Foreclosures 101 – Part 3

ForeclosureNationally, there are currently over 3.5 million American households that are over 4 months in arrears in meeting their mortgage payments.

The banks slowed the process of foreclosure on these properties last year for 2 reasons: 1) they didn’t have the means of marketing these properties without further depressing prices on the housing market as a whole; 2) they were maneuvering between pressures from the state and federal levels, as well as numerous individual lawsuits, hoping to evade massive legal and financial penalties for fraudulent practices in the real estate industry.

However, they are currently moving very rapidly to foreclose and sell these properties, for precisely the same reasons (legal and market). The banks are now playing a game of “hot potato” with these foreclosure properties. They hope to foreclose on these properties very rapidly, and very rapidly sell them off.

In this way, they enmesh these properties in a tangle of ownership issues that neither the states nor the federal government could easily untangle or correct without causing a long chain reaction of liability and economic damage throughout both the U. S. and global economies (many of these “cheap” foreclosure properties are being sold off to investors from numerous foreign countries who wish to strengthen their capital investments in the richest country in the world).

Again, a high proportion of these targeted homes are located in California, and particularly here in the Los Angeles area.

This means that the struggle between the banks and homeowners over repossessions in this area will necessarily take on a very fierce character in upcoming months.

There are millions of additional homes throughout the country that are anywhere between 1 and 3 months in arrears on their payments. Not all of these homes will fall fully into foreclosure, but the fact that so many families and individuals are just scraping by, so close to the financial default line, is a symptom of just how powerfully the economic crisis is continuing to impact communities throughout the country on the “ground level”, despite the false propaganda of the Obama Administration that the recession somehow “ended” in August of 2010.

Thus far, while the banks and Wall Street stock investors have been more than successful in getting hundreds of billions of tax-payer’s dollars in federal financial assistance to ward off the effects of a crisis that was primarily caused by their own speculative practices in the mortgage-trading markets, homeowners, who have paid most of these taxes, have taken a back seat in the process of applying “bail-out” policies to mitigate the effects of the collapse of our economy on the citizenry.

As a result, not only are larger and larger numbers of American individuals and families, of all economic backgrounds, finding themselves totally dispossessed of their homes and deep in debt, but a much larger proportion of the entire population is finding its financial resources being rapidly depleted, and both their long and short-range economic prospects are sliding further and further in the same downward directions.

Due to the general decline in property values, literally millions of homeowners have experienced a significant loss in equity (value) in their homes. In many cases, they are paying for mortgages much higher than the current market value of the home itself, whether or not they’re having trouble meeting their payments. The total loss in U.S. homeowner equity since 2006 is well over 12 trillion dollars—approximately four times the 3.4 trillion dollar national debt that so many politicians were agitating voters about during the 2010 Congressional elections.

Many homeowners who have managed not to fall into foreclosure or miss their monthly mortgage payments as of yet, have only managed to do so by leaning more and more heavily on credit cards or other forms of debt in order to cover their day-to-day expenses on everything from food, clothing, transportation, and general household needs to their personal and family entertainment.

Overall, Americans are now carrying about $798.3 billion in revolving debt, a type of debt that is almost entirely made up of credit card balances, according to the most recent data from the Federal Reserve.

Kwazi Nkrumah

Kwazi Nkrumah

Kwazi Nkrumah

Note: This is a revised version of a document Kwazi Nkrumah wrote for the Coffee Party of Los Angeles. It is posted here with the author’s permission. The Coffee Party has been organizing against mortgage foreclosures in North-East and North-Central L.A. Kwazi Nkrumah is an organizer who is active in the Coffee Party, co-founded Occupy the Hood, and supports other grassroots organizations.

This is the third in a series of 5 that will be posted over several weeks. . Part IPart I,  Part III, and Part IV of this series can be accessed here.


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