Ask a random person in Miami what issues have a highly negative impact on local communities and it would be near impossible not to hear: Foreclosures. Especially since the so-called “housing bubble” busted years ago, Miami has been thrown into chaos, with families frantically struggling to figure out not only how to put food on the table but also how to keep a roof over their heads. When the massive bank bailout took place years ago, millions of Americans were shocked when the U.S. government used our tax dollars to bail out the very banks that were complicit in causing the economic recession and foreclosing our homes. Not any less shocking, the very banks that are ripping families out of their homes are continuing to put profit before people. However, recent events have created a lot of buzz about an “end” to the foreclosure crisis; whether we will see the end to this crisis or not, struggling Miamians, such as Angela Samuels, are still eeking it out and seeking comprehensive solutions.
Last week, the newspaper headlines were flooded with talk about a “successful” settlement between federal/state authorities (including 49 state attorneys) and some of the nation’s biggest banks, including Bank of America, Wells Fargo, JPMorgan Chase, Citigroup, and Ally Financial. The settlement aimed to address bank involvement in foreclosure fraud and banks ended up doling out a total of $26 billion dollars. The money will be divided up between the states, with Florida receiving the largest chunk (at around $7 billion); most of the money, $17 billion, will be dispensed to help reduce loan principals and to assist in loan re-modifications; and $5 billion will come in the form of direct cash/penalties. These numbers have been chopped and discussed in many ways and numerous controversies have been dissected. One of the controversial aspects of the settlement includes an agreement that protects banks from state and federal lawsuits citing “robo-signing” abuses, but individuals still retain the right to bring a lawsuit. On the other hand, numerous figures across the political spectrum underscore the importance of a mechanism to reduce loan principals during such critical times. In general, the settlement has been widely acclaimed as a solution that the 99% have been waiting for, but before we celebrate let’s take a look at the numbers more closely.
26 billion dollars, upon first glance, seems like a big chunk of cash – that is, until you take a look at the numbers more closely and consider the predicted impact of that money on 99% communities struggling to keep their homes. First, let’s take a look at that “direct” cash number – it turns out that only $1.5 billion of the $5 billion (slated for direct cash) will go directly to homeowners foreclosed upon, but keep in mind that this only holds true folks foreclosed on between September 2008 and December 2011. If you didn’t get foreclosed on within that time-frame, you’re out of luck. If you do qualify, then you can look forward to $1,800 to $2,000 – hardly an amount that will greatly assist the burgeoning number of folks living in “underwater” properties. Second, Consider the fact that about 4 million Americans have been foreclosed upon since 2007. Now, consider that about 1.5 million homeowners can expect to benefit, in some way, from this settlement, with 1 million receiving some form of loan modification and only half of those (750,000) qualified to receive direct payments (again, $1800-$2000 per household). That means that the majority of people who have faced a foreclosure, over the past 5 years, are not even covered by the settlement; and, as for the people who are covered: considering that affordable health care is not a reality, that student debt is soaring upwards, and that good jobs are hard to find, the benefit doled out by the banks is like a drop in the bucket.
In fact, $26 billion as a “drop in the bucket” seems to aptly describe the reality on a number of different levels, especially considering that homeowners across the country are “underwater” to the tune of $700 billion. Nasdaq.com columnist Daniel Pereira recently stated that the $26 billion amount is about half the amount of money that the banks involved in the settlement made in just over the past year. He stated: “The $26 billion represents a significant settlement, but it clearly won’t stagger the banks too much. Together, the four banks mentioned above took in a total profit of $47.6 billion in 2011. It’s not as if the banks will be paying the settlements out of pure profits, either; they’ve all set aside a fair amount of capital to pay for their mistakes. Still it’s telling that the banks will be paying just about half of their annual profits to walk away from the foreclosure mess.” But that’s not the only context that raises concerns about the future of South Floridians who are facing foreclosures. Recent reports indicate that Florida’s foreclosures continue to climb (up 14% over the past year) and some predict that this increase in foreclosures may continue despite the impact of the settlement. Just to make things worse…
While some housing relief can be gained from the recent settlement, by no means will the settlement provide a panacea to calm the unsettling waters of the larger foreclosure crisis. Owners of “underwater” homes, young debt-ridden students, and people of color, in particular, will continue to face seemingly insurmountable obstacles. So, it is clear that much work lays ahead. Don’t be surprised if people on Miami streets continue to yell: “Banks got bailed out, we got sold out.” Until we secure sufficient bank regulations and until we achieve a fundamental shift in the relationship between tax payers and our government, comprehensive solutions will be out of grasp. To grasp these larger changes, more people across our various communities must make demands. As Frederick Douglass once said: “Power concedes nothing without a demand. It never did and it never will.” Stay tuned for some upcoming 1Miami actions. We are organizing new opportunities for the 99% to move America forward by bringing our demands into the corridors of power.