American homeowners continued to lose a great deal of wealth – $192.6 billion – due to the foreclosure crisis in 2012, and those losses had a disproportionate impact on people of color. The most devastating impacts of the ongoing foreclosure crisis were in majority people of color communities: Zip codes with majority people of color populations saw an average of $2,198 in lost wealth per household, over 1.7 times the average lost wealth in segregated white zip codes.
13 million homes are still underwater nationwide. The nation is at risk of seeing an additional erosion of $221 billion in wealth. Writing down the principal on mortgages to current market values would save homeowners thousands of dollars a year. It would also boost the economy and create jobs.
These findings were released today in “Wasted Wealth: How the Wall Street Crash Continues to Stall Economic Recovery and Deepen Racial Inequity in America,” a national report authored by the Alliance for a Just Society. For homeowners of color, who tend to keep their wealth invested in their homes and communities the impact of the foreclosure crisis is profound.
The report further details the effects of foreclosures and the pipeline of underwater mortgages on 17 cities throughout the nation. Working with partners Home Defenders League and the New Bottom Line, the Alliance released the report this morning. It includes stories from homeowners in each of these cities; many are members of the Home Defenders League and are actively fighting to remain in their homes.
This study is eye opening and puts a halt to the narrative that the housing crisis is over. It is clearly not. What we need now is the leadership in Washington D.C. to save homeowners and reset the nation’s economy.
Key Findings in the Report:
- The foreclosure crisis continued to destroy wealth on a large scale in 2012: An average of $1,679 in lost wealth per household.
- More than 13 million homes are still underwater and at risk of foreclosure and more lost wealth. If action is not taken to prevent a share of these mortgages from going into foreclosure, Americans stand to lose nearly $221 billion in additional wealth.
- A strategy of principal reduction would save money for homeowners, boost the economy, and create jobs: A principal reduction program could produce average annual savings of $7,710 per underwater homeowner, boost the U.S. economy to the tune of $101.7 billion, and create 1.5 million jobs. With more money in people’s pockets, they will remain in their homes and spend more in their communities, creating a demand for goods and services.
We have created a website for the report along with our partners the New Bottom Line and Home Defenders League. Read the full report: wastedwealthreport.com/download
We would like to thank the many contributors to the report:
Occupy Our Homes Atlanta: Tim Franzen, Shab Bashiri
Communities United Baltimore: Steve Dooley
Action NC: Luis Rodriguez
IIRON: Kristi Sanford
Communities United For Action: Mary Metzmeier
Michigan United: Bartosz Kumor
Progressive Leadership Alliance of Nevada: Laura Martin, Chris Preciado
Alliance Californians Community Empowerment: Amy Schur, Maurice Weeks, Claire Haas, David Sharples
Neighborhoods Organizing for Change: Anthony Newby
New Jersey Communities United: Mary Sczajik
New York Communities for Change: Pete Nagy
Organize Now!: Laura Johns
Action United : Maryellen Deckard
Direct Action for Rights and Equality: Christopher Rotondo
Colorado Progressive Coalition: Corrine Fowler
Washington Community Action Network!: Chris Genese
Missourians Organizing for Reform and Empowerment: Zach Chasnoff, Jeff Ordower
Alliance for a Just Society: Jason Collette
National Peoples Action: Jordan Estevao
Right to the City: Tony Romano