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California - Home Wreckers, How Wall Street Foreclosures Are Devastating Communities

California - Home Wreckers, How Wall Street Foreclosures Are Devastating Communities

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Published by: ForeclosureGate.org Library on Mar 16, 2011
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02/07/2013

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Home Wreckers
How Wall Street Foreclosures Are Devastating Communities
 
Home Wreckers:How Wall Street Foreclosures Are Devastating Communities
1
As the foreclosure crisis continues,the costs to homeowners, theproperty tax base, and localgovernments adds up to$650 billionto as much as $1 trillion.
Wall Street banks shaered our economy and le our communies to clean upthe pieces. The housing market is where the economic crisis began and withoutimmediate acon, we are facing a mul-billion dollar hit to homeowners andcommunies across California that would undermine the economic recovery ourstate desperately needs. Without a remedy, the damage to our communies willbe staggering and long-lasng.
The Costs of the Foreclosure Crisis in California (2008-2012):
1. Homeowner Cost:
Home value losses to foreclosed homes and neighbor-ing homes total minimum
$632 billion and up to $1 trillion – at leasta $337,379
value loss per foreclosure to the surrounding community.– Decline in value of foreclosed homes –$207 billion value loss– Decline in value of neighboring homes – $424 billion value loss
2. Property Tax Cost:
As housing values decline, property tax revenue lossesare esmated to be
$3.8 billion – $2,058 property tax loss for everyforeclosure
.
3. Local Government Cost:
Foreclosure-related costs for mulple agencies andmulple levels of government for maintenance of blighted properes, sheri evicons, inspecons, public safety, trash removal, and other costs are es-mated to be
$17.4 billion – $19,229 cost for every foreclosure.
The Foreclosure Crisis Continues:
One in ve U.S. foreclosures is in California.
i
California is the hardest hit of all states with the highest numberof foreclosures.
ii
There have been 1.2 million foreclosures since 2008 in California and thatnumber is expected to climb to 2 million through 2012.
iii
Foreclosures in 2011 are expected to exceed 2010 levels.
iv
More than a third of California homeowners with a mortgage already owemore on their mortgages than their homes are worth.
v
Who Is ResponsibleFor This Mess?
Wall Street’s reckless andpredatory lending practiceshave devastated Caliornia.Bankers pushed homeownersinto high-cost loans they couldn’taord and kept infating thehousing bubble so they couldget their mega-bonus checks.When Wall Street’s bets wentsour, the bankers were bailedout by taxpayers and got tokeep their bonuses butCaliornians lost billions insavings in their homes.
TOP BANKSFORECLOSING ONCALIFORNIANS:
vi
 
Bank of AmericaJP Morgan ChaseWells Fargo Bank• Cigroup
 
Home Wreckers:How Wall Street Foreclosures Are Devastating Communities
2
California Homeowner Losses:$632 billion+
The foreclosure crisis will have a signicant impact on California hom-eowners and their communies with an esmated $632 billion in homevalue losses to foreclosed homes and neighboring homes.
Decline in Value of Foreclosed Homes: $207 billion.
It is esmated that homes in foreclosure experience a 22% decline in value.
vii
That means that the impact of the 2 million foreclosures esmated forthe period 2008 through 2012 will be over $207 billion in lost home valuein communies across California.
1
Decline in Value to Neighboring Homes: $424 billion.
The impact to foreclosed properes is just the p of the iceberg. It isconservavely esmated that each foreclosed property will depress thevalue of neighboring homes within an eighth of a mile to drop 0.9%.
x
 Statewide, California homeowners could experience property devaluaonof $424 billion.
2
Insult to Injury:Bank Fees Forcedon Families inForeclosure
Mortgage servicers, who are otenthe Big Banks like Bank o America,JP Morgan Chase, Wells Fargo,make prots rom oreclosure eesrom amilies in oreclosure. Oneestimate showed that an averageoreclosure results in $7,200 incharges to the borrower.
viii
Fees tostruggling homeowners includeoreclosure processing ees, latepayment ees, inspections andvaluations ees, and other charges.
ix
Families in my community have lost either their homesor their life savings that wereinvested in their homes.
– Peggy Mears, Homeowner in Fontana,San Bernardino County
“ ” 
What will happen to the US economy in 2011? It’s great news for execu-tives and Wall Street traders, whose pay is linked to stock prices… Buta bad omen for home prices and sales, and everyone whose savings aremainly in their homes.
2
 
– Robert Reich, Fmr. Secretary of Labor
xi
 
“ ” 
What’s NegativeEquity?
Oten reerred to as “underwater”or “upside down,” it means thatborrowers owe more on their mort-gages than their homes are worth.Caliornia’s negative equity share is31.8% (compared to 23% nation-ally)- that means almost a third ohomeowners are underwater ontheir mortgages.
“Negative equity holdsmillions of borrowerscaptive in their homes,unable to move or sell their properties.” 
 
– Mark Fleming, chief economist,CoreLogic.
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