Newark Delaware Branch NAACP alternative plan foreclosure/mortgage settlement funds

The Newark Delaware Branch NAACP is presenting this alternative plan for the use of foreclosure/mortgage settlement funds to be administered by the State of Delaware.

Prior to 1900, racially segregated urban ghettos did not exist.  They are the product of a combination of public policies and private practices that began in the reconstruction era and spread rapidly during the final decades of the 19th century. Segregated housing patterns are a vestige of an elaborate system of racial subordination that was legitimized by the Supreme Court’s 1896 decision in Plessy v. Ferguson. The NAACP launched a litigation campaign against restrictive covenants. The history of housing segregation in Delaware mirrors that of the nation as a whole.

Now, according to government and industry data estimates, the majority of families, an estimated 56%, who lost their homes were non-Hispanic and white, but African-American and Latino families were disproportionately affected relative to their share of mortgage originations. Among those borrowers, it is estimated that nearly 8% of both African Americans and Latinos have lost their homes to foreclosures, compared to 4.5% of whites. The racial and ethnic disparities in these estimated foreclosure rates hold even after controlling for differences in income patterns between demographic groups.

Former Attorney General Biden’s office directed that Delaware’s share of the RMBS settlement be spent on rental and affordable housing programs in troubled neighborhoods, foreclosure and mortgage assistance programs, and funding the unit that pursues future banking settlements. We feel that it is only right that the millions of dollars received by Delaware from the foreclosure settlement be spent on programs that assist those families most harmed by the banks’ wrongdoing through actions such as forcing homeowners into bankruptcy, short sale, or deed in lieu of foreclosure.

At a meeting in April, it was suggested to have a direct phone number for those with mortgage/foreclosure problems that would be answered by people trained in this issue and having a housing center in each county staffed with people knowledgeable of how to help people through this process. Money from the foreclosure settlements could be used to train people specifically in this area.

We also believe that there should be an ombudsmen staff of attorneys to represent people in the precarious position of foreclosure because most people in such situation cannot afford the legal expense to resolve this problem.

This alternative plan for use of foreclosure/mortgage settlement funds also includes initiatives focused and targeted to areas that would develop the east side economy and training programs for the underemployed and unemployed. Job growth should be emphasized in the minority neighborhoods. Grants from settlement money and federal low income housing credits could help fund redevelopment projects and renovation of existing and vacant units to strengthen the communities in low and moderate income areas by establishing affordable housing communities on the east side. Environmental improvements such as energy saving construction would create jobs and decrease expenses such as utility costs.

We suggest the following 10 Point Plan:

  • Most of the money should be used to establish a Borrower Payment Fund to provide cash payments to borrowers whose home were sole or taken in foreclosure between and including Jan. 1, 2008 and Dec. 31, 2011, and who meet other established criteria. This would be distinct from, but complimentary to, the restitution program administered by the federal banking regulators to compensate those who suffered direct financial harm as a result of wrongful servicer conduct.
  • Require strict oversight of foreclosure processing, including of third-party venders. Restrict banks from foreclosing while the homeowner is being considered for a loan modification. Make foreclosure a last resort by requiring servicers to evaluate homeowners for other loan mitigation options.
  • Set procedures and timelines for reviewing loan modification applications, and give homeowners the right to appeal denials. Create a single point of contact for borrowers seeking information about their loans with adequate and trained staff to handle calls.
  • Provide funds and assistance to individuals and families who became displaced or homeless.
  • Provide an ombudsmen staff of attorneys to represent people in the precarious position of foreclosure.
  • Prioritize grants to assist paid for the above referenced Plan.
  • Recruit public-private partnership opportunities.
  • Hold meetings to discuss potential funding proposals & incomes resources.
  • Collaborate with local universities and colleges to insure accurate data and information.
  • Communicate with neighborhood and community groups for their input about improvements as well as negative factors in the neighborhoods.

The victims of the wrongdoing by the Banks should receive a large portion of the yet to be submitted, remaining Delaware share of the National Foreclosure Settlements from Banks Foreclosure Funds. We are encouraging the Victims of foreclosure wrongdoing visit: www.nationalmortgagesettlement.com for more information on the status of the settlement.

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