By Pilar Marrero, La Opinión and FI2W reporter
California has a high rate of foreclosures. (Photo: La Opinión)
LOS ANGELES — Activists have a pet name for Hope for Homeowners (H4H), the government initiative that’s supposed to help struggling mortgage holders keep their homes: they call it “hoho”.
“It’s a sad kind of humor, but it reflects a reality,” says Kathleen Day of the Center for Responsible Lending, a homeowners advocacy group. “We have yet to see a significant effect of these programs for most people.”
Many people across the country who are –or expect soon to be– unable to continue payments on their mortgages have placed their hopes on H4H, otherwise known as “the Obama plan”. Latinos have been experiencing foreclosures at a higher rate than the rest of the U.S. poulation, following a decade-long push to increase minority ownership. Figures released this week show that, instead of diminishing, foreclosures are rising quickly.
“I want to know, how much can my mortgage payment be reduced?” asks Norma Ochoa, a woman from Los Angeles that has been keeping up with her payments so far despite losing one of her two cleaning jobs.
Many, like Ochoa, are still waiting for an answer.
“The bank says they can not yet help me. That I need to wait,” she says, at the offices of a local organization that helps people negotiate with banks. “I don’t think I’m gonna be able to continue paying for long.”
RealtyTrac’s latest foreclosure report, released Wednesday, shows that during the first quarter of this year, foreclosure filings increased 13% compared to the previous 3 months.
California, Florida, Arizona, Nevada and Illinois account for almost 60% of all the foreclosure activity in this period. California saw a 35% jump.
The Obama Administration has been proudly touting a recent increase in refinancing, after offering $75 billion in incentive programs and working with the Federal Reserve to drive down interest rates.
Banks that receive help from TARP (the Troubled Assets Relief Program), better known as the bailout, are required to participate in the mortgage refinancing and modification programs. But many homeowners in California and other states have a hard time qualifying. This is because they have lost their jobs or had their homes devalued more than 5 percent below the value of the mortgage, which is the maximum allowed under the federal plan.
Angélica Díaz, an activist who leads homeowner clinics at the East L.A. Community Corporation in Boyle Heights, says that the Hope for Homeowners plan has yet to help the people that need it the most.
“Many people here don’t qualify because in this area homes have lost too much value and the rules don’t allow them to qualify for the modifications,” Díaz says. “Also, if you are current but want to refinance, which is the other option they would have, many can’t qualify because they’ve lost their jobs.”
Many banks accepted a temporary moratorium on mortgages while the Obama Administration presented details of the H4H plan. They have now rescinded most of the moratorium and foreclosures are up sharply.
Activists have to constantly warn homeowners that Obama’s plan is not really a law that forces the banks to do anything, but a series of guidelines and incentives that are mostly voluntary. They hope to help between 6 and 9 million people hold on to their homes. But activists say the foreclosure numbers reflect that banks aren’t going out of their way to participate.
Day, of the Center for Responsible Lending, says that what’s really needed is reductions in the principal of many mortgages, reflecting the decline in property values. Instead of further recapitializing banks through TARP bailouts, she says, the government could take over a percentage of the mortgage debt. This may slow the rise in foreclosures.
In the meantime, many immigrants are falling prey to scam artists who claim they can negotiate with banks to modify mortgages or save their homes. Many have paid thousands of dollars in fees and received nothing in return from these would-be intermediaries, who cannot deliver on decisions that are the banks to make.
Pilar Marrero blogs in Spanish and English at pilarmarrero.com