I wasn’t around at the time, but they tell me that
during the Great Depression, good neighbors often showed up to help
evicted people move their belongings back into their homes. As important
as such solidarity action is (you men and women with good backs
prepare to move into action) something has to be done soon to compel
the political establishment to bring some relief for the individuals
and families facing the possibility of being rendered homeless.
For one out of every 281 families or individuals in
metropolitan area around Atlanta, the coming of August raised the
possibility of losing their homes. That month over 5,000 properties
entered some stage of foreclosure, most of them because their owners
couldn’t meet their mortgage payments. The August Atlanta area foreclosure
rate was up 36 percent over July, three times the national average
and the second highest in the country for major urban centers—behind
Dallas.
According to RealtyTrac, in the city of Atlanta itself,
one out of every 70 homes faces some stage of foreclosure. The startling
Atlanta numbers – an alarming statistic in an economic sense, 281
tragedies in human terms – are a dramatic illustration of the national
epidemic of people – mostly working people - losing their houses.
The collapsing of the nation’s housing market now
underway is wrecking havoc on our way of life. Whether the burst
of the “housing bubble” results in a “soft” or “hard” landing is
really immaterial to those facing financial ruin. And the losses
are not restricted to major urban centers.
By the end of summer, one of every 66 household in
Greeley, Colorado, was in some stage of foreclosure. Colorado has
the country’s highest state foreclosure rate, with one new foreclosure
filing for every 301 households. The foreclosure rate there rose
60 percent in August over July.
Three factors are being cited for the rash of foreclosures
now expected to quicken over the coming months: production layoffs,
the undermining of pension plans, and the practices of banks and
other mortgage lenders. Principal among these latter factors are
adjustable mortgage rates (ARMs) and various other forms of exotic
lending schemes designed to cash in on the recently-concluded housing
boom and to take advantage of people denied usual standard rate
mortgages. Such loans have initially low rates, but later increase.
About $2 trillion in adjustable rate mortgages are
scheduled to reset at higher rates from the beginning of 2006 to
the end of 2008. Adjusted upward by an average of 2.5 percentage
points, the interest payments by holders of such mortgages would
be $50 billion higher in 2009 than they are today, according to
the Oct. 1 New York Times.
"When these option ARMs reset to market rate
interest, a first time homebuyer's payment could almost double,”
ForeclosureS.com President Alexis McGee wrote recently on
the company’s website. “On top of that, there has been a significant
drop in home values in that market. The owners can't make their
new payment, and they can't sell in a market overloaded with unsold
homes."
"We saw a drop in California foreclosures in
the west in July, but that's not going to last," wrote McGee.
"You could say that this summer is the calm before the storm."
As of Sept. 11, there were 44,683 properties in some stage of foreclosure
in California, and, wrote McGee, “again, these exotic mortgages
are a major factor.”
Over half of the home loans taken out by African Americans
last year were of this type. The rate for Latinos was nearly that
high and nearly three times as many loans to Asians were sub-prime
in 2005 compared to 2004.
"ARMs are a ticking time bomb," Brad Geisen,
president and chief executive of Foreclosure.com, recently
told the Chicago Tribune. "Through 2006 and 2007, I'm
pretty sure we'll see a high volume of foreclosures." The overheated
housing market, relatively low interest rates and the use of these
kinds of creative lending practices, contributed to a significant
increase in home ownership by African Americans, Latinos and Asians.
Now, disproportionately, those communities are feeling the negative
results of the market chilling.
Across the nation, the biggest rates of home foreclosures
are to be found in places where African Americans and Latinos are
concentrated. "African Americans and Latinos are paying a premium
for home loans because of the color of their skin." Hilary
Shelton, director of the NAACP's Washington bureau, told MSNBC.com.
In
August The Charlotte Observer reported African Americans
borrowing from 25 of the nation's largest lenders were four times
more likely than whites to pay high rates, and that black people
with incomes above $100,000 a year were charged high rates more
often than whites with incomes below $40,000. The trend of rising
foreclosures within the African American community has already begun
to erode home ownership gains, says Marc H. Morial, president and
CEO the National Urban League. African American homeownership actually
decreased by one percent in 2005.
In Chicago, foreclosure filings tripled between 1993
and 2005. Neighborhoods that are at least 88 percent Latino and/or
African American represent about two-thirds of all home foreclosures
in the city. Citing these figures, Dr. Manning Marable, director
of the Center for Contemporary Black Politics at Columbia University,
has observed that “ Home and business ownership create the equity
to pay for children’s college educations, as well as to pass down
to successive generations. Tragically, when the majority of black
Baby Boomers – people born between 1946 and 1964 – die, they will
bequeath debt to their children and grandchildren, or at best only
several thousand dollars in savings. Structural racism is the cause
of all this.”
According to Dr. Marable, “Without wealth, a home,
or a retirement account, millions of African Americans approaching
retirement age now face a perilous future.”
Just how insecure the future has become for many seniors
is illustrated by new statistics on elderly debt which has increased
substantially over the past decade. Over 60 percent of families
headed by someone over 55 had housing debt last year, which takes
more and more of their income. The largest increases were for people
75 or older. The result has been that older families “have at risk
what is typically their most important asset – their home,” according
to the Employees Benefit Research Institute.
“Consequently, older families that take on higher
housing debt are likely to have difficulty avoiding a major lifestyle
change in living arrangements for the remainder, if they have to
rely on their home as an asset,” the Institute concluded, and “are
placing themselves in a position where they could be forced to sell
their home – something that current and past retirees, in general,
have not had to do.”
Various public service efforts are underway to aid
people who, faced with this new reality in the housing market, are
in danger of losing their homes. Groups like the Urban League and
Legal Services have established hotlines to respond to people under
threat. Special clinics exist in numerous communities offering assistance
in working out arrangements that will hopefully avoid mortgage loan
defaults. Such programs will help alleviate the pain for many and
ameliorate the effects on families and communities. However, they
are limited in scope.
In Baltimore, the Community Assistance Network Inc.
reports more and more moderate-income people requesting help with
their mortgages, rents and even evictions. Of the 100 new households
the agency's shelter housed in May, 85 percent of them had recently
been evicted. "I don't want to sound like an alarmist, but
we have reached our maximum capacity in the emergency assistance
that we do,” the agency’s director Richard P. Doran told the Baltimore
Sun.
The larger question remains: will the government acknowledge
that current economic circumstances – to a large degree the result
of official policies – are threatening the security and well-being
of many people? Will the political leadership find a way to reduce
or halt the epidemic of foreclosures and evictions?
Part
1 of Fleecing Working People
“Left Margin” is a new BC column
and will be published approximately every two weeks.
BC Editorial Board member Carl
Bloice is a writer in San Francisco, a member of the National Coordinating
Committee of the Committees of Correspondence for Democracy and
Socialism and formerly worked for a healthcare union. |