Remedies to help underwater homeowners not enough, PUSH panel says (Chicago Sun-Times)

By Maudlyne Ihejirika

February 25, 2012

 

Only strident remedies — such as a national moratorium on foreclosures and offering financial aid to “underwater” homeowners — can help stem a crisis sending severe reverberations through poor and minority communities, members of an Operation PUSH panel said Saturday.

 

Those communities will have to demand action through voting power and protest, seeking redress through legislative and legal means, because the recent settlement between the nation’s largest lenders and 49 state attorneys general shows they can’t count on government solutions, said the Rev. Jesse Jackson and other members of the panel.

 

“In the 1960s, we fought against restrictive covenants, then redlining, then for the Community Reinvestment Act. We finally get a rise in black and brown home ownership. Now this,” said Jackson, pointing to research showing the largest segment of “underwater” homes — where the amount owed exceeds the value of the home — are found in poor and minority communities.

 

“Much of this is race-based driven exploitation,” Jackson said. “We must now fight to recover our lost assets stolen from us and not protected by the government. We must connect our votes with our remedy.”

 

About 11 million households nationally are underwater.

 

The government bailout of banks that was supposed to help many of those households stave off foreclosure “have not helped nearly as much as it needs to,” asserted Woodstock Institute Vice President Spencer Cowan.

 

Nor, Cowan said, will the landmark $25 billion settlement reached last month with five top mortgage lenders, which helps only 1 million households.

 

“The $25 billion settlement is only a small aspect and doesn’t address the myriad other problems that led us to this point,” he said. “Nor does it address the two largest holders of mortgages, Fannie Mae and Freddie Mac.”

 

Others noted the crisis has pushed more of the middle-class into poverty.

 

“The only investment most middle-class people have is their home. Now these same people have no credit. If they can’t get a loan, their kids can’t go to college. You have a whole generation of people moving from middle-class to poverty,” said the Rev. Janette Wilson, PUSH Education Director.

 

The panel advocated criminal action against lenders who participated in the predatory and deceptive lending practices, issuing loans destined to fail.

 

“Find the people who robo-signed these loans, and start going after them. The $25 billion settlement doesn’t rule out criminal investigation of the banks for some of these other problems,” said Cowan.

 

Research by his group found in the six-county Chicago metropolitan region, the average underwater homeowner owes $50,000 more than their home’s value.

 

The number of homes hit with foreclosures in the region rose 13.9 percent in January from December — to 13,750 homes, or one in every 276 homes.

 

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