Hispanic share, meanwhile, increased from 4 percent to 9 percent, and the “Asian/Other” share jumped from a low 2 percent to 6 percent.
The study also projects a shift into homeownership from millennials, many of whom have chosen to continue to live with their parents despite earning an income. This move by millennials plays into America’s 18-year-low homeownership rate.
“But millennials, more racially diverse than previous generations, will also be behind the diversification of households,” reports NBC. The study says “45% [of millenials] are minorities, compared with 41% of gen-Xers and 28% of baby boomers. On the strength of their numbers alone, millenials will increase the racial and ethnic diversity of US households.”
Foreclosures are still a major problem in the United States. In fact, as Business Insider reports, foreclosure data from RealtyTrac shows that one in every 905 U.S. homes received a foreclosure filing in April. While these numbers have dropped significantly—23 percent from a year ago—there are pockets of America that continue to get hit hard with foreclosures.
Business Insider listed the 14 metro areas with the highest foreclosure rate.
On the list were such cities as Chicago-Naperville-Joliet and Myrtle Beach, Florida. Ohio made a few appearances on the list as well, including Cincinnati, Cleveland, Toledo and Akron. In that last city, one in every 211 homes received a foreclosure filing in April 2013. There are currently 1,481 properties in foreclosure. This represents a 97.99 percent increase from March and an 146.83 percent boost from last year. In Columbia, SC, 1 in every 415 homes received a foreclosure filing in April 2013. Some 789 properties had foreclosure filings. This marked a whopping 210.63 percent increase from March and an 189.01 percent boost from April 2012.
Miami-Fort Lauderdale-Pompano Beach also made the list. In April 1 in every 269 homes received a foreclosure filing. The total properties in the area with foreclose filings were 9,127. Here, there was a drop—17.61 percent–from March but 1.06 percent increase from the previous year.
The crisis is pronounced across the board, with the impact hitting the level of wealth among African Americans particularly hard. The level of homeownership in this country has hit the lowest point since 1995, according to Reuters, to 65.2 percent. Among the banks with the most foreclosures, says The Huffington Post, are SunTrust, PNC, and HSBC. HSBC, for instance, has 16,317 homes in foreclosure with 60 percent of them “seriously under water.” That bank reached a $249 million settlement earlier this year after complaints that the bank wrongly foreclosed on tons of homes.
(Businessweek) — For sale or rent by distressed owner: 248,000 homes. That’s how many residential properties the U.S. government now has in its possession, the result of record numbers of people defaulting on government-backed mortgages. Washington is sitting on nearly a third of the nation’s 800,000 repossessed houses, making the U.S. taxpayer the largest owner of foreclosed properties. With even more homes moving toward default, Fannie Mae (FNMA), Freddie Mac (FMCC), and the Federal Housing Administration are looking for a way to unload them without swamping the already depressed real estate market. Trouble is, they haven’t figured out how to do that. The government admitted as much in August, when Fannie, Freddie, and FHA issued a joint plea to the public for ideas about how to solve the problem. (Give it your best shot: You have until Sept. 15 to submit ideas to email@example.com.) “They’re stuck,” says Karen Shaw Petrou, managing partner of Federal Financial Analytics, a Washington-based consultant that advises banks and other clients on government policy. “They don’t know what to do.”
(Wall Street Journal) — The threat of losing your home is stressful enough to make you ill, it stands to reason. Now two economists have measured just how unhealthy the foreclosure crisis has been in some of the hardest-hit areas of the U.S. New research by Janet Currie of Princeton University and Erdal Tekin of Georgia State University shows a direct correlation between foreclosure rates and the health of residents in Arizona, California, Florida and New Jersey. The economists concluded in a paper published this month by the National Bureau of Economic Research that an increase of 100 foreclosures corresponded to a 7.2% rise in emergency room visits and hospitalizations for hypertension, and an 8.1% increase for diabetes, among people aged 20 to 49. Each rise of 100 foreclosures was also associated with 12% more visits related to anxiety in the same age category. And the same rise in foreclosures was associated with 39% more visits for suicide attempts among the same group, though this still represents a small number of patients, the researchers say.
(Washington Post) — The D.C. Council enacted emergency legislation Tuesday to amend a controversial clause in its foreclosure mediation law that threatened to stall the sale of foreclosed affected homes across the city. The move came just days after The Washington Post reported that two large title insurers, which account for nearly 80 percent of the D.C. market share, stopped insuring sales of foreclosed homes because of concerns over the law. The change will make it easier for buyers of foreclosed homes to obtain loans, because title insurance, which protects mortgage lenders from challenges to their rights to a property, is an essential ingredient in the home-buying process. That, in turn, could help stabilize District prices by speeding the sales of homes in the foreclosure pipeline.
(Businessweek) — You might be tempted to believe that after four years of brutal declines in home prices, the worst of the crisis is over. The Standard & Poor’s/Case-Shiller 20-city index of prices has fallen back to where it was in 2003. Housing prices in Phoenix are at 2000 levels, and Las Vegas is revisiting 1999. Lower prices have made homes more affordable than they’ve been in a generation, and sales have gone up in six of the past nine months. “It’s very unlikely that we will see a significant further decline” in prices, Housing and Urban Development Secretary Shaun Donovan said in a July 3 appearance on CNN (TWX). “The real question is, when will we start to see sustainable increases? Some think it will be as early as the end of this summer or this fall.”
It’s a question many have speculated about before, especially in the wake of the Wisconsin protests that have gone on for months. However, those protests have mostly been limited to Wisconsin and have yet to inspire the masses to take their grievances to the nation’s capital—that is until now, or should I say four months from now. In October, thousands, if not more, are expected to stand outside the White House and demand that our troops be brought home. The protest is expected to last not just for a day, but for as long as it takes until the protestors’ demands regarding the withdrawal of all U.S. troops from Afghanistan, among other things, are met.
According to published reports, a plaza two blocks from the White House is being envisioned as a U.S. version of Tahrir Square where thousands of citizens will engage in ongoing, nonviolent protests. The start of this alleged U.S. uprising would begin on October 6th 2011, which also marks the 10th anniversary of the start of the war in Afghanistan.
A group of prominent activists and grassroots organizations are said to be behind the upcoming protests, and have started a website to solicit at least 50,000 individuals to camp out at the nation’s capital for as long as it takes. So far, the guest list for this event reads like a who’s who of progressive activism, including Cornel West, Bill Moyer and Glen Ford of The Black Agenda Report. Initially, the goal of the protest was to call for the withdrawal of troops from Afghanistan, but the coalition will add more demands that relate to social, economic and environmental justice.
Clearly, this planned movement has been inspired by similar social and political movements that have been happening in the Middle East and North Africa, as well as Europe on a lesser scale. But in America, how likely is the possibility that ordinary people will take up the call for action since these sorts of radical political and social change movements seemed to have died out sometime in the ‘60s. For a movement to have the desired impact, there needs to be a commitment from the average Joe and Jane who are willing to give up a day—or several days of work—and come together for the common good.
The climate is certainly right for an uprising of sorts considering the number of issues that are affecting the general public. Most Americans agree that the troops should be withdrawn from Afghanistan immediately, and six in 10 Americans think that the “humanitarian efforts” in Libya was a bad idea. Moreover, unionized workers are suffering from efforts to strip away collective bargaining and in some cases, are finding their efforts to organize under the scrutiny of the Justice Department. Cities and municipalities around the country have to decide between balancing budgets and keeping schools open. The rich got tax cuts and bailouts while millions of middle class and poor citizens lost their homes. Then of course there is the growing concern over a possible student loan bubble and the stagnation of the job market.
It would appear that whatever hope we had for a brighter future just might be spiraling into a cycle of cynicism and hopelessness. However, certain destructive and divisive policies, such as woman’s reproductive rights, gay marriage and yes, even race, have only seem to act as a wedge preventing people from coming together. This division has enabled our lame duck leadership to manipulate support and keep their powerful positions in tact – even as their constituency continues to suffer.
At some point the American people are going to say enough. They are going to rebel. Now will that day be today, in October or even next October? If Wisconsin is an indication, then we might be heading down that road. The time has certainly come for people to take to the streets and demand that their grievances be addressed. If all goes as planned it may not be an Arab Spring but it could turn into a U.S. Fall.
Charing Ball is the author of the blog People, Places & Things.
(Huffington Post) — With the nation in the grips of a punishing foreclosure crisis, one local program has found success in allowing struggling borrowers to stay in their homes. A Philadelphia initiative started in 2008 requires the two parties in a foreclosure case to meet face-to-face and attempt to reach an agreement. That tactic, it turns out, can work. Of the homeowners who made deals through the program, nearly 85 percent are still in their homes 18 months later, according to an independent analysis released Tuesday. The results offer a glimmer of hope in a bleak national situation. Of the eligible homeowners contending with foreclosure in Philadelphia, 70 percent went through the Residential Mortgage Foreclosure Diversion Program, and a third of those borrowers reached agreements with their mortgage companies to allow them to stay in their homes, according to the study from the Reinvestment Fund, a Philadelphia-based community investment group.
By Charlotte Young
After the housing industry crisis in 2008, there was a nationwide recognition that the credit rules needed to be changed. But the new proposed credit rules are threatening to shut down the home-ownership dreams for potential low-income buyers altogether.
MSNBC reports that the rules are jointly proposed by the Federal Reserve, the Department of Housing and Urban Development, the FDIC, the Federal Housing Finance Authority, the Office of the Controller of the Currency and the Securities and Exchange Commission.
Among many of the proposed regulations for “Qualified Residential Mortgages,” borrowers need a 20 percent down payment and debt cannot exceed more than one-third of the borrower’s income.
A combination of mortgage lenders, consumer advocates, housing industry officials and lawmakers have formed a coalition to oppose the rules.
Critics claim that minority and first time home-buyers will be charged higher prices to borrow money and families in high-cost markers will have to come up with more money to meet the 20 percent down payment requirements. The housing market will face a significantly smaller pool of potential, credit-worthy home buyers just as it’s struggling to recuperate.
Opponents also fear that the new rules would “create a two-tiered mortgage market.” Borrowers with larger savings will pay less as those struggling to save are faced with higher charges.
A JP Morgan report estimates the disadvantage could add up to about 3 percentage points, which could be the difference between an affordable mortgage payment or continuing to pay rent.
While the regulators gave no comment on the proposed rules, they have extended the comment period from Friday to August 1, in efforts “to allow interested persons more time to analyze the issues and prepare their comments.”