Have you ever gotten mad about something, then realized later you didn’t get mad enough? I had such an experience last week after receiving an email from the Chicago Urban League’s otherwise even-tempered Director of Housing and Foreclosure Pr
Have you ever gotten mad about something, then realized later you didn’t get mad enough? I had such an experience last week after receiving an email from the Chicago Urban League’s otherwise even-tempered Director of Housing and Foreclosure Prevention, Margaret Wooten.
The Chicago Urban League has advocated for government intervention to reverse America’s foreclosure crisis that has disproportionately affected African Americans. Last week, the administration in Washington announced that the government’s $700 billion bailout of Wall Street – – touted by supporters for its so-called aid to homeowners at risk of foreclosure–would no longer be focused on foreclosure prevention. That strategy, officials argued, had done nothing to reverse the economy’s downward slide. Instead, the bailout would emphasize a topdown strategy that gives financial institutions all the breaks.
Wooten was livid and vented her frustrations to me in an email message. By the time I’d finished reading, I could feel my blood boiling, too.
“For the life of me,” Wooten wrote, “I do not understand why the feds keep coming up with all of these bogus plans that supposedly help foreclosure victims.”
The truth is that real help for foreclosure victims is as hard to grab hold of as a goldfish. Wooten has listened to the hopeless stories and outright lies homeowners are being told by some lending institutions. For instance: You have to be behind on your payments before you can qualify for loan modification. That’s simply not true, Wooten said.
Many of those facing the loss of their homes are mystified as to how they got here. Others blame themselves. Many cannot believe that an African American broker would knowingly put them into a bad loan. “I hear that a lot,” Wooten said.
Then came last week’s announcement and insult was added to injury. Two major lenders, Fannie Mae and Freddie Mac, announced limits on how far they would go to modify home loans. Wooten explained that banks are now offering a reduction of interest rates and possibly principal for up to five years, but she said this strategy does not reverse the negative effects of inflated housing appraisals.
As Wooten pointed out, housing appraisals were off the charts a few years ago. Anyone who went into a loan based on false housing values is probably upside down in their mortgage today.
“Appraisers and brokers and, yes, even our larger banks that purchased bad loans from the secondary market should all be held responsible,” Wooten wrote.
But that isn’t the way this crisis is shaking out. In fact, it seems that everybody pays except the lead actors in this tragic play known as the mortgage crisis. That includes the real estate and mortgage brokers who profited from putting people into bad loans; appraisers who inflated housing values; and the banking institutions that purchased the bad loans. If the consumer has to pay the price for choosing a bad loan product, why not the banks when they do it?
My vision is clear–“Thank you, Margaret”–and the way I see it, the federal foreclosure rescue plan was nothing more than a public relations scheme to distract our attention away from the greed and failures of the people and the institutions that betrayed our trust and got paid. Most of the people who refinanced their homes in recent years didn’t use the money to go on a cruise or buy a fast car. They refinanced to pay off medical bills, to buy food or to send their kids to college.
For that, many people now face the potential loss of their homes due to unscrupulous business dealings. Today, more than half of all foreclosure victims are African American.
The hemorrhage of lost homes must stop. This is a civil rights issue that threatens our liberties and our economic futures. We should all be outraged. But more importantly, we should do our due diligence to save our homes. The Urban League is here for you. Call us at 773-285-5800 and set up a meeting with one of our foreclosure prevention counselors.
Cheryle R. Jackson is the president of the Chicago Urban League. She can be reached at president@thechicagourbanleague.org.
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