Lights On: Families Find Hope After Foreclosure Crisis

Black middle class still in need of relief after loss of homes; special aid program ends Dec. 31

The cause, of course, was the boom in homeownership in the early aughts that put almost 7 in 10 Americans in homes – with a good portion of black and Latino homeowners in mortgages with rates that would eventually crush them.

That was Atlanta resident Jermaine Heard’s story. A native of Philadelphia, the 37-year-old, college educated Heard moved south for a job with his wife and two children. He purchased a home using a big name bank’s “interest-only” mortgage that eventually ballooned in two years to include payments on the principal loan.

“It wouldn’t have been a problem if I hadn’t have lost my job [in 2008],” Heard said in a phone interview, adding that he suspected the bank knew he might have a problem affording the higher monthly payments to come.

“It wasn’t the best deal for me at the time. If I could only afford the interest…they approved me for a mortgage that they knew I couldn’t really afford,” Heard said.

The Heard family home was foreclosed on in 2009. They moved out and lived in a hotel for about a month. What got them back in a home, Heard said, was an early decision to keep his and his wife’s finances separate. With his wife’s credit score intact, they were able to purchase a new home. But Heard said he would have looked more closely at the financial particulars of his first mortgage, had he known to ask more questions.

His story isn’t unique. Blacks were 150 percent more likely to get high-cost loans during the housing boom, according to the Center for Responsible Lending, even when they had similar incomes and credit scores to those of white borrowers.

That’s why projects like the Independent Foreclosure Review were launched, she said. While many homeowners -- both whites and members of racial and ethnic minority groups -- lost their homes because they simply could not afford to stay in them, some banks carried out foreclosures that were initiated illegally.

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A free review of a foreclosure case often results in compensation for families who were illegally or unethically foreclosed on. Heard said his brother in Philadelphia benefited from a review of his mortgage in a foreclosure, where errors were found in the initial processing of his loan.

The federal government backs many of these foreclosure review programs, including those of the Independent Foreclosure Review. The organization is currently offering free independent reviews for home foreclosure actions that took place in 2009 and 2010.

Another of its spokespersons, Marcia Griffin, who founded HomeFree-USA, a public benefit corporation focused on increasing responsible homeownership, has enjoyed a “remarkable 0 percent foreclosure rate among families that have participated in her … pre- and post- [home] purchase counseling programs.”

For more information about a foreclosure review, visit the IFR’s website.

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