Foreclosure, which is when
a bank takes away a house because the owner cannot pay back a loan, is at the
heart of the economic crisis. During the 1990s and up until 2007, banks and lenders
encouraged people to buy expensive homes with loans far beyond their earnings.
In some cases, lenders tricked homebuyers with payment schedules designed to start
out low, but balloon after a few years. More than 2.5 million Americans
are currently at risk of losing their homes. In recent weeks there have been halts
to foreclosures due to questions about paperwork and whether lenders and banks
followed the rules when processing foreclosure paperwork. In Florida, activists
such as Lisa Epstein have been investigating banks' fraudulent mortgage practices,
including using ”robo-signers” to sign legal documents necessary to
evict vulnerable homeowners. Bank of America, the nation’s largest
bank, had stopped foreclosures as it investigated its methods, but plans to restart
its foreclosure offices as early as October 25. Economics of the U.S.
housing market
 |
| | | |
|
|  | |
|
 Patchwork
Nation map that highlights recent economic trends across the nation. |
|
|
In 2008, an estimated 68 percent
of Americans were homeowners (of a house or apartment). Homeownership is most
common in rural areas and the suburbs of cities, according to the U.S. Census
Bureau. Midwest states have the highest homeownership rate (71.7 percent) and
the Western states have the lowest rates (63 percent). When a person wants
to purchase a home, he or she usually goes to a financial institution to apply
for a mortgage loan. The bank writes a check for the property, and the homeowner
pays it back a little bit per month, usually over 30 years. The bank makes money
by charging interest --a percentage of the total amount. If you don't own
your home, you rent it. Many Americans choose to rent for a variety of reasons,
including “all-inclusive” monthly payments (rent plus utilities) and
the freedom of having a landlord to handle maintenance problems such as a leaky
sink or broken heater. A key difference between renting and owning a home is equity.
Equity is wealth. When you pay the mortgage every month, you are contributing
to the amount of money you would get if you sold your house. Part of the
financial crisis, however, is that the value of homes has dropped sharply. Therefore,
many homeowners who pay their mortgage on time still owe more than their home
is worth. For example, if you bought a house for $300,000 in 2007, your house
might be worth $150,000 today. Owing more than the house is worth is called being
"under water." What is foreclosure?
|
| | | |
|
|  | |
|
| Bank
of America announced they will resume foreclosures beginning October 25 in 23
states. | |
|
Foreclosure is the legal process
by which a bank obtains a court order to confiscate a homeowner’s property
for failing to pay the monthly mortgage. Foreclosures occur after a homeowner
has missed a series of mortgage payments and therefore are in default on the loan.
With the high rate of job loss in the United States and the economic recession,
many Americans have missed too many payments. Families facing foreclosure can
contact a foreclosure prevention specialist or take part in a program created
by Congress called the Helping Families Save Their Homes Act.
In October
2008, PBS station KCET examined how one community in the Southern California county
of Riverside was dealing with these rampant foreclosures. http://www.pbs.org/newshour/extra/video/blog/2008/10/what_really_happens_in_a_forec.html.
Reporter
Lisa Ling traveled with John Plocher of Western Security Realty Preservation,
a company that contracts with banks and mortgage companies to clean out recently
foreclosed homes. Plocher and his 73 employees cleaned out an average 15 foreclosed
homes each day. Homeowners try to fight foreclosure
|
| | | |
|
|  | |
|
Activists with the CityLife/Vida Urbana and the Bank Tenet Association in Boston
use political protest to halt foreclosures in their communitites. |
|
|
What happens to a family after
their home has been foreclosed? PBS NewsHour correspondent Paul Solman met freelance
photographer and multimedia producer Kelly Creedon, who has been documenting the
personal side of the foreclosure crisis for the project “We Shall Not Be
Moved.” Watch the second segment in this series here, http://www.pbs.org/newshour/bb/business/july-dec10/foreclosures_10-19.html. Creedon
tells the personal stories of a grassroots movement uniting working-class Boston
communities. CityLife/Vida Urbana and the Bank Tenant Association have been using
a combination of legal defense, political protest and collective action to halt
evictions since 2008. Watch some of these stories here, http://weshallnotbemoved.net/stories/.
Homeowner activists are hoping the recent revelations of sloppy paperwork
by the banks will give them bargaining power to convince mortgage lenders to negotiate
deals so that families can stay in their homes. . | 
Joplin was able to rise from the ashes because of help from everyone. And I am eternally grateful to anyone who made that possible.
