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NAACP Calls for Federal Action to End the Home Foreclosure Crisis Facing our Nation

WHEREAS, currently about 20,000 homes a week are being foreclosed upon across our Nation, a disproportionate number of which are owned by African Americans and other racial and ethnic minority Americans; and

WHEREAS, over a year ago the NAACP joined others in calling for a moratorium on foreclosures; and

WHEREAS, the NAACP firmly believes there is much the federal government can and should do to address the current foreclosure crisis; and

WHEREAS, homeownership makes neighborhoods safer, encourages community investment, provides financial security and improves the lives of families by helping to provide a safe, secure and stable home; and

WHEREAS, across the Nation a disproportionate number of the subprime loans which at the heart of the massive wave of foreclosures that our Nation is currently facing were made to African Americans and other racial and ethnic minorities; and

WHEREAS, for decades, predatory lenders have targeted African Americans and other racial and ethnic minorities through steering and other immoral practices with dubious products that contain prepayment penalties, the so-called ―exploding ARMS and the list goes on and on; and

WHEREAS, more than 52% of home-purchase loans made to African Americans in 2006 were subprime; and

WHEREAS, among subprime, overpriced loans made in 2005 and sold to investors, 55% "went to people with credit scores high enough too often qualify for conventional loans with far better terms." By the end of 2006, the share of over-priced loans rose to 61%; and

WHEREAS, as a conservative estimate, 1 in 10 African American homeowners who received subprime loans in recent years will lose their home to foreclosure; and

WHEREAS, the subprime market has not increased homeownership for communities of color; in fact, subprime loans made between 1998 and 2006 produced a net loss in homeownership. In 2004, African American homeownership peaked nationally at 49.1 percent, but by the end of 2006, it dropped 1.2 percentage points to 47.9 percent; and

WHEREAS, the subprime mortgage crisis will drain $213 billion in African American wealth, the greatest loss of wealth in modern U.S. history; and

WHEREAS, conservative figures estimate that 1 out of every 5 mortgages that originated during the last two years will end in foreclosure; and

WHEREAS, the effect of years of predatory lenders targeting African Americans and other racial and ethnic minorities will now begin to hurt not only the borrowers, but also their neighbors and their communities as homes are foreclosed upon in record numbers, and those numbers will be concentrated in African American communities and other communities with high concentrations of racial and ethnic minorities; and

WHEREAS, the impact on whole communities which can least afford the instability of massive foreclosures, will be nothing short of devastating; and

WHEREAS, one study estimated that for every home that is foreclosed on in a given block, the other homeowners on that block lose 1.14% of their property's value; and

WHEREAS, given that homeownership is one of the most reliable ways for economically disadvantaged populations to close the wealth gap, one direct result of the unfair and immoral discriminatory predatory lending that has been going on in our communities for years is that it is harder for African Americans and other racial and ethnic minorities to build wealth or pass any material possessions on to their heirs; and

WHEREAS, for many, homeownership means the difference between spending their golden years in either poverty or comfort, yet a predatory mortgage or refinancing can ruin all these dreams and more.

THEREFORE, BE IT RESOLVED, that the NAACP supports efforts in Congress to help immediately end the foreclosure crisis by providing homeowners the tools necessary to avoid foreclosure while still paying a fair market value for their homes; and

BE IT FURTHER RESOLVED, that these tools include a mechanism for the federal government to guarantee loans that are rewritten to reflect the ability of the borrower to pay the loan and the current market value of a home; and

BE IT FURTHER RESOLVED, that these tools should also include a change in current bankruptcy laws to allow bankruptcy judges to supervise the modification of mortgage loans to affordable and sustainable levels, a privilege which is already afforded to people facing bankruptcy and who are trying to save their second homes or their yachts, which would save over half a million homes from foreclosure; and

BE IT FINALLY RESOLVED, that the NAACP supports strong anti-predatory lending legislation that establishes higher standards for loan originators and provides stronger penalties and remedies for lenders who break the law, as well as ensuring that any final federal product is the minimum, and that states be allowed to continue to be more aggressive in eliminating predatory lending.