Peaceful Revolution: Can Congress Stop the Growing Numbers of Homeless Kids?

Carol and her children watched, stricken, as their beloved photo albums, stuffed animals, and baby blankets were thrown on the curb. Despite heroic efforts to save the family home from foreclosure, the unthinkable happened. Carol, her husband, and their three children found themselves suddenly homeless.

One out of fifty children are now homeless and these numbers are only expected to worsen as 2.4 million families are projected to lose their homes this year. Women, and particularly, women of color, are disproportionately affected by the sub-prime and housing crisis. The Consumer Federation of America found that women were 32 percent more likely to receive sub-prime loans than men, even though they had roughly the same credit scores. And this disparity rose with income level. Among high income earners, African American women were as much as five times more likely to receive sub-prime mortgages than white men.

It is time for all of us to stand up against discriminatory lending policies and practices and make sure that families at risk of losing their homes get immediate help. Preventing foreclosure is not only a lifeline for families, but also helps the economy by preventing further collapse in the housing market.

Earlier this month, the House passed the "Helping Families Save Their Homes in Bankruptcy Act" that would provide real relief to the 11% of homeowners whose mortgages are now in some form of distress. Under this legislation, bankruptcy judges could cut the principal on a homeowner's mortgage, reduce the interest rate, and extend the terms of a home loan to help families make it through tough economic times. In the coming weeks, this legislation will move to the Senate where it will face a tough fight.

MomsRising.org is urging the Senate to take action now to keep families in their homes by passing the "Helping Families Save Their Homes in Bankruptcy Act." Send a letter to your Senators by clicking here.

Our children are our nation's future. One out of fifty children are already homeless, missing critical years of education, healthy development, and community support. Where will these homeless children be in twenty years? Will they be the healthy, educated, and productive workforce which our economy demands for long term prosperity? Clearly, it is both in our short and long term economic interest to take action now to prevent more families from losing their homes.

A Peaceful Revolution is a blog about innovative ideas to strengthen America's families through public policies, business practices, and cultural change. Done in collaboration with MomsRising.org, read a new post here each week.

Comments

[rlugbill]

Part of the problem is how we in our culture define "home". We have gotten used to houses that are twice the size they used to be. We somehow need a bedroom for each child, instead of sharing. We "need" multiple bathrooms. We "need" a yard and a garage and a deck and a dishwasher, etc.

If we were just content with a small house or apartment or shared a house, there would be less homelessness. We have defined "house" upwards and we need to redefine it down.

Also, we have this independent American idea that gets in the way of people sharing. If someone is homeless, that means that either they don't want to live with friends or family, or their friends and family won't take them in. We have been conditioned to try to be independent instead of interdependent. We somehow feel it is "enabling" to have someone come and live with us when they are down on their luck.

Other countries don't have these things going on, so they have less homelessness than the U.S. even if they have less money than we do. They have stronger social and family support networks, less transience, and cheaper, more basic housing.

[allthings]

As a compliance specialist, I am quite aware of how some lenders target certain minorities for sub-prime loans, but the language that you use is very confusing.

"disproportionately affected by the ..crisis"
"women more likely to receive...subprime loans"

Loans are requested by applicants, applicants receive disclosures required by law, the application is approved or declined, the applicants may chose to move forward or not, and then the loan settles.

Applicants should never be passive. Would you buy a really expensive dress or suit without ever trying it on? no. Why agree to buy a house when you don't understand what could happen or if it fits you?

What the bank says you "qualify for" is not anywhere close to what you should borrow.

I do have a heart, foreclosure is horrible when it must happen and its even more horrible when it has happened because of fraud or misrepresentation. I just reject the language of victimization. Would that every person had ot present his or her personal finances to a roomful of stockholders and explain why 40% of take home pay is paying interest on the house and net worth is negative.

[Nommo]

As a compliance specialist, do you see the extremes between the former practice of redlining neighborhoods and then, overnight, allowing predatory lending practices to flourish? How many "compliance specialists" are not on the job?

[Laura Beall]

As a compliance specialist you were very aware of what went on. Senator Dodd came out stating publicly that 65% of borrowers in subprime loans were prime borrowers. I called his office to confirm there was a study done proving this.

These borrowers didn't understand what the LIBOR was. It was at an all time low thru late 2004. These borrowers weren't given a history of it. In mid 2004 the banks, knowingly, predicted the increase of the LIBOR and were right on the money. They knew exactly what was going to happen.

These predatory loans are valued at 600 basis pts. vs. prime loans at 200 basis pts. The qualifying ratios were overlooked with the 1st adjustment.

There wasn't complaince - this was the problem. How can the borrowers be blamed when the investors spent millions buying these loans. Wouldn't you look into what you were investing millions into?

How many houses does the average person buy? Hardly any. Are they expected to be finance experts? They blindly trusted who they thought was being regulated, the mortgage brokers.

Compliance means reviewing loan files before the loans are securitized to look for problems. It isn't rocket science to know that a buyer cannot go from 1% to 8% with a loan that has increased 20% over what htey initially borrowed with the famous pay option ARM's that are starting to reset.
Or with the 3/27 & 2/28 - can a borrower pay an increase of 60% in their mortage payment?

[Nommo]

Excellent question. Can Congress do anything these days with the welfare of people in mind?

[RightWingMarine]

If someone took a sub-prime mortgage that was a decision they made. If the terms weren't favorable they could have rejected that loan and if that bank wouldn't offer them another loan at better terms the customer can walk out. The fact that people of all age brackets took the ARM speaks more to that customers poor planning than discrimination.

The Helping Families Save Their Homes in Bankruptcy Act would be the death nail for lending. Why would any lending institution lend any money if the terms could be artbitrarily changed including the principle? How long can any business stay in operation if they lend more money out than they get to take in?

[Joethepauper]

There were too many houses being built and not enough bodies to fill them. The banks noticed this and decided to lobby congress to try to expand their customer base. This wasn't out of the kindness of their hearts (of which they have none), it was for pure profit. When they started lending, they created ARMs. How convenient?!! The people who agreed to those conditions should have their heads examined, sure, but the ones who wanted massive profits at the working poor's expense should be fired. The predatory lending scenario involves both predator and prey. Why are people so quick to place all the blame on people who just want a fraction of the "American Dream" that they see others enjoying.

On a side note: Can Congress stop the growing numbers of homeless kids? No, but someone should do something to halt the evergrowing population in general. All these people are just going to clog traffic and make the lines for everything longer. There is only enough food, water, and waste disposal facilities to go around. There is a plastic island of floating trash twice the size of Texas in the Pacific. There is an oil tanker under the waters near Spain that still has oil in it, but it is too expensive to deal with, so it will eventually rupture. Too many people, period.

[RightWingMarine]

your quick excuse for people who reneged on their mortgages because they really wanted a house just begs the question, there are lots of things that I really want should I buy it all on credit and then expect the taxpayer to bail me out? Your justification seems to imply that those who took advantage of ARMs have no more self-control than a child.

Ironically genetically modified foods that are mercilously lambasted could feed the hungry if only those that have enough to eat would stop burning down the research facilities. I suppose some people would rather feel self-righteous than allow other people to not feel hungry.