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Women in Foreclosure: Not Out of the Woods

| May 30, 2014

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The foreclosure epidemic is also a public health crisis. Unexpected illness and disease frequently trigger mortgage default, and the stress associated with foreclosure can cause homeowners to experience new health problems after foreclosure begins. Default and foreclosure are linked to hypertension, heart disease, food insecurity, and serious mental health problems. In one four-state study, illness and the costs of health care contributed to foreclosure in half of the homeowners studied, and in other research 32 percent of those in foreclosure skipped doctor’s appointments, 48 percent stopped filling prescriptions, and one-third met the criteria for major depression. Communities dominated by foreclosure experience increases in hypertension, suicide attempts, and emergency room visits among adults 20-49 years old.

These trends carry serious implications for single female homeowners, because they are often the strongest members of a financially fragile network that relies on them for financial security, caregiving, and housing. Single women are often forced to choose between paying their mortgage and paying for their families’ medical care. Eve, a black homeowner from Philadelphia, said she “was paying my mom’s medical stuff, but not paying mine, and my cousin was living with me because she couldn’t find an apartment. In my family, it’s just me—I’m it.” 

A lifetime of double duty at work and at home whittled away at Eve’s finances and health, further contributing to her eventual foreclosure. Well before she unknowingly signed a risky mortgage, she worked long hours balancing two part-time retail jobs with no benefits. She remembers “getting sick and having chest pains all the time. I had high blood pressure and the doctor kept saying, ‘Stay home,’ but I couldn’t or I would lose money I needed.” Eve says she “kept going, working sick, and then I got heart disease around the time my husband died.”

In the United States, 38 percent of female workers have zero access to paid sick leave, which means women like Eve must weigh the need for pay against the need to take care of themselves. Lack of paid sick leave affects men at about the same rate, but the impact is often greater on women because they shoulder the burden of unpaid care work at home. The problem is worsened by a lack of paid family leave for women in low-wage service jobs. So in addition to working when sick, Eve also “missed work sometimes to take care of my mom.” Again, this experience is not unusual. Only 12 percent of U.S. workers enjoy paid family leave to care for a new baby, adopted child, or seriously ill family member, further placing single women with families to care for in financial binds that make them vulnerable to predatory brokers, financial exploitation, and mortgage foreclosure.

In September 2013 President Obama marked the five-year anniversary of the housing crisis with a speech, stating, “So if you add it all up, over the last three and a half years, our businesses have added 7.5 million new jobs. The unemployment rate has come down. Our housing market is healing. Our financial system is safer.” The White House released an accompanying report praising the Home Affordable Modification Program (HAMP) for helping “more than 1.2 million borrowers to date and an additional 1.9 million homeowners who have received foreclosure prevention assistance through the FHA [Federal Housing Administration].” HAMP, the program intended to help nine million families keep their homes, provided financial incentives for banks, not requirements. Under HAMP, the government indirectly subsidized mortgages by paying banks the money they would lose if they agreed to refinance with qualifying homeowners. HAMP was an attempt to persuade, not force, banks to lower homeowners’ interest rates.

The improvements celebrated by the White House were not evenly distributed. The United States is experiencing a market recovery, not a human recovery. As noted in Part 1, the housing crisis continues to wreak havoc on the one in four homeowners who re-defaulted on their loans, the 20 percent who are underwater on their mortgages, and the four million who were supposed to be assisted by HAMP but never qualified, never made it through the maze of paperwork, or whose banks refused to cooperate. It is not clear how many single women were able to access the program, but given their 30 percent overrepresentation among risky loans, it is likely that many female homeowners remain trapped in risky mortgages. In addition to the 7.8 million homeowners unable to reap the benefits of HAMP, the few who were able to see their rates lowered will again experience a spike in their monthly mortgage bills when the program expires in 2014 and 2015. According to a senior analyst at Bankrate, “The program [HAMP] was a temporary Band-Aid. Five years later, that Band-Aid is going to be ripped off.”

These temporary and insufficient policies rest on two assumptions: first, that the financial picture of homeowners in trouble would improve along with that of the financial industry, which was rescued by Congress with a $700 billion bailout. The loan modifications provided by HAMP were intentionally temporary because it was assumed that homeowners would be able to refinance on their own when the program ended. In reality, most homeowners in trouble were never assisted by HAMP not only because lenders were not required to lower rates, but because some people’s mortgage trouble is tied to a weak economy, health problems, and a failing safety net. As a result, 28 percent of those who did receive help have already re-defaulted, and an additional 11 percent have fallen behind on their payments. The second assumption is a persistent belief that the problem of mass foreclosure can be solved by changing financial policy without addressing the safety-net holes that leave millions of women vulnerable to mortgage exploitation in the first place.

The problem of mortgage foreclosure is more complicated than is recognized by current policies, which treat default as isolated economic failures untouched by broader social problems. Eve’s experience with foreclosure can be attributed in part to the actions of a predatory broker who exploited policy gaps and her financial stress. In the bigger picture, market and safety-net failures combined over time to make her one of the “perfect customers” described in Part 1. A lack of paid sick leave, inadequate insurance, low wages, and long hours contributed to her early heart disease. Her “mom’s bad insurance,” and a lack of paid family leave to care for her, further strained the budget and Eve’s health. The looming cost of college and the promise of upward mobility for her children left her with seemingly no choice but to draw on a home that was 100 percent paid for.

The Dodd-Frank Act outlawed many risky mortgage practices, but millions are still feeling the effects of those abuses and are in need of assistance. Although the government does not plan to replace HAMP, there are steps women can take to alleviate mortgage trouble. Step number one is recognizing the severity of one’s mortgage trouble. Homeowners should not wait for the bank to return calls, assume they will follow up, or assume that verbal agreements will translate into written ones. Homeowners should document any interactions with their lenders and only send important paperwork through certified mail or by fax, both of which allow them to prove their bank received the documents. Step two is keeping a copy of everything that is sent to the lender.  Step number three is avoiding scam artists and locating legitimate legal assistance or help from a housing counselor. Requests for deed transference or lump sums of money are the number one tip-off that an offer for help is a rescue scam. HUD maintains a list of certified agencies, and the Center for Responsible Lending offers practical steps and suggestions for anyone in mortgage or financial trouble. 

The views expressed in this commentary are those of the author alone and do not represent WMC. WMC is a 501(c)(3) organization and does not endorse candidates.

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