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The housing crisis hit Americans hard. Four million homeowners have already experienced foreclosure and another 11 million still owe more than their homes are worth. The number of those affected however goes well beyond these 15 million however when you consider the other family members. Then there’s the neighbors. You might be wondering how the foreclosure crisis can affect the neighbors of those going through foreclosure. When many homes in the area are foreclosed on and become vacant, the value of surrounding homes can drop dramatically. This has become an especially big problem in minority neighborhoods.
Communities of color hit hardest
When the housing crisis hit in 2008, it was the minorities who were hit hardest. Minorities were the main target for predatory loans so when the housing prices dropped suddenly, they were the ones left underwater. As a result, communities of color experienced a disproportionate number of foreclosures. As more and more homes are foreclosed on and vacated, the neighborhood begins to look worse and worse as homes fall into disrepair.
Not only were minority neighborhoods hit harder, but they’re experiencing the recover much slower as well. While many more affluent areas have already recovered from the housing crisis, minority neighborhoods are experiencing little, if any, recovery.
A possible solution
So far, the federal government has not been able to find a solution for these communities of color so local governments have stepped in with a possible solution. They want to use their power of eminent domain to seize underwater mortgages, pay fair market value to the current mortgage owner, and then re-issue the mortgage at a more affordable rate. This would essentially streamline the housing crisis recovery in neighborhoods that were harder hit by fixing up abandoned properties and raising home values.
An unexpected opponent
Surprisingly, the Federal Housing Finance Agency (FHFA) threatened legal action and the withdrawal of credit to any local governments that use eminent domain powers to seize mortgages. A coalition of community groups filed a Freedom of Information Act (FOIA) request asking why the FHFA was opposing them but got no response. Now the American Civil Liberties Union (ACLU) has filed a FOIA lawsuit asking a judge to order the FHFA to give a response. In the meantime, communities of color can only wait for an answer.
Business, real estate, and bankruptcy law and litigation news brought to you by mbblegal.net
Source: aclu.org/blog/racial-justice/communities-color-face-unexpected-foe-foreclosure-recovery
Communities of color hit hardest
When the housing crisis hit in 2008, it was the minorities who were hit hardest. Minorities were the main target for predatory loans so when the housing prices dropped suddenly, they were the ones left underwater. As a result, communities of color experienced a disproportionate number of foreclosures. As more and more homes are foreclosed on and vacated, the neighborhood begins to look worse and worse as homes fall into disrepair.
Not only were minority neighborhoods hit harder, but they’re experiencing the recover much slower as well. While many more affluent areas have already recovered from the housing crisis, minority neighborhoods are experiencing little, if any, recovery.
A possible solution
So far, the federal government has not been able to find a solution for these communities of color so local governments have stepped in with a possible solution. They want to use their power of eminent domain to seize underwater mortgages, pay fair market value to the current mortgage owner, and then re-issue the mortgage at a more affordable rate. This would essentially streamline the housing crisis recovery in neighborhoods that were harder hit by fixing up abandoned properties and raising home values.
An unexpected opponent
Surprisingly, the Federal Housing Finance Agency (FHFA) threatened legal action and the withdrawal of credit to any local governments that use eminent domain powers to seize mortgages. A coalition of community groups filed a Freedom of Information Act (FOIA) request asking why the FHFA was opposing them but got no response. Now the American Civil Liberties Union (ACLU) has filed a FOIA lawsuit asking a judge to order the FHFA to give a response. In the meantime, communities of color can only wait for an answer.
Business, real estate, and bankruptcy law and litigation news brought to you by mbblegal.net
Source: aclu.org/blog/racial-justice/communities-color-face-unexpected-foe-foreclosure-recovery
