Families Living On The Edge of Homelessness | Foreclosures & Unemployment

By Martie Hevia | Blue Beach Song™

One-Fourth of American Kids are Homeless:

“It is estimated the poverty rate for kids in this country will soon hit 25%. Those children would be the largest American generation to be raised in hard times since the Great Depression.”
–Hard Times Generation: Homeless Kids | 60 Minutes (March 6, 2011)

There are millions of families who are living on the edge of homelessness – one paycheck away from losing their homes; losing their healthcare, if they have it; and losing their ability to buy food for their family. Imagine being one paycheck away from losing the absolute basics of raising a family: food, shelter, and healthcare. We all need to feed our children; provide them with shelter – a place to call home; and take them to a doctor when they get sick.

What if we could not provide our families with the basic necessities?

These families do not make enough money to have ‘disposable’ income to invest in stocks, IRAs, 401ks, or to save in a savings account. Their money is invested completely in their family. Their big ‘luxury’ is to have purchased a modest home, once upon a time. And, if they are lucky enough to be able to afford the insurance and the gas, they may even have a family car.

The parents in these families make sacrifices for their children everyday, often working more than one job, but many of them still cannot afford the costs of basic school supplies, let alone all the other costs associated with allowing their children to have a normal school experience. It is difficult to participate in sports or extra-curricular activities when your parents cannot afford the costs of a team uniform, or tickets to the dance, or a yearbook at the end of the school year. Many of the older high-school-age-children growing up in these families hold down after-school jobs to help their parents pay the bills.

These families have been living on the edge of homelessness, struggling and stressing, for a very long time. As a society, we have known about them and we have ignored them. These are the families who will fall through the cracks without a safety net. One unexpected bill, a reduction in their work hours, a mechanical failure in the family car, a sick child, a sick parent, a disability, a death in the family, an increase in childcare costs… any one of these things and countless others could be the financial time-bomb that throws a family into the abyss of homelessness.

These families do not have available to them the minimal support services that are available to the poor; nor do they have the disposable income, the tax deductions, the cap on social security payments, or the power and connections with politicians that wealthier people have.

There are no bailouts for families dangling from the financial high-wire they carefully tried to walk… dangling and waiting to fall… waiting to lose their homes… waiting to lose everything they own. Where do you put your things when you have no home, when you have no money to rent a new one, no money to hire a moving truck, no money to rent a storage space? Perhaps you walk away and leave your things, taking only what is absolutely necessary, taking only what will fit in the car, or taking only what you can carry on your back.

Although the government, private organizations, and churches offer some limited services to truly destitute people, there is nothing comprehensive or consistent in basic services. Where do you sleep and eat and bathe? Once you have lost your home, how do you keep a family together?

Some families are forced to split up because homeless shelters designated for families do not allow the man, the husband, the dad, to stay in the shelter, limiting the beds to the women and children. And there are never enough beds for all the women and children who need beds. Some families choose to stay together and sleep on the streets, or, if they are lucky enough to still have a car and a little money, they live in their cars. How do you raise your children in a car or on the streets?

2005: about 250,000 new families entered into foreclosure every three months.
2010: about 1,000,000 new families enter into foreclosure every three months.

Studies show that children of homeowners are more likely to have fewer behavioral problems at school, generally perform better on academic achievement tests, tend to graduate from high school, and are less apt to become pregnant as teenagers. It is not difficult to imagine that the repercussions for society of a homeless child are countless, endless, boundless.

The government’s inefficient, impersonal and wasteful bureaucracy consumes more of the taxpayer dollars than it should, but that is not an excuse to not fund these programs, rather it is a reason to restructure them. Likewise, many of the charities dedicated to helping the poor use more than 90% of donations for the administration and operation of the charity, but it does not mean that we should not be charitable, rather we should research the charities and churches to whom we donate to make sure that more of our dollar goes to the people who need it, and less to the people who run the charities and churches.

Why should we care? Because it is the right thing to do, and because the family you help might be your own. Remember Bernie Madoff? From one day to the next some of Mr. Madoff’s clients went from thinking they were rich to joining the ranks of the poor. One retired couple ended up losing everything and were forced to live in an RV. They made plenty of money and they thought they had made all the right investments, but they lost everything they owned, every penny they had. ‘There but for the grace of God go I.’

Living on the edge of homelessness is not an aberration, it is a trend. In the last decade, the middle class and the upper-middle class have begun to disappear. The lower middle class and poor have increased in numbers, joined by millions more formerly-middle-class families. We live in times when, for the first time, it is unlikely that children will do better than their parents. The chasm between wealthy and poor has widened. More than 90% of our wealth and resources belong to less than 1% of the population.

Did you know that in 2005 more than 250,000 new families entered into foreclosure every three months? In part, because, in 2005, 43% of us spent more than we earned and 42% of us did not have enough in liquid assets to support ourselves for three months. In 2003, 52% of us were living paycheck-to-paycheck and those numbers have only gotten worse.

Since 2007, many families have lost their homes due to sub-prime loans and option ARM loans that can nearly double their mortgage payments from one year to the next. The matter clearly reaches a tipping point when you consider that more than 32% of homeowners will experience a job loss and more than 25% will experience a health crisis, but most homeowners do not have savings, credit, or extended family with the resources to help them through such crises.

In the first quarter of 2010, foreclosures increased by 16% and bank seizures of residential homes hit an all-time record. Nearly 1 million homes, 1-out-of-138 households, have been repossessed or have received default or auction notices in the first few months of this year. RealtyTrac predicts an additional 4 million foreclosure filings as banks work through their backlog of delinquent loans – this year.

Last month, in July 2010, housing sales dropped another 27% and some states, like California, Nevada, Arizona, Florida, Idaho, Utah, Michigan, Illinois, Ohio, and Maryland, saw 1-in-82 of their housing units affected by foreclosure actions.

Most everyone in the United States has been affected by falling home values – $6 trillion drop so far. Many homeowners facing economic hardship, unable to get a modified loan through their bank, are also unable to refinance or sell their homes because the value of the original mortgage is more than what the house is worth. How do you sell or refinance your home when the present value of the house is only half of the purchase price a few years ago? You don’t. And many families are forced to walk away or are pushed out by the banks.

The Obama foreclosure prevention program, the Home Affordable Modification Program (HAMP), has been a dismal failure, in part because it does not require the banks, who received taxpayer bailout money, to work with families who qualify for a loan modification. Out of the 4 million it promised to help, only 389,000 homeowners who meet all the criteria in the HAMP program have worked out the 5-year modified loan with their bank.

The majority of HAMP-qualifying families, many of whom have fallen victim to the banks’ predatory loans or who have seen a reduction in their income as a result of an illness, a disability, unemployment or underemployment, are turned down by their banks. Facing no penalties or repercussions from the federal government, the banks are opting instead to foreclose on millions of families.

“[The] HAMP program has, in policy and practice, been a colossal failure, …designed to shield banks…”
-Joshua Rosner, noted bond analyst [Huffington Post, 12/14/2010]

Although the official U.S. unemployment rate right now is 9.5% or 14.6 million Americans, we know that the government does not count all the people it should, keeping the unemployment number artificially low. It does not count, the underemployed (for example, professional people who are working part-time at a fast food place) and it does not count people who have been unemployed for a long time and have “given up” looking for work.

The real unemployment number, depending on what criteria you include, is between 22%-28% as of July 16, 2010. Think about it, one fourth of Americans are unemployed or underemployed. How long will they be able to pay for their homes?

Many of the same people who supported bailing out GM, Wall Street, and the banks, and support pouring billions into Pakistan, Iraq, and Afghanistan, and support giving subsidies to the insanely profitable oil companies, and support giving huge tax cuts to the wealthiest top 2% in our country, many of those same people do not support extending unemployment benefits to families in our own country who are on the verge of becoming homeless.

Why? They say it is because of how it will add to our deficit and negatively impact our economy, even though most economists agree that unemployment benefits stimulate and grow the economy through the multiplier effect. Specifically, for every $1 paid out in unemployment insurance, we generate more than one dollar in economic growth, some calculations estimate the growth to be between $1.60 to $1.90.

No doubt some hippie-liberal-democrat came up with this hogwash, right? Nope, quite the opposite. Mark Zandi, former economic adviser to John McCain during the 2008 campaign and current chief economist for and co-founder of Moody’s Economy.com, testified before the Senate Finance Committee on April 14, 2010, asking lawmakers to extend the unemployment benefits. He had calculated that for every dollar spent on unemployment benefits, the Gross Domestic Product (GDP) will grow by $1.61 one year later.

Although the cost of foreclosures is obviously greatest on the family who loses their home, the costs are also high for the community and the remaining neighbors, as well. In 2005, statistics show, one foreclosed home could cost a community nearly $35,000 in direct costs to local government agencies and as much as an additional $220,000 reduction in property values and equity to nearby homeowners.

But those are just numbers, aren’t they?

The real cost is a human cost to the families who lose their homes. The traumatic memories that will scar homeless children forever. The heavy burden the parents carry in trying to provide safety and some kind of a life for their children as they live in tent cities, in cars, or on the streets.

What will they do without any money? What will they eat? Where will they shower? How do the kids go to school? How do the parents look for work? What happens if they get sick? How long will they be homeless? Perhaps only a few of the haunting worries of a homeless parent.

What if you were unexpectedly forced into homelessness? What would you do? How would you survive? How would you get yourself out of it? How would you preserve your dignity and your sense of place and worth in society?

We need safety nets for these families dangling on the edge of homelessness. We are the United States of America. Surely, we can do better… or at least we should.

“President Obama has just released his 2012 Budget, which includes drastic cuts to safety net services and anti-poverty programs.” –National Coalition for the Homeless (February 14, 2011)

Martie Hevia © 2010-2011 | All Rights Reserved

RELATED BLUE BEACH SONG POSTS

• And Then You Lose Your Home…
• Bank of America Nightmare… Updates Journal
• Bank of America Nightmare… Wake Me Up!
• Families Living On The Edge of Homelessness | Foreclosures

RESOURCES | ADDITIONAL UPDATED STATS & FACTS

• Foreclosures May Increase 20% in 2011: “In addition to an unemployment rate lingering near 9 percent, some underlying home values are less than the mortgages on the properties. That indicates foreclosure filings may climb about 20 percent in 2011, reaching a peak for the housing crisis, RealtyTrac said earlier this year.” –Sales of U.S. Existing Houses Fall, Prices Reach Nine-Year Low By Alex Kowalski | Bloomberg Business Week (March 21, 2011) | http://www.businessweek.com/news/2011-03-21/sales-of-u-s-existing-houses-fall-prices-reach-nine-year-low.html
• Bank Repossessions Increased 23% in January: “As the CEO of RealtyTrac said, “lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing.” In fact, during January, bank repossessions increased 23% in states with a non-judicial foreclosure process (20 states), while states with a judicial foreclosure process had a 7% decrease in bank repossessions. Considering the slower processing rate of foreclosure filings, the relatively low amount of foreclosure filings in January were not generated from organic market conditions. Since the processing rate is expected to accelerate, foreclosures are expected to gradually increase throughout the first quarter of 2011.” –Foreclosure Facts January 2011 | Left and Right News (February 10, 2011) | http://www.leftandrightnews.com/2011/02/10/foreclosure-facts-january-2011/
• High percentage of foreclosure sales will continue to weigh down home prices: “The catch-22 for 2011 is that while accelerating foreclosure sales will help clear the oversupply of distressed properties and return balance to the market in the long run, in the short term a high percentage of foreclosure sales will continue to weigh down home prices.” –2010 Year-End and Q4 Foreclosure Sales Report | RealtyTrac (February 23, 2011) | http://www.realtytrac.com/content/foreclosure-market-report/2010-year-end-and-q4-foreclosure-sales-report-6402
• LIVING IN POVERTY: 1-in-7 Americans = 14.3% of the population = 43.6 million people – Census 2010 Report on Income, Poverty & Health Insurance (9/16/2010)
• “Families with children are among the fastest growing segments of the homeless population. In its 2007 survey of 23 American cities, the U.S. Conference of Mayors found that families with children comprised 23% of the homeless population (U.S. Conference of Mayors, 2007). These proportions are likely to be higher in rural areas. Research indicates that families, single mothers, and children make up the largest group of people who are homeless in rural areas…” –National Coalition for the Homeless | Who is Homeless? Fact Sheet: http://www.nationalhomeless.org/factsheets/who.html
• Children’s Poverty Rate to Equal 25%: “American Families have been falling out of the middle class in record numbers… It is estimated the poverty rate for kids in this country will soon hit 25%. Those children would be the largest American generation to be raised in hard times since the Great Depression.” –Hard Times Generation: Homeless Kids | 60 Minutes (March 6, 2011) | http://www.youtube.com/user/60minutes#p/f/4/dK_RnxYdrqU
• Home Prices Fall: “January (2011) home prices fell for the sixth month in a row, edging closer to a double dip.” | Home Prices Near a Double-Dip By Les Christie | CNN Money (March 29,2011) | http://money.cnn.com/2011/03/29/real_estate/January_home_prices/index.htm

RESOURCES | ADDITIONAL VIDEOS

• San Jose and the Recession | 60 Minutes | 10/24/2010
  
  
• Wiping Out Savings | 60 Minutes | 10/24/2010
  
  
• Poverty & Homelessness Statistics Getting Worse:
  
  Unemployment Benefits: The 99ers

  The poverty and homelessness statistics, from the 2010 Census based on 2009 information, have gotten and will be getting staggeringly worse as the 99 months of unemployment benefits expire for the enormous number of people who have been unemployed for nearly two years. The majority of the 99ers in this 60 Minutes report are college educated, many with post-graduate degrees, former professionals who have exhausted their 401ks, IRAs, savings, and other resources, and who will be losing their homes in the next few months. (60 Minutes: aired on October 24, 2010; filmed in Silicon Valley/San Jose, California.)

• The Mortgage Mess: Who Really Owns Your Mortgage | 60 Minutes (4/3/2011) | http://www.cbsnews.com/video/watch/?id=7361596n&tag=mncol;lst;2

RESOURCES | RESEARCH

• President Obama’s Proposed Federal Budget for Fiscal Year 2012 | White House | http://www.whitehouse.gov/omb/budget
• Economists: No Home-Price Recovery This Year (2011) | Wall Street Journal (March 22, 2011) | http://blogs.wsj.com/developments/2011/03/22/economists-no-home-price-recovery-this-year/
• Urban Institute: Unemployment Statistics on Older Americans – Charts & Tables | http://www.urban.org/UploadedPDF/411904_unemploymentstatistics.pdf
• Huffington Post: Obama’s Foreclosure Program Will Reach Less Than One Quarter Of Administration’s Target, 12/14/2010 | http://www.huffingtonpost.com/2010/12/14/obama-anti-foreclosure-program_n_796629.html
• Census 2010 Report on Income, Poverty & Health Insurance | [http://www.census.gov/prod/2010pubs/p60-238.pdf]
• Columbia University: Center for Homelessness Prevention Studies | http://www.columbia-chps.org/section/resources
• Bureau of Labor Statistics: Employment Situation Summary, 8/6/2010 | [http://www.bls.gov/news.release/empsit.nr0.htm]
• Daily Finance: The Jobless Effect: Is the Real Unemployment Rate 16.5%, 22%, or. . .? | [http://www.dailyfinance.com/story/careers/what-is-the-real-unemployment-rate/19556146/]
• Heartbreak Hotel, 2011: Homeless Children in America, Sermon by Rev. Karin Kilpatric, March 20, 2011 | http://www.arvadaucc.org/documents/Sermon-Heartbreak%20Hotel,%202011.pdf
• RealtyTrac: Foreclosure Trends | [http://www.realtytrac.com/trendcenter/]
• NeighborWorks: Foreclosure Statistics, document in PDF format is available at the FDIC.gov webpage: [http://www.fdic.gov/about/comein/files/foreclosure_statistics.pdf]

(The following statistics are gleaned from the Foreclosure Statistics document just cited.)

Homeowners Facing Foreclosure
1 out of every 200 homes will be foreclosed upon each year. (Mortgage Bankers Association)
Every three months, 250,000 new families enter into foreclosure. (Mortgage Bankers Association)
One child in every classroom in America is at risk of losing his/her home because their parents are unable to pay their mortgage. (Based on information from the Mortgage Bankers Association)
A slower real estate market can translate into falling prices and home values. As a result, homeowners who opted for adjustable rate mortgages may now find that as their mortgage rate adjusts higher, their home value is lower and therefore refinancing is no longer an option.
Six in 10 homeowners wish they understood the terms and details of their mortgage better. (Freddie Mac/Roper poll of 2,031 U.S. homeowners, conducted 2005.)
More than 6 in 10 homeowners delinquent in their mortgage payments are not aware of services that mortgage lenders can offer to individuals having trouble with their mortgage. (Freddie Mac/Roper poll of 2,031 U.S. homeowners, conducted 2005.)

Many homeowners already are at the financial edge:
o 43% of American households spend more than they earn each year.
(Homeownership Preservation Foundation data of 60,000 homeowners)
o 52% of employees live paycheck to paycheck.
(The MetLife Study of Employee Benefit Trends: Findings from the 2003 National Survey of Employers and Employees, November 2003.)
o Nearly 42% of all American households do not have enough in liquid financial assets to support themselves for at least three months.
o 46% of American households have less than $5,000 in liquid assets, including IRAs.
(Asena Caner and Edward N. Wolff, “Asset Poverty in the United States: Its Persistence in an Expansionary Economy,” Levy Economics Institute of Bard College, 2004.)

Tipping points that put homeowners over the edge:
o 32% experience a job loss
o 25% experience a health crisis
o 85% have already missed one mortgage payment
o 50% have already missed two payments
o Most have no savings, no available credit, and their extended families have limited resources.
o Most have first-time loans, and most loans are less than three years old.
o They may have already refinanced two or three times.
(Homeownership Preservation Foundation data of 60,000 homeowners)

The Cost of Foreclosure for Cities and Communities
Homes in foreclosure that become vacant provide sites for crime or other neighborhood problems. One foreclosure can impose up to $34,000 in direct costs on local government agencies, including inspections, court actions, police and fire department efforts, potential demolition, unpaid water and sewage, and trash removal. (William C. Apgar, Mark Duda, and Rochelle Nawrocki Gorey, “The Municipal Cost of Foreclosures: A Chicago Case Study,” February 27, 2005, p. 2.)
One foreclosure can result in as much as an additional $220,000 in reduced property value and home equity for nearby homes. (William C. Apgar and Mark Duda, “Collateral Damage: The Municipal Impact of Today’s Mortgage Foreclosure Boom,” May 11, 2005, p. 4.)

Benefits of Homeownership
Homeowners are more satisfied with their lives and are happier. Homeownership is positively associated with physical, mental and emotional health. (Robert D. Dietz, “The Social Consequences of Homeownership,” June 18, 2003, p.2, 4.)
Children of homeowners are likely to perform higher on academic achievement test and are more likely to finish high school. They also have fewer behavioral problems in school and are less likely to become pregnant as teenagers. (Robert D. Dietz, “The Social Consequences of Homeownership,” June 18, 2003, p.2, 4.)
Political activity (voting, civic participation) is higher among homeowners than renters. High level of neighborhood homeownership enhances property values. (Robert D. Dietz, “The Social Consequences of Homeownership,” June 18, 2003, p.2, 4.)