Poorly regulated subprime mortgage lending and the economic downturn have pushed the housing market into its worst slump in 16 years. Home foreclosures are at an all-time high, with South Florida being one of the hardest hit regions in the country. Many Americans lost their homes because of unscrupulous lending practices and widespread unemployment.
Homeownership is an important way of building and passing on wealth from one generation to another. Ensuring that people maintain this crucial investment is an essential component of achieving sustainable growth and development in our communities.
The Center for Responsible Lending (CRL) analyzed the demographics of the foreclosure crisis and found that foreclosure has disproportionately impacted African-American and Latino homeowners. In short, a home owned by an African-American family is 76 percent more likely to go through foreclosure than a home owned by a white family. CRL study shows alarming evidence that the foreclosure crisis will wipe out a generation of wealth in African-American communities and exacerbate the existing income and equity gap between white and non-white families. The CRL research also shows that the foreclosure crisis is far from over and runaway foreclosures continue to drain hundreds of billions of dollars in wealth from communities of color.
An estimated 2.5 million foreclosures were completed from 2007 – 2009, and an estimated 5.7 million additional foreclosures are imminent.
An estimated 17 percent of Latino homeowners and 11 percent of African-American homeowners have already lost their homes to foreclosure or are now at imminent risk.
The great majority of homes lost were owner occupied, as are those at imminent risk of being lost.
The racial and ethnic disparities in these estimated foreclosure rates hold even after controlling for differences in income patterns between demographic groups.
Based on the Home Mortgage Disclosure Act (HMDA) data, in 2009, 8.9 percent of African-American home purchasers entered into subprime mortgage loans compared to only 2.3 percent of white home purchasers in the 23rd district of Florida. At the height of the foreclosure crisis in 2006, Broward County had the second highest rate of subprime mortgages in the state of Florida. During this year, 54 percent of African-American home purchasers entered into subprime mortgage loans compared to 25 percent of white home purchasers. It is clear that subprime lending has disproportionately impacted communities of color in our district. Given that 30 percent of subprime loans are likely to face foreclosure, the apparent past and present predatory lending practices have played a direct role in the current foreclosure crisis in your district and will be detrimental to maintaining wealth through homeownership for a large group of your constituents, particularly those of color.
I have taken a proactive role to address many of the concerns of homeowners in South Florida. For instance, I introduced an amendment to H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act of 2009, aimed at decreasing abusive and predatory lending by outlawing many of the egregious industry practices that marked the subprime lending boom, and would prevent borrowers from deliberately misstating their income to qualify for a loan. My amendment also requires the newly formed Office of Housing Counseling to incorporate information about flood and natural disaster insurance into its educational agenda. I am pleased to report that this legislation, introduced by Representative Brad Miller of North Carolina on March 26, 2009, passed the House on May 7, 2009.
Finally, I have worked with several organizations to hold lenders accountable for their predatory lending practices which disproportionately affect communities of color. Rest assured, I will continue to work for and support measures that help people remain in their homes, avoid foreclosure, increase financial literacy, and fight for the right to fair, healthy, and affordable housing.
Independent Foreclosure Review
In April 2011, the Federal Reserve Board and the Office of the Comptroller of the Currency, issued enforcement actions against mortgage servicers for unsafe practices and deficiencies during foreclosure processing. As a part of these actions, federal regulators are requiring mortgage servicers to offer independent foreclosure reviews to borrowers who may have suffered financial injury due to deficiencies in the process and if so, to appropriately compensate those customers.
To qualify, your mortgage loan needs to meet the initial eligibility criteria:
For further information on the Independent Foreclosure Review, please visit the web sites of the Federal Reserve Board or the Office of the Comptroller of the Currency.