With 13.2 million homes still underwater, principal reduction could save underwater homeowners an average of $7,710 a year and boost U.S. economy by over $100 billion
Seattle, WA – The foreclosure crisis continued to destroy wealth on a large scale across the U.S. in 2012, with $192.6 billion in lost wealth, an average of $1,679 per household, nationwide. The most devastating impacts were felt in communities of color: in zip codes with majorities of people of color, average lost wealth per household was $2,198, over 1.7 times the average lost wealth of $1,267 in segregated white zip codes.
These are among the key findings of a landmark study, “Wasted Wealth: The Foreclosure Epidemic, a Generational Crisis for Communities of Color,” released today by the Alliance for a Just Society, Home Defenders League, and The New Bottom Line. Wasted Wealth analyzes 2012 foreclosure data to calculate lost wealth, examines the ongoing threat of foreclosures-in-waiting, and explores the economic impacts of principal reduction.
“While the impacts of the housing crisis have been felt broadly across communities and across the country, these data shows that there’s a clear racial dimension to the foreclosure crisis: households in communities of color are the hardest hit,” said report co-author Jill Reese, Associate Director of the Alliance for a Just Society.
The full report, including national numbers, data for all 50 states, and special breakouts for 19 cities, is available here: http://bit.ly/wastedwealthreport
“It’s as if my life, security for my family, a roof over our heads, is a game to the banks,” says homeowner Grace Alexander of Newark, NJ. “There are four generations of us living under that roof and our impending homelessness is not a game to us.”
Homeowners like Grace Alexander have worked with Home Defenders League and New Bottom Line coalitions nationwide, to push Congress and the Administration to move on principal reduction.
In addition to wealth already lost in communities like Harris’, the report found there were 13.2 million underwater mortgages still on the books in 2012 and another $221 billion in wealth at stake if a share of these mortgages go into foreclosure.
“The solution to the continuing foreclosure crisis is clear: we need principal reduction, and we need it now,” says Tracy Van Slyke, Director of the New Bottom Line. “President Obama's nomination of Rep. Mel Watt as the new director of the Federal Housing Finance Agency is a step in the right direction. It's time for Congress to confirm this nomination immediately in order to support homeowners now, strengthen communities and get our economy back on track.”
Key findings from the report include:
- The foreclosure crisis continued to destroy wealth on a large scale in 2012: $192.6 billion in wealth was lost due to foreclosures across the U.S. in 2012, an average of $1,679 in lost wealth per household.
- Foreclosures had a disproportionate impact on communities with above average populations of people of color: In zip codes with proportions of people of color above the national average of 16%, average lost wealth per household was $2,008.
- The most devastating impacts of the ongoing foreclosure crisis were in majority people of color communities: Zip codes with majority people of color populations saw an average of $2,198 in lost wealth per household, over 1.7 times the average lost wealth in segregated white zip codes.
- More than 13 million homes are still underwater and at risk of foreclosure and more lost wealth: For reporting zip codes, there are at least 13.2 million underwater mortgages. If action is not taken to prevent a share of these mortgages from going into foreclosure, Americans stand to lose nearly $221 billion in additional wealth.
- A strategy of principal reduction would save money for homeowners, boost the economy, and create jobs: A principal reduction program could produce average annual savings of $7,710 per underwater homeowner, boost the U.S. economy to the tune of $101.7 billion, and create 1.5 million jobs.
Read the full report: wastedwealthreport.com/download
The New Bottom Line is a national campaign fueled by a coalition of community organizations, congregations, labor unions, and individuals working together to build a movement that challenges established big bank interests on behalf of struggling and middle-class communities.
The Home Defenders League is a national movement of underwater homeowners and our allies fighting Wall Street to get back what Wall Street stole from us and for a stronger economy for all of us.
The Alliance for a Just Society is a national coalition of state-based grassroots community organizations that address economic, racial, and social inequities to advance economic justice and generate increased power and sustain social change.