Foreclosure Crisis Continues to Destroy Wealth, Particularly in Communities of Color, Study Says

June 24, 2013
Fontana Herald News (Cal.) 
mortgage lending news

The U.S. foreclosure epidemic wiped out $192.6 billion in American wealth last year, or about $1,679 per household, according to a study from the Alliance for a Just Society, Home Defenders League, and The New Bottom Line. The most damage was done in minority neighborhoods, with predominantly white areas losing only $1,267 in wealth on average compared to $2,198 in communities of color. "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," noted the Alliance of a Just Society's Jill Reese. The organizations also determined that more than 13 million mortgages were still underwater last year, putting an additional $221 billion in wealth in jeopardy if these loans end up in foreclosure. The solution, they conclude, is principal reduction -- which they figure could save underwater borrowers $7,710 on average, generate $101.7 billion in economic activity, and create 1.5 million jobs. "The solution to the continuing foreclosure crisis is clear: we need principal write-down, and we need it now," declared Tracy Van Slyke of The New Bottom Line. "It's the right thing to do for homeowners. It's the right thing to do for the economy. It's the right thing to do for the country."
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