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Losing Ground: Foreclosure Rate Higher Among Minority Homeowners


This story was funded in part by the International Center for Journalists.

By Ann-Marie Adams, Staff Writer

HARTFORD — For 15 years, Yassah Wynne worked two jobs and paid a $1, 200 mortgage on her three-bedroom Simsbury home. Her husband’s income helped with household expenses that come from raising two children and a cat named Cleo.

Wynne divorced her husband in 2002 but could still afford her mortgage on her 50-hour, six-day work schedule as a medical secretary and as a Certified Nursing Assistant. Then things changed. Bank of America Home Loans absorbed Countrywide Financial last April, and soon afterward she noticed monthly increases by $50, then, $100 until it reached $1, 600. This change on a fixed interest $171, 000 loan, she thought, was odd. So she sought answers. Bank representatives mentioned something about tax increases, she said. For a while, she dipped into her savings until it overwhelmed her.

“I just couldn’t do it anymore. I couldn’t make those payments,” she said after exiting Hartford Superior Court. “I don’t even go see a movie. I’m always working.”

The 40-year-old, African-American, single parent of two panicked. She needed a solution.

LONG LINES, MORE MINORITIES

On any given morning, distressed homeowners across Connecticut file into Hartford Superior Court on Washington Street, anxiously waiting to meet with their banks. For several months, Hartford home owner Ramon Gutierrez, 48, noticed a disturbing pattern. Most of the distressed owners were African American and Latino.

“A year ago, I saw all kinds of people coming in, lots of white people, a few blacks and Hispanics. But as my mediation drags on, I see more people of color, very few Asians, fewer whites,” Gutierrez said. “And I’m starting to wonder about that.”

Gutierrez’s observation is aligned with a national trend and is supported by a recent study by a national agency that serves as an advocate for homeowners, the Center for Responsible Lending.

Yassah Wynne stands outside her home.

According to the study, the number of African American and Latino borrowers disproportionately bore the burden of foreclosures. Since the recession began in 2006, nearly 8 percent of both African American and Latino borrowers lost their homes to foreclosures, compared with 4.5 percent of white borrowers. And as the crisis continues across the country, it will be particularly devastating to more African American and Latino families.

The Center also found a separate and deeply troubling issue: minority communities continue to experience significantly higher foreclosures rates than whites, regardless of their income and educational level.

The news came as no surprise to Hartford City Councilman Luis Cotto.

“I’m not surprised at a pathetic picture the report describes, especially about Latinos,” Cotto said. Latinos are predisposed to be in this situation because they’re a newer population and not as [financially] literate.”

Hartford is Connecticut’s capital city and 41 percent of its residents are Latinos, while 38 percent are African American, which includes West Indians. And almost 20 percent are foreign born, according to the 2006 U.S. Census estimate. The city comprises most of the targeted population for subprime mortgages. The impact of the housing crisis in this city is especially devastating because owner-occupied housing is only 23 percent of the city’s housing stock.

The 17-square-mile city has mostly churches, other nonprofit organizations and corporate offices, which contribute less to the overall tax base. In one month alone, the city’s home foreclosure rate jumped 74 percent.  Yet, there’s very little discussion on a municipal level about staving off foreclosure in a city with an already low tax base.

Cotto said there is no action with the housing committee, but the city should have some kind of dialogue on this matter.

“It would behoove the municipal to hold on to that 23 percent,” he said.

STATE STEPS IN, STEMS FORECLOSURE CRISIS

On a state level, there have been many discussions, led by the General Assembly’s Housing Committee, about how to stem the housing crisis. And the state just celebrated what it deemed a success and an example for others to follow: court-mandated mediation before the final act of foreclosure. In this judicial program, lenders are forced to follow federal guidelines in processing the Home Affordable Mortgage Program (HAMP). More than 7,100 cases have completed the mediation process through June 2010.

Seventy-six percent of those cases have reached agreement, which could include a quit sale. Overall, 62 percent – more than 4, 400 cases – remain in their homes, according to state officials.

In July, Gov. Jodi Rell staged a ceremony with Laura Wilson, a single, white suburban mother, in front of her Windsor home to celebrate the success of the mediation program and by signing a bill, House Bill 5270, An Act Concerning Foreclosure Mediation, that extends the bill until 2012. State officials see that as a viable measure to stem the foreclosure rate across the state, not just in the suburbs.

However, Wilson’s process “went relatively smoothly” compared to others who are still in mediation. That’s why she was a “feel good” success story for the cameras.

Indeed, Wilson’s experience with her bank went well. But Wynne’s experience with her bank has been dramatically different. Wynne said her first mediation session was an unforgettable experience. The bank’s lawyer didn’t speak to her and hardly looked at her.

She is not alone. Another homeowner said an attorney openly said to her: “You look like you might understand what I’m talking about.”

CERTAIN STATISTICS NOT KEPT

Program administrators said they don’t keep track of gender, race and ethnicity, which makes it difficult to assess a statistical disparity or whether interactions between the banks and homeowners of color are, well, colored by personal prejudice.

But it’s easy to gauge by eyeballs how many homeowners each mediator administers every week. Hartford has four mediators and each has 10 to 12 cases daily. About half of those persons are people of color.

Although some  people might suffer slight indignities, advocates say the court-mandated program seems like the only viable buffer to protect African Americans and Latinos from predatory lenders seeking to skip steps in the federal process for distressed owners who qualify for the Obama administration’s program. Or Servicers who practiced delay tactic, or is a part of the institutional delay evident in the process.

MEDIATION, MANDATORY STOP BEFORE FORECLOSURE

 

 

 

 

 

 

 

Yassah Wynne inside her home in Simsbury.

 

 

 

 

 

 

 

Because of Connecticut’s mandatory foreclosure mediation program, Wynne has the opportunity to meet with her bank’s lawyer. In April, the Liberia-born woman, who  immigrated to America in 1988, walked into her first mediation session dazed and anxious. She met her young mediator, who introduced himself and asked: “How are you doing?”

“I can’t eat. I can’t sleep,” she blurted out in her slight Liberian lilt. “I’ve never been through this before. But I’m not hiring a lawyer. I can’t afford it.”

She was still recovering from sticker shock after paying off $20, 000 to her divorce lawyer. And she thought about her 19-year old son about to enter college, and her 14-year-old daughter about to enter high school. And with her part-time job down to only four hours, she had some concerns.

“Don’t worry,” her mediator told her.

“Just tell me they’re not going to lock my door, … my kids are not going to come home and see a locked door,” she said. The mediator told her that’s not going to happen, at least not like that.

“He was just great. He explained things to me,” Wynne said, her round, girlish face with big brown eyes brightened. “All of a sudden I felt relieved.”

Wynne was assigned a mediator, who seemingly cared about her state of mind. That’s not the typical experience. Eager to unload their caseloads, some mediators give the bank the benefit of the doubt when they claim they didn’t receive paperwork; or use that as a reason to exit mediation. For example, when a Windsor homeowner went before the judge, he showed proof of faxed documents to the bank. The judge ordered the homeowner back into mediation.

Wynne’s experience with her bank’s lawyer has only just begun.

“He looked at me like I was an insect,” she said of the young white attorney. “He didn’t open his mouth until he told the mediator he had to leave to pick up his son for soccer.”

Upon hearing that, Wynne thought that the attorney probably didn’t know that she has a son who was on the Simsbury high school’s varsity team and on the honor roll.

“He was probably thinking about what to do with this African girl who shouldn’t be living in Simsbury,” she thought. “I got that slight feeling…. But I guess they are just doing their job.”

On her second visit, another attorney was on the phone during her session, she said. He didn’t look up to talk to her. Then she learned the bank wasn’t ready. So she hurried out of court. It was her only day off during the week, which she gets once per month. She was thinking she could’ve been home cleaning, mowing the lawn, or doing laundry.

Another frustration was the request for more paperwork. She was actually thinking about walking away from her house. She didn’t need the additional stress, she said.

“I’ve been running around for so long. I’m tired,” she said. Then she enumerated the unit levels of stress.

“I spent $32 in Kinko’s. That’s grocery money for my kids,” she surmised.

Now she was angry because her house, she said, is worth more than she owed the bank. There’s still equity.

“I know this is America and people want to make money, but they can’t mess with people’s house like that, especially when you have children.”

ALTERNATIVE SUPPORT TO MEDIATION?

In addition to the court mediation program, the state also has two other programs targeted at distress owners: The CT Families and the Emergency Mortgage Program. Both are by the Connecticut Finance Housing Authority, a quasi-public agency whose mission is to “expand affordable housing opportunities.” Both programs were off to a slow start. Last January, the programs helped only one person.

Since then, the requirements have changed and the CHFA CT Families program has helped 93 homeowners. Of that number, 15 Latinos and 14 African Americans have been helped, compared to 59 whites. In the EMAP program, a total of 149 loans have been processed. Of that number, 12 Latinos were helped and 29 African Americans were helped, compared with 72 whites, and 65 who did not use identifiers, according to state officials.

Considering the percentage of people of color in foreclosure, the numbers are not proportionate. In the age of Obama, this snap shot of state programs also implies—at fist glance—a biblical and secular form of economic oppression, some say.

CT CITIES, CENTER OF FORECLOSURE CRISIS

Housing advocates say it’s not far fetched to say that since 2007, a high percentage of foreclosures are disproportionately found in the cities. And that more should be done to help stem that crisis in already depressed areas.

“It’s safe to say that since communities of color are targeted by subprime lenders, it’s easy to see how many people of color are disproportionately affected,” said Erin Kemple of Connecticut Fair Housing Center, a Hartford–based nonprofit organization that offers foreclosure assistance, including legal help. Kemple advocates for more pro-bono attorneys funded by the sate.

The research supports Kemple’s assessment.

RealtyTrac, a company that tracks foreclosures across the country, forecasts many foreclosures in cities, not just in Connecticut but also across the nation.

According to RealtyTrac, Connecticut cities had the highest foreclosure rates in the following order: Bridgeport, New Haven and Hartford. In July alone, there have been respectively 98, 52 and 44 initiations of foreclosure actions in Bridgeport, New Haven and Hartford. The number for cities almost doubled from last July figures of Bridgeport’s 51, New Haven’s 42 and Hartford’s 28 foreclosures.

The demographic and housing pattern in cities and some suburbs today mirror that of the 1960s and 1970s, not long after the Fair Housing Act of 1968. Connecticut, like other states, had hatch clauses that prohibited white homeowners from renting or selling houses in the suburbs to blacks, Jews and Catholics.

In the late 1960s, former Hartford Councilman George Ritter, now deceased, was known to have helped people of color to buy houses in the suburbs by using whites as front people. But when they did move in, they were racially harassed. In 1980, one black family’s home was bombed after they moved into the suburb of Manchester.

Today, people of color are still concentrated in the state’s urban core. If they’re in the suburbs, they become targets of subprime loans irrespective of income and education, and they receive less help than their white counterparts do to stem foreclosure, researchers say. Agencies that once helped predominantly urban populations, such as ACORN in Hartford, are gone, Cotto said.

President of Connecticut Hispanic Democratic Caucus Tomas Reyes said there was an organization in Bridgeport that also helped many Latinos, but that agency is now defunct. And there’s no particular programs targeted at the Latino population to help them in this crisis. Reyes said his group relies on supporting politicians who will implement policies to address a broad array of services for the community.

The federal government has taken notice of the trend of inadequate services to give extra help distressed homeowners of color. Some say race neutral programs are sometimes ineffective.

At a June hearing by the House Committee and Oversight and Government Reform, bank executives testified about foreclosure prevention efforts. Chairman Congressman Edolphus Towns (D-NY) reiterated the need to do more with the federal administrative modification plan but added that more needs to be done to address the glaring disparities.

“Clearly we need to do a lot better than we’ve done in the past,” he said.

Wynne agreed. Wynne’s third mediation session is scheduled for Aug. 20. She has many questions and wants answers. Why can’t they give her what she can afford to pay now with her 40-hour job and a five-hour part-time job? After all, she said, she is one of the lucky ones: she still has stable income.

“I don’t understand. People around the whole world are losing jobs,” she exclaimed, hands gesticulating, eyes questioning. “I still have a job, no…I have two jobs…and they don’t want to give me a modification. What’s the problem?”

When contacted, a Bank for America representative said they would investigate the matter.

RACE Number Percentage of Total
African American 29 19%
Asian 4 3%
Latino 12 8%
White non Latino 94 63%
Other 21 14%
TOTAL 149 107%
Female 51 34%
Male 66 44%
TOTAL 149 78%

CT FAMILIES                                                                                 Source: CHFA

This story was funded in part by the International Center for Journalists.


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CT Foreclosure Filings Up, Many Stuck in Court Mediation


By Wendy Innes and Andrew White, Staff Writers

HARTFORD —  Roberto  Rodriguez  is knee deep in foreclosure-related paperwork, sorting out fax receipts from folders he has stacked in his two-bedroom condominium in Windsor.

His papers date back to May 2008 when he first sought help to avoid an impending foreclosure. But help didn’t come soon enough. Six months before Wells Fargo filed foreclosure paperwork in New Britain Superior Court, Rodriguez  contacted the bank’s bill collector, America\’s Servicing Company, and sought ways to overcome his unfortunate situation. First, he was underemployed, then unemployed. Then his mother died, and he lost his job. But the bank did not offer a solution. He then learned about a Connecticut Housing Finance Authority’s Housing Fair in late spring 2008. While there, he talked to someone at Department of Banking, which in turn referred him to Association of Community Organizations for Reform Now ( ACORN)  and Neighbohood Assistance Corporation of America (NACA) programs. Both program representatives in 2008 requested financial information and other personal documents after telling him they had a record of getting modifications for their clients.  To date, Rodriguez  has yet to get a help from  ACORN  or NACA.

Then in May 2009, the bank filed foreclosure papers and Rodriguez applied for foreclosure mediation. Since then he has been in mediation. Armed with his fax receipts of paperwork he sent to the bank, he would meet with the bank’s lawyers from Hunt, Liebert and Jacobson, P.C. Each lawyer would have a different story. They didn’t receive the paperwork. After he produced the fax receipts, they would tell him to refax the information and wait. He would wait only to hear on his second and third meetings that his paperwork was still being reviewed. And by the time the paper work was processed, he was told to refax the information—again.

“I don’t think there is any good faith effort in these mediation sessions,” Rodriguez  says. “They are playing ridiculous games that even a five-year old can decipher. How can you mediate with someone who doesn’t want to mediate?”

In March, there was a 22 percent spike in new foreclosure filings statewide, according to  RealtyTrac, a foreclosure tracking firm that gives monthly state by state foreclosure trends.  In April, that number rose again by 4.4 percent, with another 2,915 new foreclosure filings.  In Hartford county alone the number  is down almost 3 percent from the previous month but up almost 13 percent  from the previous year with one in every 593 housing units in some stage of foreclosure, including those who are stuck or are on their way to being stuck in mandatory mediation. According to the latest number released by the mediation program, about 10, 000 homeowners are in Connecticut’s mandatory court mediation program—and in limbo.

“It is a significant number,” says Foreclosure Mediation Program Manager Roberta Palmer. “But saying people are in limbo is, I guess, accurate, but they are in a much better place because their homes cannot be foreclosed on.”

Rising Mortgage Defaults, Rising Frustration

Industry experts at first linked rising default rates across the country to looser lending in the subprime market, which provides mortgages to people with poor credit or low income. Some were drawn in by initially low teaser rates, and then when the low-interest rate period ended, they got stuck and realized they can’t pay the loan,” says Erin Kemple, executive director of the Connecticut Fair Housing Center, a Hartford-based nonprofit organization that advocates for fair housing.

Because subprime lending in Connecticut appears to be concentrated in urban areas, the rise in foreclosure filings raises concerns about deteriorating rates of home ownership in city neighborhoods, Kemple, says.

“People have gotten into loans that have unaffordable terms,” she says. “We would call them predatory; not everyone would.”

Concentration of Foreclosures in Urban Areas

Now, the foreclosure crisis is also driven by people who lost their jobs. And they are turning to the courts for help.

Connecticut’s mandated mediation program is a judicial process that allows homeowners to meet with a representative who has the authority to negotiate for the lender. The mediator’s role, Palmer says, is to ensure there’s an accurate review of homeowner’s financial information and to  make sure the federal guidelines are accurately applied.  The Lender may reduce interest rate, fixt interest rate, extend the term of loan and/or reduce principal balance. Or the homeowner may qualify for the Home Affordale Modification Program (HAMP) where the federal government help with some of the arreagage and mortgage payments. However, some homeowners may still lose their homes after their paperwork is reviewed. These would receive “graceful exists” such as short sales, deed in lieu of foreclosure or an extended sale date.

But some who are considered qualified  for what’s called the Obama plan or HAMP, never get to the end of the process, housing advocates say, because lenders come unprepared to sessions and are usually unaware of the guidelines and how to apply them.

Foreclosure Attorney Keith Fuller places most of the blame for the delays with the lenders. Fuller supports the program, but says that banks are making it difficult for the homeowners.

“I find that it takes a lot of these banks a while to do a full review of a loan for modification. By the time they get around to putting all the pieces together to analyze it for a full modification, the last financial information that’s been submitted is outdated.” Fuller says.

According to Fuller, it takes the bank 60-90 days to review all of the required information and by the time their review is complete, the information is no longer considered valid and the bank requests the information again.

“It’s sort of this cycle that goes on and on,” he says. “It’s extremely difficult and really emotionally taxing for these people to go weeks and weeks or months and months without a straight answer from the bank because from their perspective, it’s confusing to know what the bank is doing.”

In addition, borrowers will call their lenders only to find that the information that they had sent in weeks before has disappeared.  Fuller expresses his frustration for his clients’ situations, “In this information age, it seems to me, that the banks should be a little bit more organized in collecting all this information.”

Eugene Melchionne, foreclosure attorney and chairman of the National Association of Bankruptcy Attorneys in Connecticut is a critic of the program, and he champions federal intervention in bankruptcy court.  Melchionne also represents homeowners who are stuck in the foreclosure mediation process.  

“The oldest mediation I have now is easily going on a year and a half,” he says.  “The mediators don’t really have any power to be able to force banks to cooperate fully. Security is “the primary reason why people buy houses. Clearly those stuck in limbo, waiting to find out if they will keep their home have little of that.”

But there is a silver lining here. That’s because to being in limbo, Palmer says, is better than being out of the house. She says the court is aware of the frustration level on both sides and how burdensome it is for mediators as their caseload grows.

The court, however, is resolute on one matter. “We won’t let those cases out of mediation until we get an answer one way or the other on whether or not they qualify on any settlement,” Palmer says.

Mediation, A Success Story

Connecticut’s mediation session is touted as a model for other states across the country. In February, the program  boasts a success rate of about 60 percent. But some question the accuracy of that number. Attorney Melchionne says that the statistics put out by the court don’t tell the whole story. The court only tracks those people who have completed the mediation process. There is no data on those who are in limbo. In addition, Melchionne says,  his clients are making payments under temporary modification, but are continuing to be reported as late on their credit reports and receiving notices from the banks that their homes are going to be foreclosed on.  

“They’re showing a huge success rate, but they’re counting people who are leaving their homes as successes,” he says.  When asked what he would define as a successful mediation, he says that homeowners staying in their homes are what he considers a success.

Matt Silverman, a Boston-based businessman who was  banking specialist for 10 years, agrees with Melchionne. Silverman says the state’s program has a phenomenal success rate and is too good to be true.

“I’d like to see that number verified because it would be the most successful program in the nation, especially when compared with about a 5 percent success rate everywhere else,” Silverman says. “If a program like this is working that well, they should be talking with the Obama administration’s highest officials to roll out … a national program that finally solves the housing crisis.”

Silverman offers a free online course at www.hopeforfree.org. This site helps homeowners with how to package their story for the lender and how to find a lawyer experienced in debt negotiation, he says.

The state also has measures to help homeowners stuck in limbo, thanks to the works of housing advocates such as Connecticut Housing Center. They recognized early on the limitation of the mediation program and have been pushing for state officials to strengthen the program. advocates say. As a result of their work, the General Assembly in May passed a bill to extend the state’s foreclosure mediation program for two years. The bill promises to punish lenders and servicers who come to the mediation unprepared to do good faith negotiation.

The new bill will take effect on July 1. 

Helpful Links:

Connecticut Housing Finance Authority

Connecticut\’s Forelcosure Mediation Program

Mortgage Law Network

Editor’s Note: Roberto  Rodriguez  is a pseudonym for a person who wants to remain anonymous. The name and other identifiers have been changed to protect the person’s identity.

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