Realtors Say Minorities Face Foreclosure Threat
Alarmed that the housing downturn is having a disproportionate impact on minorities of all shades, groups of Hispanic, Asian and African-American real estate professionals have put forth a five-point action to protect people of color and prevent a roll-back in their homeownership gains over the last half-dozen years.
"Our communities are at great risk," said NAHREP chair Rebecca Gallardo-Serrano. "We must work collaboratively with lawmakers to save distressed homeowners and preserve options for future buyers."
The plan calls for the creation of a national foreclosure prevention fund to help distressed borrowers. In addition, it would prevent lenders from moving to repossess homes until they could show they took "all reasonable" steps to contact borrowers and provide them with a full spectrum of workout options and loan modifications.
The initiative, which was put on the table late last month at the National Association of Hispanic Real Estate Professionals' annual legislative conference here, also calls for a "declining market's second mortgage fund" to stimulate demand and stabilize prices in neighborhoods and communities where more than the normal number of foreclosures have taken place.
The junior liens should be interest free, the groups said, and should be repayable on a sliding scale as prices appreciate over a five-year period.
NAHREP was joined in recommending the plan by the Asian Real Estate Association of America and the National Association of Real Estate Brokers. It is the first time the three organizations, which together have more than 70,000 members, have presented a united front on an issue of such magnitude.
The groups are largely concerned that if current mortgage default and foreclosure trends continue without intervention, whatever gains minorities have made in recent years will be all but wiped out.
They also fear that not just individual borrowers will be affected but also their neighbors, including those who are still making on-time house payments. Defaults result in abandoned homes, increased crime, lower property values and lower tax revenue to support needed community services, said AREAA chair Emily Fu.
NAREB president Maria Kong said the groups are worried not just about current owners but buyers as well. As the market adopts new standards to avoid future risk, Ms. Kong said, there is "a very real and overwhelming potential" to disenfranchise minority and low- to moderate-income homeowners.
"We must ensure that sustainable homeownership remains a viable option for Americans of all economic means," she said.
To protect current owners, the groups want Congress and regulators to develop new Community Reinvestment Act requirements and incentives for banks to pursue innovative loss mitigation and foreclosure prevention initiatives.
They also want government examiners to include a review of lenders' strategies to dispose of foreclosed properties to be certain they do not have a negative impact on minority neighborhoods.
Their plan further calls for a "single, transparent and consistent" policy for identifying and assessing true risk in supposedly declining markets. Such a policy should clarify the practice of assigning higher fees and additional underwriting requirements in markets were prices are falling, the groups said. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/