Post by the Hawthorne Hawkman, image from www.hudsonriverhousing.org
Earlier today, I received an uplifting message from Dave Snyder of Jewish Community Action about the foreclosure prevention outreach being done by NCRC. That's the Northside Community Reinvestment Coalition. Not only has NCRC been doing groundbreaking work on foreclosure prevention outreach, but the group (of which Hawthorne is a founding member) has also been lobbying Senators Klobuchar and Franken on the Consumer Financial Protection Agency bills going through Congress. We need to reach out to those at risk of losing their homes but also work with our elected officials to ensure that such a crisis never happens again.
Dave Snyder and Marcus Harcus have been doing a top-notch job of coordinating the outreach and lobbying, and today Dave told this story...
..."WE ARE STOPPING FORECLOSURES!
"Several months ago, when our volunteers knocked on Ms. Dorette B.’s door to talk with her about foreclosure prevention counseling, she told them that she had the situation firmly in hand, and didn’t need help. At the time, Dorette had negotiated a loan modification with GMAC to allow her and her daughter, who lives with autism, to stay in her home of 13 years. She called us back, however, when GMAC refused to make her modification permanent, citing a single missing signature on her application. With only a few days before her sheriff’s sale date, we connected Dorette to a counselor at Habitat for Humanity, and they were able to get her sale postponed until August 2, buying her some time to plan and negotiate further. Her case is still unresolved and JCA and other partners may still need to push for help for Dorette.
"But the point of this story is not that Dorette is getting help because of volunteer doorknockers like YOU. The point is that shortly after receiving assistance, Dorette was out with our team in north Minneapolis, wading through knee-deep snowbanks to knock on doors herself, to reach fellow residents who could use some help. The point is that the core leaders of our campaign—who have knocked on doors, traveled to Washington DC to represent us, and lobbied elected officials for fair lending reforms, are residents who have struggled against foreclosure themselves, and have decided to stand up for their neighbors.
"Since 2006, there have been more than 2,600 foreclosure sales in near North Minneapolis, out of 9,291 total households--a financial tsunami that wiped out millions of dollars of community wealth and uprooted thousands of families.
"In 2006-07, 49% of all home loans made to northside residents were subprime, higher-cost loans, compared to just 13.5% of Twin Cities loans overall. Subprime loans can easily cost you $50,000-$100,000 more for your home over the course of a 30 year mortgage than you would with a conventional, prime rate loan. That’s long-term, generational wealth that could have sent a kid to college or secured a small business on solid footing. Multiply that by 100, or 500, or 2,600, and then try to think of what impact that community wealth could have had for the Northside."
NCRC has two important dates coming up: On Tuesday, May 25, we will meet at the Urban League, 2100 Plymouth Ave N, at 6 p.m. to plan next steps and do foreclosure prevention outreach. And on Wednesday, June 9th at 5 p.m. we will hold an NCRC Community press event with John Taylor, President of the National Community Reinvestment Coalition and local elected officials. If you can't make it to either event but still want to help, there are always opportunities. Contact Dave Snyder at david@jewishcommunityaction.org.
9 comments:
Did Dorette pay her bills on time? If not, she should be foreclosed on. We need to teach responsibility to people.
There are several pieces of information missing from this story.
1: If she lived in the home for 13 years it sounds as if a refinance was done and cash pulled out inflating the balance due. Where did the cash go?
2: Sub Prime loans cost more than Prime loans because the risk of loaning the money is greater hence the higher interest rates. How was her credit when she likley did a cash out refinance? Perhaps she belonged in a sub prime loan due to poor credit?
3: Community wealth? How can you consider interest due a mortgager to be community wealth? The community has no claim on accounts receivables whether they are paid or not paid by a borrower who defaults.
Anon 2:05 - Paying your bills on time can be pretty difficult when you have a predatory mortgage loan to deal with.
Questioner - you assume she took cash out. It's possible this was a no-cash refinance. The point of this post is not to tell Dorette's life story, but to show that the outreach done by NCRC partners is getting people connected with help, and some of those people are giving back with more volunteering of their own.
Furthermore, there have been various studies showing that significant numbers of people who received a subprime loan qualified for a better product at the time of origination. Depending on the size of the group studied, geographic location, and dates, I've seen those numbers range from 17% to 48%.
Now, when someone pays hundreds of dollars more each month than what they qualified for due to having a predatory loan, that's money that can't be spent at local businesses, can't be invested or saved, and can't be otherwise used in the community.
When a person goes through foreclosure, or when thousands of foreclosures concentrated in one area drive down home values, then the lost equity can't be used for things such as retirement or putting a child through college.
When these things happen repeatedly and on an overwhelming scale, that's what NCRC partners describe as a loss of community wealth.
She purchased the home in 1997 for $70k so lets assume she financed $67k at 7% her payment would have been $445 per month. By 2007 her balance would be about $60k so lets say she does a refi at subprime rates of 12% her payment would jumpo to a WHOPPING $617. UNLESS she cashed out and her balance swelled. In past years the city had her tax value at $185k and i'd bet dollars to donughts that her mortgage balance is over $110k and possibly over $150k so likley she either can't afford a very reasonable $617 or there is a ton of cash that went somewhere.
My point is that organizations that try and keep these homeowners in homes need to look at the entire picture and they don't. There is no "right" to stay in your home, if she had stayed on her original financing she'd be fine but for whatever reason she chose to refinance and likley cashed out equity as well.
Maybe we should actually be reducing the redemption period? Making banks wait 6 months to re-market the home just drags he situation on and prevents the market from clearning out inventory so that home values can increase. Generally it takes months of late or no payments to get to a foreclosure. Why give another six months?
While many likley won't like your comment, if you look at all the vacant homes sitting while they othewise could be sold with shorter redemptions you may be on to something.
Foreclosure Prevention Programs do look at the full picture, including why homeowner refinanced, current product and what's going to be affordable. That includes discussion of options to leave the home if there are no alternatives including selling or deed in lieu. There would not be less vacant properties with a shorter redemption period, currently a vacant property can have it reduced to 5 weeks. This rarely happens and even if it does it still needs to be secured and sold. Banks have a huge amount of vacant properties as a result of foreclosure. Everyone loses in foreclosure, investor, servicer, homeowner, neighborhood and ultimately the larger economy.
Oh and The questioner you are forgetting closing costs, including broker compensation, origination fees, discount points and potential yeild spread premium. Subprime loans are not cheap and sometimes the fees eat away equity even with no cash out.
Sheriff's auction sales pursuant to foreclosure can be stopped by filing a "partial" Chapter 13 Petition in Bankruptcy. It is done a few days before the sale. The filing of the petition causes an "automatic stay" on all the actions of creditors to enforce their debts. The website of the Minnesota Bankruptcy Court lists the papers required and the form to permit one to pay only half of the filing fee. When the partial Chapter 13 is not finished, the partial filing is automatically dismissed. It's as if one has gone down the aisle and not gotten married! Individuals can do this on their own without an attorney. Court staff is very helpful. Once you get a receipt for the filing, showing the case number and date of filing, fax a copy of it to the attorney and the county sheriff and the sale cannot be held.
At the most this will give one mnore time, sometimes as mush as half a year, but more time can be important.
Attorneys and Social Service Organizations cannot do this because it is advising people to "abuse" the legal process and it would eventually catch up with them in some way. As is the mortgage companies and banks never "abused the law!!!!!>
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