Nigel Roberts

June 30, 2011 | Economy

Congressmans Johnson, Lewis and Scott Team to Help Prevent Foreclosures

More than 2,000 struggling Georgia homeowners met one-on-one with their mortgage lender to negotiate a way to keep their home. The two-day Help for Homeowners event on June 17 and 18 in an Atlanta suburb was one of many such events nationwide aimed at stemming the tide of foreclosures.

Georgia Democratic Congressmen, Hank Johnson, John Lewis and David Scott organized the event—the third time that they’ve collaborated in a Making Home Affordable event, with more planned for the future.

“While foreclosure rates in metro Atlanta are down 8 percent from last year, they are still way too high,” said Johnson, who reports to have assisted more than 650 residents with pending foreclosures. “Homeowners are stressed. These kinds of events are a positive way to make a difference, but the problem is bigger than one foreclosure prevention event.”

African-American communities have been especially hard hit in the foreclosure crisis. Beginning in the 1990s, predatory lenders began a program of systematically marketing subprime loans to minorities in segregated urban areas. Such loans were in great demand for use in mortgage-backed securities that could be sold in secondary markets.

Research reveals that this was a race-based effort. Even African-Americans with similar credit profiles and down-payment ratios to white borrowers were more likely to receive subprime loans, according to a Princeton University study.

Among the possible options available to participants at foreclosure prevention events is applying for the federal Home Affordable Modification Program, or HAMP. Johnson said homeowners struggling to keep their homes need to know about the $50 billion program that offers assistance in restructuring loan payments.

More than 4.8 million HAMP modification arrangements were started between April 2009 and the end of March 2011, according to the Department of Treasury. The department reported that 29,000 homeowners in April 2011 received a trial HAMP modification, and 29,000 additional homeowners received a permanent modification with a median payment reduction of 37 percent—or more than $500 every month.

HAMP pays mortgage servicers $1,000 for each loan that is modified and $1,000 a year for three years if the borrower pays on time. Funding comes from money set aside from the bank bailout. This financial incentive to modify home loans is intended to encourage lenders to work with struggling homeowners rather than foreclose.

Nigel Roberts is the United Nations correspondent for Politic365. He has been a political, economic and international affairs reporter for more than a dozen years. Nigel also freelances in public relations and communications. He holds a master’s degree in Political Science/International Relations from the City University of New York Graduate School & University Center.