How Is Obama Fighting Foreclosure in the Black Community?
By Cynthia Gordy
The Obama administration has overhauled its plan for fighting foreclosure. While last year's original effort, the Home Affordable Modification Program (HAMP), focused on lowering rates for borrowers with subprime loans...it was of little help to unemployed folks lacking a steady income.
Responding to calls to switch up their strategy, the administration has expanded the program by requiring lenders to give up to six months of mortgage assistance for unemployed homeowners. The government has also increased incentives for lenders to cut loan balances for these borrowers.
But does this mean that the administration's previous efforts to stabilize the housing market have tanked? Not so, says Housing and Urban Development Secretary Shaun Donovan. In a reporter's roundtable, he explained what his agency has done to help homeowners, improve the market in the low-income communities hardest hit by foreclosure, and prosecute the predatory lenders behind much of the problem.
How much has the original housing plan actually helped?
Although at the end of February only 175,000 overwhelmed borrowers received permanent loan modifications, 1.1 million people either received, or are currently undergoing, trial modifications to ensure eligibility for a permanent change. "After three months, we verify their income and do other things to make sure the loan will be sustainable for them over time," said Donovan. An additional 4 million people were able to refinance through the HUD-owned Federal Housing Authority (FHA). "It's important not to think of the HAMP program as the sum total of what we're doing to help troubled borrowers," he said, noting that half of African-Americans who got loans last year used FHA.
What about justice for the victims of predatory lenders?
"Clearly one of the causes of the housing crisis was targeted lending in low-income and minority communities," said Donovan. To prevent this from happening again, HUD has increased funding for fair lending activities and grants for community-based organizations that pursue fair housing complaints. HUD has also partnered with the Civil Rights Division of the Department of Justice to identify and bring discrimination cases to them for enforcement--and restitution for families. "Where we bring cases with examples of discrimination, we are able to get settlements or awards to benefit those families that were targeted."
What's happening to all these long-vacant, foreclosed houses?
"One thing that doesn't often get focused on is the number of blocks that had five or six vacant homes, and the impact that has on surrounding property values and the health of the community," said Donovan. HUD has put $6 billion into its Neighborhood Stabilization Program to rehabilitate foreclosed homes in the communities hardest hit, and an estimated 80,000 homes will be purchased through the program. "I was just in Charlotte, North Carolina, in an African-American neighborhood where out of 81 homes, half of them were foreclosed two years ago," said Donovan. "Using Neighborhood Stabilization, and partnering with Habitat for Humanity and the local government, we've been able to get control already of 13 of those homes."