Woodstock Developments

A monthly update on new research, analysis, and advocacy from Woodstock Institute

June 28, 2011


From the President: Growing Racial Wealth Gap Adds to Concerns about High Down Payment Proposed in QRM Rule

Dory Rand When it takes a long time to create a problem, it often takes even longer to fix it. In Black Wealth/White Wealth: A New Perspective on Racial Inequality, Melvin L. Oliver and Thomas M. Shapiro illustrated how various American tax, property and financial policies and practices precluded generations of African Americans from building wealth and created intergenerational poverty, the effects of which continue to reverberate today. The gains that some African Americans and other people of color made in wealth creation through home ownership, small business development and educational attainment during the late 1990s and early 2000s were all but wiped out by ongoing the financial and foreclosure crisis. If left unaddressed, the racial wealth gap will continue to grow.


Related: What a Qualified Residential Mortgage is and how it could affect access to credit for communities of color

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What’s next for housing finance? Key ideas from five of the nation’s top thinkers

Sameera Fazili of the U.S. Department of the Treasury explains the Administration's proposals for the housing finance system

The future of the housing finance system is on everyone’s minds. It’s clear that any changes to the system could have enormous impact on the ability of people of color and low-wealth individuals to sustainably purchase a home and build wealth.

With that concern in mind, Woodstock Institute convened a panel of five of the nation’s top housing finance thinkers from the U.S. Department of the Treasury, National Community Reinvestment Coalition, CitiMortgage, Community Investment Corporation, and Oak Park Regional Housing Center to discuss proposals with a group of more than one hundred housing stakeholders on May 12, 2011 at the Federal Reserve Bank of Chicago (see photos). Woodstock Institute compiled a white paper summarizing key ideas and proposals that arose from the event.


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Treasury penalizes servicers not performing up to standards

The latest report on the Obama Administration’s foreclosure prevention program includes the news that Treasury has, for the first time, taken punitive action against servicers who exhibit poor performance on the Home Affordable Modification Program. HAMP has been beset by difficulties, most notably that the 608,615 permanent modifications active today fall far short of the 3-4 million homeowners that Treasury aimed to reach. Consumer advocates have called for Treasury to take action against servicers who lose borrowers’ documents, give them conflicting or counterproductive advice, and erroneously reject borrowers from the program. We are pleased to see that Treasury is withholding incentive payments from three servicers in need of substantial improvement: Bank of America, Chase, and Wells Fargo.


HAMP servicer assessment shows widespread errors, potentially eligible homeowners being denied

Bank of America, Chase, and Wells Fargo had their incentive payments for successful permanent modifications and short sales suspended for one quarter—and possibly longer, if they don’t shape up. We know that homeowners are facing difficulties working with many more servicers than only those three, however. How are the rest of them doing according to HAMP’s auditors?


Related: More trouble brewing with HAMP

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New USDA regulation could help low-income families save

A new regulation from the USDA could help families get through hard times without giving up hope for a better future. The Supplemental Nutrition Assistance Program (SNAP), once known as the food stamp program, provides assistance to buy food to more than 40 million low-income individuals every month. This assistance helps families put food on the table as they work towards a more secure financial footing. Until this proposed regulation, certain retirement or education savings would disqualify someone from the SNAP program—which is counterintuitive, since those very savings help people advance economically. It’s difficult to build a better life for your children when you must sacrifice saving for their education in order to keep your source of food.


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Can't keep up with the latest economic security news?

We know that the flood of news about foreclosures, lending reform, the changing housing finance landscape, and more can be overwhelming. Filter out the noise by following our Twitter feed, where we curate top news about pressing economic security issues. Then continue the discussion on our blog and Facebook page.

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New at Regional Home Ownership Preservation Initiative

While much of the response of the foreclosure crisis has been focused on the negative effects on homeowners, they are far from the only victims. Tens of thousands of Chicago region renters have been displaced—sometimes illegally—due to rental buildings going into foreclosure as well. The Lawyers’ Committee for Better Housing (LCBH) recently released a report that found that, in 2010, nearly 6,000 apartment buildings went into foreclosure in the City of Chicago, affecting more than 17,000 units. Every week in 2010, 123 apartment buildings went into foreclosure.


In this issue

  Recent Work

File IconBridging the Gap II: Examining Trends and Patterns of Personal Bankruptcy in Cook County’s Communities of Color
May 2011

File IconPaying More for the American Dream V: The Persistence and Evolution of the Dual Mortgage Market
April 2011   

File IconLeft Behind: Troubled Foreclosed Properties and Servicer Accountability in Chicago
January 2011 

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