“Foreclosure Crisis Fades to Black and Brown”

An August 15th CityLimits Featured Investigation focuses on the disproportionate impact of the foreclosures on black and Latino communities, where the crisis that began in 2007 continues to rage. LS-NYC Director of Foreclosure Prevention Litigation Jacob inwald discusses the impact of recent foreclosure prevention funding cuts on legal services providers and clients.

Michael Hickey, the Director of the Center for New York City Neighborhoods, which partially funds foreclosure prevention work at LS-NYC, says that 75 percent of CNYCN's clients are people of color, and that many of them can't make the payments on what are otherwise attractive loans because they lost all or part of their income during the recession, which disproportionately their communities. "You look at the neighborhoods where the foreclosure crisis is occurring, and these are communities where there's a large concentration of people connected to the service economy, or to the public sector, both of which have really suffered in the downturn," he told CityLimits.

From the piece:

Last fall, New York's judiciary became the first in the country to require that attorneys filing foreclosure actions also submit an affirmation to verify that their clients' paperwork is accurate. The measure is intended to prevent the robo-signing of foreclosures that erupted last year. On one hand, the new rule has forced attorneys to review documents that before were submitted to the courts largely sight unseen. On the other, those attorneys are filing foreclosure actions, but stalling on the next step — filing the Request for Judicial Intervention, which triggers the new affirmation requirement, in addition to the settlement conference process.

"They've put a lot of clients into limbo," says Jacob Inwald, director of foreclosure prevention litigation at Legal Services NYC, a legal aid provider. "Because the plaintiff's law firms are not yet able or willing to file the required affirmation corroborating the accuracy of what they've filed in court… they're not getting settlement conferences, which is actually an opportunity to try and resolve their case."

In the meantime, legal aid attorneys are trying to safeguard houses, one at a time. For the past two years, the state has been funding legal aid for homeowners facing foreclosure. But that money has now been axed from the budget, set to expire in December.

"Foreclosure is a lawsuit. Imagine what it's like to be sued, and confront going into court without a lawyer," says Inwald. "The banks aren't going into court without lawyers."

Long-term implications

Racial disparities in foreclosure also have broader social repercussions. As the crisis strips a disproportionate number of black and Latino families of the equity in their homes, it threatens to further expand the country's yawning racial wealth gap. For each dollar of median white family wealth, Latinos possess 12 cents of wealth, and African-American families claim only 10 cents of wealth, according to the Insight Center for Community Economic Development.

"We do see very large disparities in family wealth between whites on the one hand and nonwhite families on the other hand," says the Furman Center's Madar. "I think a lot of people would point to home ownership patterns as contributing to that disparity."

The Greenlining Institute, a public policy research and advocacy group based in Berkeley, California estimates that while white families impacted by foreclosure will lose about one-third of their wealth, African-American and Latino families who are impacted will lose two-thirds of their wealth.

Read the full article at CityLimits.org .