Tuesday, July 24, 2012

The Foreclosure Crisis for Older Adults: Part II - Solutions

Yesterday's AARP PPI Solutions Forum: "The Foreclosure Crisis - Ending the Nightmare for Older Americans" did two things: it introduced the new report that I discussed in an earlier post, and it had an intriguing panel discussion.  I had the rare opportunity to sit in the audience and listen to the panel, while simultaneously live-tweeting the event on Twitter.  While I have enjoyed speaking at similar events, Monday's experience was a fun one, as I could see what people on Twitter liked during the event and I was able to see and hear others make important points on the panel.  I'll share those highlights and a few of my own thoughts in this post. (The forum video is available online)

AARP Policy SVP Susan Reinhard welcomed the crowd and Lori Trawinski introduced the report. Then, Jane Bryant Quinn moderated a panel that included:
This was a good mix that highlight varied perspectives in the discourse around foreclosures.  It was somewhat frustrating that the early part of the conversation was sidetracked onto "silver bullets" that
could or could not fix the crisis.  The thought that carried the end of the day was that a range of solutions are needed, although there was some debate over what those solutions should be and what the federal role should be.



Solutions from the report included principal reduction, mediation programs, REO-to-Rental programs, universal mortgage servicing standards, widespread housing counseling, scam prevention, legal assistance to homeowners, and increasing housing assistance.

Together, this range of solutions address several key issues - easing the burden on some homeowners with unsustainable mortgages (and making them more likely to pay), making sure that homeowners have access to full information at every step before a serious delinquency occurs, providing mediation to ensure that homeowners and banks have a chance to work it out if at all possible,  ensuring that all lenders play by a fair set of rules, and providing a range of housing options at all price points that meet the needs of the 50+, including those who have been foreclosed upon.  Together, this range of solutions can help to limit foreclosures and make sure that everyone has a sustainable housing option.

Although the report focuses on foreclosures as a financial issue, to many, the housing issue is equally important.  Mass foreclosures can devastate a neighborhood through vacancies, blight and the problems that those issues bring. As Bowdler mentioned, a foreclosure in a multigenerational household can affect several the quality of life for many people at one time (Many Latino families are multigenerational whether they are in homes or apartments, as I discussed in the Langley Park post.)  Renters in a house that is foreclosed upon can lose their home through no fault of their own. 

Jim Carr brought up an important point - the crisis is not over.  The regional/local nature of foreclosures means that they cannot accurately be viewed at a national scale.  When I mentioned in the earlier post that one in 35 homes owned by a 50+ householder are in foreclosure, that may make it seem that there is one in every neighborhood.  Maybe a closer envisioning describes it as one neighborhood in 30 being dominated  by foreclosures - if you are in Detroit, Cleveland, Las Vegas, South Florida, Phoenix or Washington, DC, you are well aware of the issue of mass foreclosures in parts of your region over the past few years.  On the other hand, our earlier study didn't find any 50+ foreclosures in our review of 4th quarter 2007 data from the entire state of Montana. While rates have grown since then, 50+ foreclosures are regional, just like foreclosures for younger households.

David John opined that we need to re-examine the role of homeownership in the US economy, and that it isn't the right option for many.  I have long felt that homeownership is "forced" in many cases and we overemphasize its importance as a wealth-building tool, which then leads to policies that promote homeownership, which makes it appear to be a better wealth-building tool.  It's a self-perpetuating machine.  More rental housing options with a focus on affordability combined with more wealth-building options could lead to a more sustainable housing and wealth-building strategy.


Deborah Leff was enthusiastic about foreclosure mediation as a tool - her group timed a blog post to be released the same day as our event. The DOJ's work in getting the major mortgage servicers to negotiate an agreement with 49 states is commendable, but the fact that several states have looked at ways to use the settlement funds to balance state budgets is somewhat distressing - although there is $2.5 billion targeted towards foreclosure prevention, states have workarounds that would allow them to spend money on other activities.  I believe that the funds should only be used to increase foreclosure prevention activities and be used in targeted ways to support areas that have suffered from mass foreclosures. 

While I'm not a fan of being anywhere at 8:30 am, this event was a thought provoking morning and a good way to launch the report.  As always, your comments are welcome.

A special mention for Maya Rockeymoore and  Danielle Reyes who were live tweeting at #mortgage50 and to the others who tried to do the same - the weak cellphone signal in the room was an issue.

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