When Roxie was laid off from her job as an echocardiogram technician at a hospital, her finances came under significant strain. Although she had some money saved and found freelance technician work, her income was less than half what it used to be and she couldn’t afford health insurance. On top of that, she was the sole breadwinner helping to raise three grandchildren. The savings eventually disappeared and she fell behind on her mortgage and other debts.
Additionally, bankruptcy filers in African-American communities are more than twice as likely as filers in predominantly white communities to choose Chapter 13 bankruptcy.
Additionally, bankruptcy filers in African-American communities are more than twice as likely as filers in predominantly white communities to choose Chapter 13 bankruptcy. The report concludes with recommendations to improve economic opportunity for individuals in African-American communities.
Woodstock Institute Senior Vice President Geoff Smith presented the findings of a new report that found that thousands of foreclosed, vacant homes in the City of Chicago are likely poorly maintained, lack clear ownership, and threaten to destabilize neighborhoods. “The steward relationship between loan servicers and the homes in our neighborhoods is broken,” noted Smith.
Permanent modifications continue to grow increasingly slowly and trial modifications are still dropping, though October marked the end of the six-month streak of double-digit decreases in active trial modifications. Chicago region permanent loan modifications rose by 3.1 percent from September to October, compared to 6.6 percent growth from July to August and 4.1 percent growth from August to September (see charts A and B).
The fact that the current modification programs, such as the Home Affordable Modification Program, are voluntary means that homeowners have little power to force reluctant mortgage loan servicers to the bargaining table. While several “judicial foreclosure” jurisdictions (where foreclosures must be approved by a judge) are implementing mandatory or voluntary court-supervised mediation programs that bring homeowners and servicers to the table, such programs are too few to address the nationwide problem of ongoing foreclosures.
In Chapter 13 bankruptcy, a person who is deeply in debt undergoes a financial reorganization by completing a three- to five-year repayment plan to his or her creditors. The debtor generally retains all of his or her property, but he must devote all of his disposable personal income to repaying his creditors over the course of the court-supervised repayment plan.
These are the kind of sobering statistics that experts presented to more than 100 representatives from community, research, financial, regulatory, and government groups at “Beyond Foreclosures: The Impact of the Financial Crisis on the Wealth Gap and Economic Opportunity.” Indeed, a staggering number of consumers lack sufficient access to banking services that would help them build wealth, do not have opportunities to build a positive credit history, and must resort to the costly and stigmatizing process of bankruptcy.