Obama’s Failure to Mitigate the U.S. Foreclosure Crisis
There are a number of commendable accomplishments by President Barack Obama during his eight years in office. These were recently detailed in long-form story called, “My President Was Black,” by Ta-Nehisi Coates of The Atlantic. However, this profile of Obama is incomplete in one regard: It does not take into account his failure to stop the foreclosure crisis – or to hold anyone accountable for the enormous damage it inflicted on so many ordinary Americans.
In fact, more than 9 million American families have lost their homes since the housing bubble burst, either due to foreclosure or some associated transaction. When we look at this in terms of the average size of American households, we’re talking about 20 million displaced people. These were individuals forced to uproot their lives. Forced to find a place to stay. Forced to start over. This had an out-sized impact on people of color in particular, who are more likely to keep their wealth in their home equity and who were also the primary targets of predatory subprime loans. Although Coates takes note of the fact that white homes hold seven times as much wealth as black households, yet fails to mention that this statistic actually worsened under Obama, in large part due to these foreclosures, according to The Federal Reserve.
This is not to say that Obama did not have noteworthy achievements. However, this has to be counter-balanced with Obama’s own role in one of the biggest losses of black wealth in history. Sure, the president does cannot simply do anything he chooses. There are Congressional constraints, many checks and balances. However, when it comes to the foreclosure crisis, Congress had already invested the incoming president with the authority to take swift and decisive action.
While Obama’s transition team marked $100 billion in federally appropriated funds to help lessen the blow of these foreclosures, here we are eight years later, and only $21 billion has been doled out. Our Miami foreclosure lawyers know that despite the promise by Obama that 4 million mortgage modifications would be made, fewer than 1 million actually went through.
Obama faced an incredibly difficult time getting Republicans to work with him. But when it came to the Home Affordable Modification Program (HAMP), he didn’t need them to do so. That was solely in the purview of the Treasury Department, which in turn decided just to run it through mortgage firms, which of course have a financial incentive to foreclose on these properties rather than modify the loans. This was never used as the vehicle of relief it promised to be for homeowners. Rather, it allowed banks to more slowly absorb the foreclosures that would inevitably be made. Banks squeezed homeowners for every last payment they could get, only to turn around and foreclose on the property anyway.
And perhaps one of the worst things about all of it was that the foreclosures that were carried out were largely fraudulent. Centuries-old property records laws were simply set aside. Banks used millions of fabricated and forged records as evidence in courts of law trying to cover their mistakes. Leading mortgage firms actually had to halt foreclosures altogether in 2010 because they did not have the ability to do so legally.
Yet Obama’s justice department failed to anything to leverage these findings to the advantage of homeowners, who were still struggling. Sure, there were a number of settlements, but those ultimately did not provide much in the way of meaningful relief.
In the end, all of this served to show that rules are inapplicable to the wealthy, to the powerful. Although many people may cite racism as the catalyst for the rise of Trump, we might suggest that it could also too be a loss of faith in our institutions.
If you’re battling debt collection in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call 305-358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday at 5 p.m. on “Debt Warriors with Bruce Jacobs and Court Keeley,” discussing foreclosure topics that matter to YOU.