The Black Informant | African American Commentary, News and Community Building

The is from Newsweek:

Six years ago, Brian Lavelle moved out of the city of Cleveland to the nearby suburb of Lakewood for what he thought would be a better life. Back then, Lavelle, 38, was a forklift operator in a steel mill making $14 an hour. He had a house, a car and was saving for his retirement. Then, three years ago, the steel mill closed and Lavelle found that the life he dreamed of was just that, a dream. The suburbs, he quickly learned, are a tough place to live if you’re poor. For starters, there isn’t much of a safety net in his community. Food pantries, job-retraining centers and low-cost health clinics are hard to come by. He can’t afford either gas or car insurance, and inadequate public transportation hurts him, too. Not long ago, he was offered a job in another suburb, “but it just wasn’t doable.” The commute by public bus would have taken him three hours each way.

Once prized as a leafy haven from the social ills of urban life, the suburbs are now grappling with a new outbreak of an old problem: poverty. Currently, 38 million Americans live below the poverty line, which the federal government defines as an annual income of $20,000 or less for a family of four. But for the first time in history, more of America’s poor are living in the suburbs than the cities—1.2 million more, according to a 2005 survey. “The suburbs have reached a tipping point,” says Brookings Institution analyst Alan Berube, who compiled the data. For example, five years ago, a Hunger Network food pantry in Bedford Heights, a struggling suburb of Cleveland, served 50 families a month. Now more than 700 families depend on it for food.

That’s not to say that all suburbs are struggling. In areas such as New York and Los Angeles where the regional economies are booming, the surrounding suburbs are doing just fine. It’s another story altogether in the South and Midwest. (more…)

Now, here is a press release that came out in May of last year (excerpted)

Irvine, Calif. – May 23, 2006 – RealtyTrac™ (www.realtytrac.com), the leading online marketplace for foreclosure properties, today released its first annual 2006 U.S. Metropolitan Foreclosure Market Report, which ranks the foreclosure rates of the top 100 metropolitan areas. This year’s report, based on data captured over the first quarter of 2006, shows Indianapolis, Atlanta and Dallas having the highest foreclosure rates among the nation’s largest 100 metropolitan areas. Cities in the Sun Belt and Rust Belt generally had the highest foreclosure rates in the first quarter of 2006, while cities in the Northeast and Gulf Coast documented some of the lowest. (source)

Question: In this press release, where are many of the forclosures taking place?

Answer: Mainly in the South and Midwest.

One of the main reasons behind the surge of foreclosures is the fact that many folks bought houses they could not afford–thanks in part in high-risk loans with very attractive initial loan rates (ARM loans that go up over a period of few years). Once these rate began to go up, what started as a monthly mortgage payment of $1200 (for example) now has grown into a $4,000 per month headache. While many Black activists have tried to make the selling of high-risk loans a race issue, the real truth is that many people have been targeted regardless of race.

The technical term here is POOR PLANING!

Another thing that people do not realize is that when folks find themselves in dire straits and need to sell their home, the desperation sale of their home has a direct affect on the value of other homes in that community. Not too far from us there is a whole cul-de-sac with all except one home up for sale. It has been that way for months. At least two of the homes are completely empty. Do you think streets full of “for sale” signs and empty homes are attractive to potential buyers?

I guess Newsweek didn’t have enough room to include this bit of information in their “poverty is everywhere thanks to Bush” piece.

Solution

Unfortunately if you find yourself in this situation, you options are very slim. A. You could do what most folks have done–put your house on the market and hope you find a buyer who is willing to pay AT LEAST the market value. B. Ask your lender about any special hardship programs they may offer (be VERY careful with this option as they may add more to what you owe on the back end of your loan).

*If you have been in this situation, please comment on how you were able to cope. You very well could be encouraging someone else!

Here is more helpful information:

“Don’t Wait For Trouble-Get Your ARMs Around The Terms Of Your Mortgage; (888) 995-HOPE Offers Help To Homeowners With ARM Loans“.