On Foreclosures: Too Little, But Not Too Late

The Obama administration and states around the country have taken important steps in recent months toward putting American homeownership and financial security back on track. But it’s clear that more ambitious solutions are needed.

After a lull due to negotiations over fraudulent bank practices, foreclosures are expected to come roaring back this year, with hundreds of thousands of Americans newly at risk of losing their homes. As the scourge of foreclosures continues, the economic security of families and the stability of communities remain at risk. The crisis has deepened inequality throughout the country, and continues to hold us back as a nation.

To be effective, America’s solutions to this crisis must match the scale and shape of the problem. They must stem foreclosures while ensuring that the abuses that caused this problem never happen again. They must help families and communities rebuild their economic security while ensuring that successful homeownership remains a firm steppingstone to opportunity for working Americans. They must protect people from discrimination and ensure fair housing and lending for all Americans.

Earlier this month, a group of housing experts that includes The Opportunity Agenda, National Council of La Raza, and the National Fair Housing Alliance released a Compact for Home Opportunity. The Compact offers over a dozen practical policy solutions that, taken together, will reduce foreclosures, help families and communities restore their economic security, and rebuild the American Dream for the 21st century. It is a crucial part of the national Home for Good campaign that is gaining strength around the country.

One of the Compact’s calls is for Fannie Mae and Freddie Mac to reduce the principal on loans they own or back to fair market value. A range of economists, experts, and Administration officials agree that doing so would prevent foreclosures while strengthening our economy, improving overall property values and, in the long term, benefiting Fannie and Freddie’s solvency. Yet, Edward DeMarco, acting head of the federal agency that governs Fannie and Freddie, has inexplicably refused to consider principal reduction as a broad-based solution. His position is particularly indefensible, given that Fannie and Freddie are currently owned by the American people after a massive federal rescue in 2008.

While keeping the pressure on DeMarco is key, the Compact for Home Opportunity offers many other things that federal, state, and local actors, as well as private industry, can do today to drastically improve Americans’ housing prospects. One particularly effective example is supporting qualified counseling to Americans considering homeownership and those facing financial difficulty. Counseling by professionals certified by HUD significantly reduces the likelihood of being snagged by predatory lending practices and of running into financial trouble down the line. It’s an investment that saves homes and heartache, as well as tax dollars.

Principal reduction by Fannie and Freddie, housing counseling, and many other solutions exist that can strengthen home opportunity for everyone in our nation. It’s not too late to turn things around. But the clock is ticking.

On Foreclosures: Too Little, But Not Too Late

The Obama administration and states around the country have taken important steps in recent months toward putting American homeownership and financial security back on track. But it’s clear that more ambitious solutions are needed.

After a lull due to negotiations over fraudulent bank practices, foreclosures are expected to come roaring back this year, with hundreds of thousands of Americans newly at risk of losing their homes. As the scourge of foreclosures continues, the economic security of families and the stability of communities remain at risk. The crisis has deepened inequality throughout the country, and continues to hold us back as a nation.

To be effective, America’s solutions to this crisis must match the scale and shape of the problem. They must stem foreclosures while ensuring that the abuses that caused this problem never happen again. They must help families and communities rebuild their economic security while ensuring that successful homeownership remains a firm steppingstone to opportunity for working Americans. They must protect people from discrimination and ensure fair housing and lending for all Americans.

Earlier this month, a group of housing experts that includes The Opportunity Agenda, National Council of La Raza, and the National Fair Housing Alliance released a Compact for Home Opportunity. The Compact offers over a dozen practical policy solutions that, taken together, will reduce foreclosures, help families and communities restore their economic security, and rebuild the American Dream for the 21st century. It is a crucial part of the national Home for Good campaign that is gaining strength around the country.

One of the Compact’s calls is for Fannie Mae and Freddie Mac to reduce the principal on loans they own or back to fair market value. A range of economists, experts, and Administration officials agree that doing so would prevent foreclosures while strengthening our economy, improving overall property values and, in the long term, benefiting Fannie and Freddie’s solvency. Yet, Edward DeMarco, acting head of the federal agency that governs Fannie and Freddie, has inexplicably refused to consider principal reduction as a broad-based solution. His position is particularly indefensible, given that Fannie and Freddie are currently owned by the American people after a massive federal rescue in 2008.

While keeping the pressure on DeMarco is key, the Compact for Home Opportunity offers many other things that federal, state, and local actors, as well as private industry, can do today to drastically improve Americans’ housing prospects. One particularly effective example is supporting qualified counseling to Americans considering homeownership and those facing financial difficulty. Counseling by professionals certified by HUD significantly reduces the likelihood of being snagged by predatory lending practices and of running into financial trouble down the line. It’s an investment that saves homes and heartache, as well as tax dollars.

Principal reduction by Fannie and Freddie, housing counseling, and many other solutions exist that can strengthen home opportunity for everyone in our nation. It’s not too late to turn things around. But the clock is ticking.

December 6: National Day of Action

Access to an affordable home under fair and sustainable terms is crucial to our economic security and central to the American Dream. But misconduct by banks and lenders, inadequate rules and enforcement, and record unemployment rates are robbing millions of Americans of their homes and security while ravaging whole communities and holding back our national recovery.

Clear solutions exist that can prevent foreclosures and restore communities today while repairing the American Dream into the future. As the Occupy movement focuses on home opportunity, with a National Day of Action to address the foreclosure crisis on December 6, The Opportunity Agenda has launched "Thirteen Things America Can Do to Stop Foreclosures and Fulfill the American Dream," a summary of effective solutions that can save homes, restore neighborhoods, and fulfill the American Dream. This document states in plain language who must do what to ensure home opportunity for all Americans. Click here to learn more.

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December 6: National Day of Action

Access to an affordable home under fair and sustainable terms is crucial to our economic security and central to the American Dream. But misconduct by banks and lenders, inadequate rules and enforcement, and record unemployment rates are robbing millions of Americans of their homes and security while ravaging whole communities and holding back our national recovery.

Clear solutions exist that can prevent foreclosures and restore communities today while repairing the American Dream into the future. As the Occupy movement focuses on home opportunity, with a National Day of Action to address the foreclosure crisis on December 6, The Opportunity Agenda has launched "Thirteen Things America Can Do to Stop Foreclosures and Fulfill the American Dream," a summary of effective solutions that can save homes, restore neighborhoods, and fulfill the American Dream. This document states in plain language who must do what to ensure home opportunity for all Americans. Click here to learn more.

Read also:

 

 

The Occupy Movement Focuses on Foreclosures

As the Occupy movement enters its third month, it is moving into a new phase. Colder weather in the north, combined with aggressive push back from city officials around the country, is requiring the movement to adopt new, innovative approaches that include, but transcend, public presence as protest.

Pundits are wondering aloud whether Occupy is through. But this young movement is just getting started. An exciting piece of evidence to that effect is a new focus on foreclosures.

Alongside its call for job creation, corporate accountability, and relief from crushing student loan debt is a growing demand that Wall Street and Washington make right the disaster that their greed and neglect respectively caused. The movement has deemed December 6th a National Day of Action to Stop and Reverse Foreclosures.

The new “OccupyOurHomes.org” website describes the stakes and the problem well:

“Everyone deserves to have a roof over their head and a place to call home. Millions of Americans have worked hard for years for the opportunity to own their home; for others, it remains a distant goal. For all of us, having a decent place to live for ourselves and our families is the most fundamental part of the American dream, a source of security and pride.

 In 2008, we discovered bankers and speculators had been gambling with our most valuable asset, our homes—betting against us and destroying trillions of dollars of our wealth. Now, because of the foreclosure crisis Wall Street banks created with their lies and greed, millions of Americans have lost their homes, and one in four homeowners are currently underwater on their mortgage.”

These Americans are joining many others, particularly in communities of color, who were victimized by predatory lending and lax enforcement for decades. A new report by the Center for Responsible Lending, for example, shows that African Americans and Latinos were consistently more likely than whites to receive high-risk loans. While an unacceptable 12 percent of White Americans have lost their homes to foreclosure or are delinquent, a staggering one-quarter of Latinos and African-American borrowers are in the same position.

Fortunately, there are a range of solutions that can save homes, restore communities, and rebuild the American Dream of fair and sustainable homeownership. They range from mandatory mediation of foreclosure proceedings, to pre- and post-purchase counseling, to principal reduction and bankruptcy reform. Also important are approaches like own-to-rent programs, community land trusts, and improved fair housing enforcement. And when Congress again takes up the future of Fannie Mae and Freddie Mac, it will be crucial to maintain a government role that keeps homeownership accessible and sustainable for working Americans.

The Occupy movement and its allies have been criticized, unfairly in my view, for failing to articulate solutions. As their attention turns to addressing foreclosures, it is clear what they are working for.

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