Market Watch, September 27, 2018: A decade after the housing crisis, foreclosures still haunt homeowners
After they had to leave the home, the Landis “begged” several landlords to give them a chance despite their poor credit. They eventually found someone to rent them a home while they both continued to work and tried to recover financially.
“Wells Fargo has made a fortune off of the backs of those who would seek to reclaim their dignity,” Maria Landi said. She added that Wells Fargo is looking into their case after she contacted them to say she believes their home was erroneously foreclosed on due to the computer glitch. Others affected by the crisis weren’t so lucky. Although the homeownership rate has rebounded in recent years, it still remains well below the high it reached before the foreclosure crisis.
Matters are even worse for black, Hispanic and low-income Americans though. Today fewer than half of black households (41.6%) and Hispanic households (46.6%) are homeowners, while just over half of households whose income is less than the national median family income own where they live (50.2%).
This is a reflection of how the foreclosure crisis began, said Jesse Van Tol, chief executive of the National Community Reinvestment Coalition, a group of grassroots organizations focused on promoting community development and improved access to financial services. “The foreclosure crisis really started as a subprime lending crisis,” Van Tol said, referring to the extremely risky loans lenders made to borrowers with less-than-stellar credit in the lead up to the crisis. “Low-and-moderate income people and people of color were disproportionately targeted for these bad loans.”
Crisis-era foreclosures and short sales were concentrated in these communities. That not only left millions of these Americans without a home, but also significantly lowered home prices in these areas. While housing markets in cities like San Francisco and Seattle have recovered, the areas where these risky loans were common haven’t bounced back. In fact, they continue to see higher levels of new foreclosures, Van Tol said.