Virginia Holwell was a child welfare trainer for the State of Illinois before being laid off last summer. She had worked for the state for 30 years. Photo Source: New York Times
The New Face of Foreclosures
Virginia Holwell worked for the State of Illinois for 30 years. She loved her job and, if you’d asked her a year ago, she would have told you that she planned to work for another 10 years. But the Great Recession hit Illinois particularly hard and Virginia was laid off from her job. Virginia had counted on having 10 more years of work to pay off her mortgage and retire with full benefits. Instead, she found herself with a pension that was a third of her former salary and a mortgage that was now more than half of her monthly income. Virginia is the new face of Americans who are struggling to avoid foreclosure. Despite never missing or being late on a single payment, Virginia was recently told by JPMorgan/Chase that she wasn’t eligible for a modification and she should consider liquidating her home. She is working with IPA to try to save it.
Illinois Attorney General, Lisa Madigan, said on January 28, 2011, “The Great Recession is far from over. Millions of Americans are without jobs or much hope of finding adequate employment anytime soon. Millions more have lost their homes and a new wave of foreclosures is set to sweep the country.”
History of the Foreclosure Crisis
The recently released Financial Crisis Inquiry Commission’s (FCIC) report echoes what Illinois People’s Action has been saying since the late 1990s. Predatory and subprime lending was on the rise in an increasingly unregulated market and, if unchecked, it had the potential to bring our economy down. IPA (then known as the Central Illinois Organizing Project; CIOP) met with Barack Obama when he was still an Illinois State Senator in 2002 to talk about the perils of predatory lending in Illinois. The organization spearheaded an anti-predatory lending initiative to intervene with borrowers facing foreclosure as a result of predatory loans.
As lenders discovered an untapped housing market, subprime lending began to soar. New “innovative” products were introduced on an almost daily basis, each more complicated and risky than the last. Adjustable rate loans teased borrowers with low initial interest rates. Option ARMS allowed borrowers to pay interest only or even less-than-interest rates on their mortgage, causing borrowers to fall further behind on their debt every month. Many of the products were offered to borrowers without determining the borrower’s ability to repay the loan. Once the deal was closed, and the brokers got their cut, the loans were securitized, packaged and sold to unsuspecting investors. A year or two later when the interest rates on these loans started to adjust upward, the borrowers found the new rates unaffordable. The trickle of foreclosures we saw in the 2000, grew to a stream by 2005 which grew to a raging river by 2007 and Niagara Falls by 2008.
We’re Only Halfway through the Foreclosure Crisis
We’ve seen nearly 6 million American families lose their home in the foreclosure crisis. As many as 13 million are predicted to lose their home before the crisis abates in 2012. That means we’re only about halfway through the crisis. And the new faces of foreclosure will be the millions of Americans who, like Virginia, never took out a predatory or subprime loan. They took out affordable loans that they could afford. They paid on them for years—never missing a payment, never late with a payment. But then, due to no fault of their own, they lost their jobs. They lost their jobs when the economy tanked because of as Wall Street and Big Bank greed and lack of regulatory oversight. And now the very entities that caused the Great Recession, wants us to pretend that everything is back to normal and we should move on. Those without jobs and those struggling to keep their homes wonder who is on their side. IPA is.
500 IPA leaders meet with Federal Reserve 2009
In 2009, IPA with its national affiliate, National People’s Action, met with Ben Bernanke, Chair of the Federal Reserve, and demanded the Federal Reserve get out of the Washington bubble and come out and meet real people on the ground. IPA hosted one of 10 national Federal Reserve meetings. 500 concerned citizens came out to address the foreclosure crisis, other forms of predatory lending and the need for community economic development. In 2010, IPA followed up on that meeting with the U.S. Treasury and hosted a similar meeting with the Treasury. IPA collaborated with 25 other groups around the state, inviting them to a roundtable discussion with the Treasury, proposing significant changes to the Treasury’s anti-foreclosure program. The program, which was supposed to help 3-4 million homeowners facing foreclosure, has only helped about 20% that number. IPA posits that the reasons for this include the fact that the program was voluntary and that the very institutions who caused the problem were continuing to make money by not solving it. We continue to organize for meaningful reforms, most recently organizing to encourage the 50 Attorneys General to mandate meaningful modifications as part of their settlement with the big banks involved in foreclosure fraud.
What Can I Do?
- Call Lisa Madigan at (312) 814-3000 and tell her that you want her to push for a strong settlement that does more than fines the banks. It needs to result in homeowners keeping their homes.
- Read IPA newsletters and attend IPA chapter meetings to stay informed and be ready for action when it is needed.