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Today's Top News
Activists Demand Real Change as Foreclosures Mount
BOSTON - Hundreds of thousands of people in the U.S. continue to lose their homes each month in an ongoing crisis that is wreaking chaos on communities, advocates say.
Millions are out of work and high mortgage interest rates are kicking in, and many families can't keep up with their mortgage payments, housing advocates say. The U.S. Department of Labour reported Friday that a record number of people are out of work.
"People are so far behind,'' Stephanie Portea, director of ACORN in Florida, told IPS.
ACORN housing experts in Florida work with hundreds of families each month who are facing foreclosure, to try and help them stay in their homes. ACORN is one of many non-profits that are shouldering most of the burden of stemming the tide on a foreclosure-by-foreclosure basis.
A recent White House report found that mortgage lenders are doing little to help people facing foreclosure, despite generous government incentives to do so.
"Some of the banks are getting a bit better. But most are not,'' Portea said.
The biggest reason foreclosures are still happening is that banks are not willing to seriously negotiate the loans they made, some of which have extremely high interest rates, she said.
"It almost doesn't matter what the economy is like if the banks aren't doing loan modifications,'' Portea said.
July was the worst month yet for the number of foreclosures, according to recent reports by the private sector. In July, 8.6 percent of homeowners were delinquent on their mortgages - an increase of 40 percent over July 2008, according to Lender Processing Services.
The number of homes that have gone completely into foreclosure increased 89.6 percent since July of last year.
RealtyTrac reported that 360,149 U.S. properties were in foreclosure or delinquent on payments during July 2009. That means one in every 355 homes was issued a foreclosure notice in July, it said.
"July marks the third time in the last five months where we've seen a new record set for foreclosure activity," James Saccacio, CEO of RealtyTrac, said in a statement.
Florida, Arizona, California and Nevada are the states with the highest rate of foreclosures, and some communities are being hit especially hard.
In Fort Myers, Florida, one in every 64 homes was served a foreclosure notice in July. In Las Vegas, one in 47 homeowners received a foreclosure notice in July, and in Phoenix, Arizona, one in every 103 homeowners was served, according to RealtyTrac.
"Despite continued efforts by the federal government and state governments to patch together a safety net for distressed homeowners, we're seeing significant growth in both the initial notices of default and in the bank repossessions,'' Saccacio said.
About 29 states and some cities have scrambled to enact laws to slow foreclosures, like requiring that a judge decide if a foreclosure is warranted. Massachusetts is one state that does not have such a law and the results are disastrous for families, says a housing activist there.
"Homeowners don't get a day in court before foreclosure. They do get a day in court before eviction,'' Steve Meacham, a community organiser with City Life, Vida Urbana, a Boston non-profit, told IPS. The group is known for protesting evictions and shaming banks into backing down.
"We seem to have a lot more leverage with banks after foreclosure,'' he said.
About 2.9 million homes nationwide have already been lost to foreclosure and U.S. officials estimate that 2.5 million more people may face foreclosure in the next couple of years, a disaster sparked by what has been revealed as aggressive and often reckless mortgage making by lenders that included the nation's biggest banks.
Many of the foreclosures involved questionable loan terms, including interest rates destined to rise spectacularly after a few months of low, "teaser'' rates. The loans were made by financial institutions at a time when the value of housing was going up and up.
These sub-prime mortgages were transformed into investments by financial institutions and traded around the globe as highly risky packages.
Now it is mortgage interest rates that are going up and up, and housing value that is going down. Many houses are worth far less than what people paid for them.
In March, President Barack Obama set aside 75 billion dollars to lenders willing to negotiate with homeowners to avoid foreclosure. But the Home Affordable Modification programme is voluntary and just nine percent of the 2.7 million delinquent mortgages have been adjusted by banks, the government reported.
Among the big banks, many of which received a taxpayer bailout, Wachovia had the worst record and has modified just two percent of its bad loans. JPMorgan Chase and GMAC, formerly affiliated with General Motors, have negotiated the highest percentage of their bad loans - 20 percent.
It is unclear if the Obama administration will issue stricter guidelines for the programme. Officials did not return a request for comment.
In Boston, many homeowners are saddled with mortgages that are much, much higher than the value of the homes today.
"The untold secret of foreclosures in Boston is that well more than half of homeowners in foreclosure could afford their homes at their real value today. If the bank would rewrite the principal, they could avoid half of foreclosures. They are altering the interest rate and extending the terms of the mortgage but this is not acceptable,'' Meacham said.
Activist groups plan to target the G20 summit in Pittsburgh later this month, when high-level officials and leaders from the world's biggest economies will meet to discuss national stimulus packages and strategies to ameliorate the global economic crisis.
The Bailout the People Movement, together with some major trade unions and other grassroots organisations, is setting up a tent city and a march for jobs. Dozens of other groups are still awaiting permits to hold demonstrations, as the city prepares to deploy a massive security presence of thousands of police officers, state troopers and National Guard.
Foreclosures and unemployment go hand-in-hand.
The U.S. Bureau of Labour Statistics said Friday that the number of recorded unemployed people in the nation reached 14.4 million in August, for an overall rate of unemployment of 9.7 percent. This is about double the number of people unemployed before the recession began in 2007 and the highest rate of joblessness in 50 years.
African Americans had the highest rate of unemployment, 15 percent, of any other ethnic group.
Another 2.3 million people indicated they were barely working and wanted a job, but were no longer looking. An additional nine million people work part-time but are unable to find full-time work, the bureau learned in a survey. Together, the rate of those who are unemployed and underemployed is 16.8 percent, the bureau said.
People who are employed are working less than a full week, an average of 33 hours each week, instead of 40, because of employer cutbacks, the bureau reported.
Two nights ago in Boston, 80 people gathered outside a hotel where inside, Deutsche Bank executives and guests were celebrating an upcoming golf tournament. Deutsche bank is responsible for evicting more families than any other, according to Vida Urbana.
In the latest eviction, the tenants offered to buy the building at today's price. The bank refused. At the protest, the group sang gospel and protest songs and, "We served a notice to quit on Deutsche Bank,'' Meacham said.