Tuesday: Zombie Loans, Chess, and Why Foreclosures Make Us Sick

Today the Asset Building Program in California attended the Bay Area Asset Funders Network's first regional conference, entitled "Addressing the Disparate Impact of Foreclosure on Households and Communities of Color." We (and by we, I mean me) entered the Federal Reserve Bank of San Francisco this morning with a sense of what would follow: damning data showing how and why people of color lost more in the crisis, along with an overwhelming picture of what it might take to fix the problem. But I got more than I bargained for.

First notes: A community member and member of action and community leadership organization Causa Justa/Just Cause, Kimberly Isaac, told the audience about her personal experience with foreclosure in 2007. The apartment complex she was living in went into foreclosure and new owners Countrywide sent her $1,000 and a week to move. Because she was a member of CJJC, she knew this was illegal (tenants can't be evicted without cause in these circumstances) and refused to move. "Bring it on," she told them. And she was able to stay in her apartment.

The astounding and damning data section, of course, did come: Robbie Clark of CJJC gave a history of the racist roots of the foreclosure crisis: redlining, urban renewal funds that let cities raze poor communities, the lack of access to financial resources, credit, and information. And then there's CJJC's recent study on foreclosure in Oakland, Rebuilding Neighborhoods, Restoring Health that found 3 out of 10 people forgo medical care during foreclosure, and the number of homeless high school students doubled from 2007 to 2008, among other things.

Foreclosures make us sick, Clark said, and the evidence was everywhere: declines in physical health, asthma rates spiking due to deteriorating housing conditions, the requisite stress and depression that accompanies foreclosure. And then there is the health blow on the community level, with crime, drug activity, and poverty rates climbing as property values, tax bases, and service quality falls.

FRBSF self-described "data geek" Carolina Reid added national scale to that report, which she called a good portrait of what's going on nationally. This is not over, even though we all have "foreclosure fatigue," even though "foreclosures were soooo 2009", she told us: 2 million properties in this country are in foreclosure, and 3.6 million are delinquent, right now. 

And we know this is affecting communities of color most. Trillions of dollars of wealth has been lost; the subprime mortgage business was so lopsided that if it had been equitably distributed along race lines, white losses would have been 44% higher than they were, and losses to homeowners of color would have been 20% less. Reid pointed to an important issue and potential point of entry for a solution on this: that there is such widespread distrust of banks, that people want to get a home loan from someone who looks like them, and that these facts were exploited by subprime lenders in low income communities.

And because I know you must be wondering, "zombie loans" are the ones coming after former homeowners--the ones who lost their home and shouldn't have to pay that debt--because debts are being sold by servicers to collectors for pennies on the dollar. As if community assistance groups didn't have their hands full.

A panelist in the second session lost his composure talking about the generations of effort washed away; saying blacks are now where they were in 1929, and Bank of America paid $0 in taxes last year. 

Hopes for national and state policy solutions were pinpointed during a "lightning round" in the panel moderated by Paul Leonard of the Center for Responsible Lending. Topping the list were uniform servicing standards, state-level settlements on servicers by Attorneys General, regulatory pressure to keep credit accessible, and increased fair housing enforcement. Additional action can be taken by supporting a measure to create a reliable agent of financial education resources at the state level, by connecting with the Asset Funders Network, and other initiatives like it. The Asset Building Program is hosting the event Mitigating the Impacts of the Current Foreclosure Crisis next week in Washington.

Tomorrow and Thursday will bring more updates on crucial convenings in California. For today, Adam Kruggel with Contra Costa Interfaith Supporting Community Organization (CCISCO) delivered the most stirring call to action I've heard yet:

"We are still just playing checkers, and the financial industry is deep in a game of chess. The payday lenders have a ten year plan to become the go-to consumer choice, to have a piece of every paycheck... [the financial empowerment community] needs to have a vision-- a bigger vision. This country cannot survive otherwise."