Fifty-three percent of Black Wealth Gone to Foreclosure. In a second letter to President Obama regarding the home foreclosure crisis, Rep. John Lewis (D-GA) was joined by 28 House Democrats requesting that President Obama issue an executive order to release the flow of mortgage relief money to those hardest hit by foreclosure.
Lewis wrote the President last year on this issue as well. His second letter to President Obama was dated March 12 of this year. The backlog of foreclosure assistance is an issue that has been brought up by many members of Congress over two years. Many members blame the failure of the Hardest Hit Fund, which was established in 2010 as part of TARP.
Though there have been conversations with the Department of Treasury, many in Congress have pointed out that the Administration’s response has been to slow. Minority communities have been hit particularly hard by foreclosure because minority homebuyers with good credit were steered to adjustable-rate mortgages and high interest loans. Though banks such as Bank of America have agreed to $335 million in victim compensation for their actions on Black and Latino borrowers, the crisis has erased a generation of Black wealth.
The foreclosure crisis has rapidly expanded the wealth gap between black and white in America which, according to PEW Research, has tripled with 53 percent of Black wealth eliminated as a result of plummeting home prices. In an interview last month with Roland Martin, the chief economist for the AFL-CIO, William Spriggs, said “there are a number of homes right now that are underwater — they were able to avoid foreclosure. And so we do need to have continued focus on efforts from the Administration.”
“A recent study from the Institute on Assets and Social Policy at Brandeis University, followed 1,700 working-age households from 1984 to 2009 and found that the total wealth gap between white and African-American families has nearly tripled,” wrote Jamelle Bowie in February in The American Prospect.
Many have focused on Obama Administration official Ed DeMarco for the lack of action and have long called for him to be fired. Though Rep. Mel Watt (D-NC) has been interviewed to replace DeMarco, Watt has yet to be hired.
When asked what she would say to President Obama if given thirty minutes with him alone, Rep. Maxine Waters (D-CA), the most Senior Democrat on the House Finacnial Services Committee said she’d focus on foreclosures. ”I would continue to talk about the need for substantive loan modifications and improving the settlements that have been made to ensure that constituents who are the victims of fraud … are compensated fairly,” Waters told Politic365 in her Capitol Hill office on March 13.
“Foreclosure is still a crisis for far too many communities, including in my district. We need urgent and bold action to help struggling families retain their homes,” said Rep. Barbara Lee (D-CA).
In his press release today, Rep. Lewis, a senior member of the House Ways and means Committee and a civil rights legend, pointed out that relief to everyday Americans is slow but assistance for the banking industry has been quick.
Lewis pointed out that, “banks are well on their way to recovery but millions of Americans are hanging by a thread, hoping against hope that they will receive some kind of federal mortgage support before it’s too late.”
“In February 2010, during the height of the recession, the Treasury Department established the “Housing Finance Agency Innovation Fund for the Hardest-Hit Housing Markets” which promised $7.6 billion to states suffering with the highest unemployment rates and the greatest losses in home values. It represented a way the Administration chose to directly address the debacle Main Street experienced due to recklessness in the financial services industry,” Lewis added.
“Homeowners in Southeast Michigan have bit hit hard by the foreclosure crisis during the Great Recession. Continuing to make them wait for assistance is unacceptable. Three years ago they were given a glimpse of hope in the Hardest Hit Fund assistance programs. We must follow through now to do everything in our power to insure these funds are distributed to homeowners anxious for this support. An executive order that allows for greater use of housing counselors, provides additional program flexibility, and implements some of the common-sense reforms outlined in last year’s SIGTARP report would give vital assistance to the recovery of the housing market in Michigan,” stated Rep. John Conyers (D-MI) in Lewis press released issued today.
“The housing crisis has deeply impacted California, where more than 43,000 homes are estimated to be in the process of foreclosure. It is essential that the funding provided to the Hardest Hit Fund initiative is maximized, so that as many homeowners as possible are able to benefit from HHF foreclosure help. Given the failures evident within the HHF initiative, I urge the President to direct the Department of Treasury to amend HHF contracts to improve the allocation of HHF resources,” said Rep. Loretta Sanchez (D-CA).
“The Hardest Hit Fund was created with the purpose of helping homeowners stay in their homes by avoiding foreclosure, and I thank Congressman Lewis and others for urging the Treasury to carry out an initiative that provides such direct relief,” stated Rep. Albio Sires (D-NJ) in Lewis’ release.