Marc H. Morial
President and CEO
National Urban League
There is no doubt that economic empowerment is the new civil rights movement of the
21st Century. And one of the keys to achieving this goal and bridging the economic
gap between the African-American community and other communities is increasing
homeownership, the primary source for assets and wealth in the African American
community.
Thanks in part to low interest rates and more liberal lending to homeowners who had
not qualified for mortgage loans in the past, African Americans have made great strides
in homeownership in the past decade. For the first time, in 2004, nearly 50 percent of
African Americans owned their own homes.
Yet, as more and more African Americans are buying their own homes, more and more
are becoming foreclosure statistics. According to a 2005 Harvard University study,
areas with large minority populations, such as Philadelphia, have experienced sharp
rises in foreclosures, in some cases more than doubling. The trend of rising
foreclosures within the African American community has already begun to erode
homeownership gains. In 2005, African American homeownership fell for the first time
in a decade.
This problem is not exclusive to the black community. In the last five years, nearly 3
million households in the United States have entered into foreclosure. During the first
quarter of 2006, foreclosures rose 72 percent over the same period in 2005, according
to a recent survey by RealtyTrac, a firm that specializes in foreclosure monitoring.
African Americans, however, are particularly susceptible to foreclosures in part
because of the growing popularity of more expensive and higher-risk subprime
mortgage loans. According to recent Home Mortgage Disclosure Act data, minorities
are twice as likely to receive subprime loans as whites. In mostly minority communities,
this rate can be up to ten times higher. And, according to the Mortgage Bankers
Association, in 2004 subprime loans were four times more likely to become delinquent
and three times more likely to be foreclosed upon than prime loans.
To combat the growing problem of foreclosures in the African American community, the
National Urban League and the Minneapolis-based Homeownership Preservation
Foundation have recently joined forces to help minority homeowners teetering on the
brink of foreclosure through the new National Urban League Foreclosure Prevention
and Education Program.
A major goal of the partnership is to turn the tide of increasing foreclosures by reaching
those homeowners who are not calling their lenders before it is too late.
According to a
recent HPF poll of 1,334 U.S. homeowners, more than half of the homeowners polled
said they would not contact their mortgage company if they were delinquent in their
payments, with the primary reasons being mistrust of lenders, pride and
embarrassment.
According to a recent Freddie Mac study, foreclosure counseling is key to helping
homeowners keep their homes. All too often pride and fear get in the way of getting
help. The first step to foreclosure prevention is breaking down homeowners' fears and
misconceptions through education and opening up the lines o f communication with
lenders.
To reach deeper into the community, the National Urban League is helping to promote
the Foundation's free Homeowner Helpline (888-995-HOPE) across the country. The
Foundation has also pledged $1.2 million over the next three years to support the
expansion of foreclosure counseling and education work in local Urban League
affiliates in Houston, St. Louis, and Philadelphia, cities which ranked in the top 50
metropolitan areas for foreclosure in the first quarter of 2006.
According to RealtyTrac, one in every 358 households in the US was facing
foreclosure in the first quarter of 2006. In Houston, that figure was one in every 202
households, followed by Philadelphia with one in every 258 households and St. Louis
with one in every 298.
The partnership builds upon the experience of HPF's Home Ownership Preservation
Enterprise (HOPE) that has seen successes in Chicago, Dallas and Detroit. In 2005,
the program held nearly 1,500 phone counseling sessions, nearly one third of which
led to the prevention of foreclosures.
Foreclosure not only hurts individuals: It hurts lenders and entire communities.
According to a 2002 Tower Group analysis, lenders incurred an average cost of nearly
$59,000 per loan they foreclosed upon. Cities with significant foreclosure rates face
high property rehabilitation cost, decreased marketability and lower property values.
The National Urban League believes we can help stop the endless cycle of broken
dreams that foreclosure brings due to bad choices and lack of knowledge. Our
program, like many others, first begins with the individual and will help struggling
homeowners to get back road to economic promise and stability.
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