The clock is ticking.
The clock is ticking for millions of American families facing foreclosure proceedings. In 2008, 2.3 million families entered the foreclosure process.
And, in the time it took you to read this far, it happened to another family. Every 13 seconds a family in the United States enters foreclosure.
They are people like Denise Parker, highlighted in today's New York Times. A mother of three who works as a housekeeper at two Midtown Manhattan hotels, she bought a home in Springfield Gardens, Queens, in 2005 with an adjustable interest rate that, after two years, went up every six months. Her payments started at $3,500 and now are $5,050 a month. She fell behind last year and her house is scheduled to be auctioned off on Friday.
Since 1999 ACORN has been fighting "predatory lending," a series of practices concentrated in the subprime mortgage market that enriched brokers and investors while setting up borrowers to fail, principally in the refinance market. But the problem, despite its heart-breaking effects on families, was concentrated in communities of color or low- and moderate-income communities and ran below the radar.
In 2006, as the problem raced towards a crescendo and the predatory practices of the subprime industry grew nationwide, ACORN issued a report called The Impending Rate Shock (PDF) that said these practices "pose a huge threat to the security of individual homeowners and entire neighborhoods." Of course, we made a mistake of scale: they posed a threat not just to neighborhoods, but to the entirety of the world's economy.
A problem of such magnitude, which affects all homeowners and the value of most Americans' single greatest asset: the equity accumulated from homeownership, demands a solution the size of which can only be addressed by the Federal government. That solution must include the following three key issues or it will not succeed and four families a minute will continue to lose their homes.
In the words of Mike Shea, the Executive Director of ACORN Housing Corporation, a sister organization to ACORN, a plan must:
• Establish standardized loan modification guidelines and federally subsidized economic incentives that will provide investors and the mortgage servicing industry with an ability to objectively evaluate the economics of the modification;
• Carve out protections for renters who, despite being current on their rent, would otherwise be in jeopardy of eviction due to the mortgage default of their landlord; and
• Grant bankruptcy court judges the ability to restructure homeowner debt and reduce monthly payments via interest rate reductions and principal balance forgiveness.
President Obama's announcement today of a $75 billion program to address the foreclosure crisis at the heart of the economic meltdown is welcome and swift action for a problem that the Bush administration and its Congressional allies actively blocked attempts to address while Wall Street tycoons grew fat on the equity stripped from working families. And every 13 seconds another family pays the price.
The recent announcements by major institutions like Bank of America, Chase, and Citigroup to implement a foreclosure moratorium on the mortgages held in their own portfolios are also important steps in the right direction. However, these voluntary steps do not come close to covering all families who may face foreclosure in the coming months, in particular because so many of the predatory mortgages that were originated during the subprime boom were securitized and sold off to investors instead of kept in the lender's portfolio. Those are the loans at the heart of this crisis.
In the wake of the administration's commitment to the three principles above, it is crucial to America's economic recovery that these principles be in any package passed by Congress. It is inevitable that elements of Wall Street and their enablers in Congress will try to weaken or gut provisions that subscribe to these principles. We cannot let that happen.
ACORN's Foreclosure Campaign will continue until the crisis has passed. We will continue to work to save individual families who are caught up in the mess through the ACORN Home Defenders. And we will fight for the principles outlined above against the fat cats and their allies in Congress so that we can take another step on the road to economic recovery.
Addressing this crisis isn't just about saving the American economy or starting to get back on our feet, it is fundamentally about saving the American Dream, about living up to our best visions of ourselves as Americans, reaching out to stand in solidarity with each other, and, inch by inch, making this a stronger nation.