After years marked by stalemate and indecision, 2012 has delivered
a glimmer of hope for families and the housing market. The Department of
Justice kicked off the year with a historic settlement with Bank of America
regarding predatory loans made by Countrywide before the Bank acquired the
company in 2008. Not to be outdone, 49 state Attorneys General delivered
the largest settlement made thus far on behalf of families who experienced
wrongful foreclosure. And just last week, California’s state legislature approved
a bill to end the practice known as dual track—where
a homeowner’s loan modification and foreclosure are processed at the same
time. Now servicers will have to suspend foreclosure while a family is being
evaluated for a home-saving solution. Our community’s skepticism is
warranted as we’ve heard the promises before, only to be disappointed with one
failed program after another. But there is one reason to think that these
latest efforts may be the precursor to true relief: elected officials finally seem to have gotten
the message that voters care about housing.
In polls, voters often identify the troubled state of the economy
as their top concern. Most economists agree that housing remains the
biggest drag on our recovery. Eleven million homeowners owe more than
their home is worth. That’s 11 million people who are keeping themselves
out of the consumer economy. Some of this is a good thing; people are
paying down their debt and padding their savings. But for most, that
negative equity looms large over the family finances. Not only is
household consumption down, but families are delaying
purchases of major goods that drive our economy,
such as cars and houses.
On Monday, July 9, HUD Secretary Shaun Donovan and CFPB Director
Richard Cordray will speak before hundreds of Hispanic leaders at the 2012 NCLR
Annual Conference in Las Vegas at 6:00 p.m. ET/3:00 p.m. PT. If you’re in
town, you can join us at the Mandalay Bay (it’s free and open to the
public). If you can’t be there in person, you
can watch it live here. Our message is clear: Don’t quit the dream. The settlements
secured earlier this year are a critical step forward, but their ultimate
impact will only be realized if implemented well. This town hall is part
of the Home for Good
Campaign—a venue for local voters to challenge our presidential candidates
on their solutions to the persistent housing slump.
For as much consensus as there is around solutions, the lack of
movement from Washington is shocking. Principal reduction is widely
recognized as the best way to head off an unnecessary foreclosure, thereby
sparing the neighborhood one more abandoned property and keeping local taxes
flowing to municipalities. Analysis of the various methods servicers use
to stave off foreclosure shows that homeowners are most successful when the
principal balance is written down to a value closer to what the home is
actually worth. Perhaps the best evidence is that the banks and servicers
are putting this strategy to work on the loans they hold on their books.
Republican candidate Mitt Romney’s solution is to let
the housing market bottom out, and he and President Obama
both support refinancing as way to help the market rebound. These strategies
have not worked so well for Latino families in hot foreclosure states like
Florida, Nevada, California, and Arizona, where home values may be as little as
50% of what they were a few years ago. During
another session at the NCLR Annual Conference, we will share data that
shows that Latinos accounted for only 4.2% of all refinancing loans originated
in 2010 compared to 87% for White homeowners. Meanwhile Fannie Mae and
Freddie Mac overseer Ed DeMarco continues to be
the major obstacle preventing implementation of the best tool for restoring housing
stability—principal reduction.
The hope is that with robust implementation of the 49-state AG
settlement, the evidence for principal reduction will grow. Most of us
are not content to wait that long. Voters in California showed they can persevere—the bill had failed three times before—when they stand up and let
their elected officials know what they want. Now it’s time to deliver
that kind of success to other states. Here is what you can do: Tell the
presidential candidates you want to see better solutions
now. Join us at the Don’t Quit the Dream
town hall or follow us on Twitter at #NCLR12 to
get your side of the story on the public record. Together we can make
2012 the year to turn around the housing market.
