Foreclosure Q&A with Reece Dameron

Reece_DameronQ: The Baltimore Sun reported in August that “a record one in eight Marylanders [were] behind on their mortgages as of [last] spring.” Could you briefly describe the roots of this crisis?

A: In the past several years, many investors began to purchase mortgage backed securities. The subsequent increase in money for mortgages and demand for securities led lenders to relax their lending requirements. Lenders became more willing to make mortgage loans without first verifying the assets or even the income of the individuals to whom they were loaning money. Many of these risky subprime loans, often based on inflated property values, were nearly certain to fail from the moment the papers were signed. Lenders and loan originators were protected, however, because they were able to sell the mortgages to firms that bundled the loans into securities and then sold the securities to investors. When people began to default, the securities backed by subprime loans lost value. As a result, some banks and firms that owned those securities as assets failed. The bank failures impacted the rest of the economy and now, as people are losing their jobs or having their hours cut back, more people are beginning to miss payments.

Q: In March, the Obama Administration launched the $75 Billion Home Affordable Modification Program (HAMP). Could you briefly describe the program?

A: HAMP provides incentives to mortgage loan servicers who modify the terms of delinquent mortgages according to specific guidelines. If a borrower has suffered a hardship and their mortgage payment accounts for more than 31% of their gross monthly income, the servicer can modify the loan terms to reduce the payment to 31% by lowering the interest rate, extending the term of the mortgage, and in some circumstances forbearing principal. The program can be very helpful to borrowers in several ways, including sometimes significant reductions in their payments and helping to stop foreclosure sales. Additionally, the program will reduce the loan balance for borrowers who successfully make their payments over the long term.

Q: According to some, the program has gotten off to a slow start. Is this consistent with your experience-and has there been any change in the situation recently?

A: Yes, it does seem that the program has started slowly. It has taken some servicers a significant amount of time to adjust to the government guidelines and to increase their staff to serve everyone who needs help. However, just last week, the Treasury Department released new guidelines that should help to standardize and streamline the process.

Q: Commentators have described how the widespread mortgage defaults of subprime borrowers contributed to the banking crisis, which led to the recession, which in turn led to a second wave of foreclosures-this time including “prime borrowers,” or those who had good credit when they first got their mortgages. Have you seen more prime borrowers as clients as the crisis has continued?

A: We do seem to be seeing more prime loans, but I have not been tracking the numbers on a daily basis. Our first concern is to see if we can assist every homeowner who comes to us with a problem, regardless of where they started.

Q: What is it like for the average client seeking assistance with foreclosure prevention? How long is the average wait for modification?

A: There are several factors that can affect how long the process takes, and if everything goes right, it can still take three months or more. Some loan servicers are beginning to offer HAMP trial period plans based on financial information provided over the phone, but not everyone qualifies for a HAMP modification, and the trial period plan itself is not a permanent modification. Much of the process is dependent on the borrower. If a borrower has trouble controlling their spending, or did not keep track of their financial information very well, it can take longer. Of course, the servicers make mistakes as well and sometimes unnecessarily lengthen the process. Although being delinquent and facing possible foreclosure is understandably stressful, borrowers need to be patient during the process.

Q: The Congressional Oversight Panel recently issued a report stating that the Home Affordable Modification Program, “is targeted at the housing crisis as it existed six months ago, rather than as it exists right now,” and was not designed to deal with foreclosures caused by unemployment-a growing problem with the current economy. Panel Chairwoman Elizabeth Warren has expressed concern that the program is not doing enough and others have questioned whether the Administration will be able to reach its goal of preventing 3 or 4 million foreclosures. On the other hand, Federal Officials have reported this month that HAMP reached its initial goal of 500,000 trail mortgage modifications weeks ahead of schedule. Do you see things getting worse before they get better?

A: It’s difficult to say. The causes of the foreclosure crisis are changing, but it remains a story about how the economy writ large is affecting individuals and families. The economy is still not creating jobs and many people remain unemployed. People and families without sufficient income will be unable to make their mortgage payments. And the hard truth is that if a homeowner cannot pay their mortgage, they will eventually face foreclosure. Until the economy recovers, we can expect high rates of default, and we should ensure that there is assistance for homeowners that is tailored to the problems they are having. HAMP is certainly part of the solution, but other programs may be necessary as we go forward.

Q: What should someone do if they are facing foreclosure?

A: Since the process can be confusing and stressful, homeowners should immediately seek assistance if they have any questions or problems. Many people are afraid of working with their servicer or even admitting there is a problem, but they must know that the problem will not go away if they ignore it. More importantly, homeowners need to understand that the foreclosure process moves very quickly in Maryland and they should not wait until a foreclosure action is filed. Anyone who has already missed a payment or thinks they will be unable to make their next payment should consider themselves to be facing foreclosure. We can help homeowners, if they will let us.

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Interviewed by Will Flagle

Reece Dameron is a recent addition the Foreclosure Prevention staff here at St. Ambrose. He is a 2007 graduate of the University of Texas School of Law who has previously worked on election law issues and landlord/tenant law. At St. Ambrose, Reece is helping our housing counselors and homeowners to find alternatives to foreclosure. Reece hails from Missouri.

Housing, White Privilege, and Wealth Inequality

As a social justice issue, housing seems simple and relatively bland: people need shelter, what else is there to talk about?

A lot, actually.

Housing issues are related to a complex web of social justice concerns. Two related concerns that are particularly relevant to housing are white privilege and wealth inequality. In fact,  understanding the history of discrimination in America—particularly housing discrimination—is indispensable to understanding contemporary economic inequality.  What’s the connection between housing,  white privilege, and wealth inequality? Here’s a statistic that might surprise you:

The Federal Housing Administration and the Veterans Administration financed more than $120 billion worth of new housing between 1934 and 1962, but less than 2% of this real estate was available to nonwhite families—and most of that small amount was located in segregated communities.[1]

In other words, for almost three decades the U.S. government backed $120 billion worth of home loans and 98% (!) of those loans went to whites.

How did this institutionalized racism become possible?

Spurred on by massive mortgage foreclosures during the Great Depression, the federal government […] began underwriting mortgages in an effort to enable citizens to become homeowners. But the mortgage program was selectively administered by the Federal Housing Administration (FHA), and urban neighborhoods considered poor risks were redlined—an action that excluded virtually all the black neighborhoods and many neighborhoods with a considerable number of European immigrants. [2]

More important than this shocking history, however, is the relationship between home ownership, wealth, and opportunity—a relationship that links past discrimination to economic inequality today. To begin with, a home is one of the most important assets that a family can own. As Dalton Conley—associate professor in the Department of Sociology at New York University—explains in the PBS documentary Racethe Power of an Illusion, “The majority of Americans hold most of their wealth in the form of home equity.”[3] Therefore, because of the significance of housing as an asset, discrimination in housing directly contributed to inequality in wealth accumulation.

Wealth, in turn, is an important determinate of the opportunities that a family can provide for their children. As Larry Adelman has written, “a family’s net worth is not simply the finish line, it’s also the starting line for the next generation.”[4] A family can take out a second mortgage on their home, for instance, to finance their child’s college education or job search. Actions such as these can significantly affect a child’s life trajectory.  Indeed, because of the way that wealth creates opportunity, “Economists have shown that about 50-80% of our lifetime wealth accumulation is really attributable, in one way or another, to past generations,” writes Conley. Wealth, in other words, provides a mechanism that transfers opportunity, or the absence of opportunity, from one generation to the next. It is this intergenerational link between wealth and opportunity that explains why the effects of long past institutionalized racism—such as FHA housing discrimination—are still felt today.  [*]

How are the effects of historic discrimination still felt? Take the “wealth gap,” for example. Thomas Shapiro, in The Hidden Cost of Being African American, writes that “The net worth of typical white families is $81,000 compared to $8,000 for black families.”[6] That’s a 10:1 difference! This present day racial inequality in wealth, however, must be understood in light of the history of institutionalized racism and privilege. And housing discrimination is a fundamental part of that history. As previously mentioned, a home is often a family’s most important asset or source of wealth. Housing discrimination, therefore, created inequality in the accumulation of wealth. Moreover, wealth has two distinct characteristics: 1) it creates opportunity and 2) is it inheritable. The combination of these characteristics produced a dynamic whereby inequality in wealth—initially bolstered by discriminatory practices—was often passed down and maintained from one generation to the next. So long past discrimination in housing affected the wealth and opportunities of later generations. In short, past housing discrimination is an important factor in explaining economic inequality today. Conley writes:

Today, the average Black family has only one-eighth the net worth or assets of the average white family. That difference has seemingly grown since the 1960s, since the Civil Rights triumphs, and is not explained by other factors like education, earnings rates or savings rates. It is really the legacy of racial inequality from generations past. No other measure captures the legacy – the cumulative disadvantage of race for minorities or cumulative advantage of race for whites – than net worth or wealth.[7]

Thus, the reverberations of long past institutionalized racism are still felt today. As a primary example, housing discrimination creates inequality in wealth and opportunity that is often inherited by succeeding generations. Tracing back the linkages between present day inequalities in wealth and past housing discrimination demonstrates that—as a social justice issue—housing isn’t simple. Yet these linkages also show that, in spite of their complexity, contemporary housing issues remain as important as ever.

[1] George Lipsitz. 1998. The Possessive Investment in Whiteness. Philadelphia:Temple University Press.

[2] William Julius Wilson. (2005 [1996]) “When Work Disappears: The World of the New Urban Poor,” in Mapping the Social Landscape: Readings in Sociology. ed. by Susan Ferguson. New York: McGraw Hill.

[3] Dalton Conley. 2003. Interviewed in Race the Power of an Illusion. PBS Transcript available at

[4] Larry Adelman. 2003. A Long History of Racial Preferences – For Whites .

[*] Note that wealth, not income, has been the touchstone for economic status throughout this discussion. This is no accident. For wealth, not income, is a much better indicator of opportunity: “Even when families of the same income are compared,” explains Adelman, “white families have more than twice the wealth of Black families. Much of that wealth difference can be attributed to the value of one’s home, and how much one inherited from parents.”

[6] Thomas M. Shapiro. 2004. The Hidden Cost of Being African American: How Wealth Perpetuates Inequality. New York: Oxford University Press.

[7] Dalton Conley. 2003. Interviewed in Race the Power of an Illusion. PBS Transcript available at

What is the New Normal?

It seems that everyone these days, from economists to Wall Street analysts, to talk show pundits, to the average person on the street is speculating on when the economy will recover and get back to “normal.”  But what normal are they referring to? 

 The normal of the past decade has been ever-increasing home prices, enabled by cheap credit, exotic sub-prime mortgage products, little or non-existing underwriting standards and a broad assumption that housing values can only go up.  This boom turned the typical house into an ATM machine of home equity, which in turn fueled huge increases in consumer spending and the resulting debt.  While this was happening, incomes were stagnant and our personal savings rates were very low.

 So the bubble has finally burst.  House prices have plummeted in every neighborhood, exotic mortgages have for the most part disappeared, mortgage underwriting has tightened and housing has returned to what it has always been: shelter, a sound long-term investment, and not the right choice for everyone.  People are saving more and spending less, which is good for the individual household, but evidently bad for an economy that seems to be based on little more than consumer spending.

 So, what is the new normal we are hoping to see?  In housing, it appears that the answer is the return of the housing bubble.  What are we paying attention to?….hoped for increases in home sales, home prices and housing construction starts.  All homeowners, me included, want their lost home equity wealth back, but how can that happen?  Given past and likely continued income stagnation, the only way to increase affordability is through cheaper credit.  And with mortgage rates near record lows, there is little room to decrease further without the return of the poisonous loan products that got us into this mess in the first place.

American Casino: St. Ambrose Staff Make it to the Silver Screen

St. Ambrose staff have made it to the Silver Screen. Featured in the documentary movie American Casino were Stephanie Davis, Cara Stretch, Anne Norton and Lisa Evans.

The Roqoff Crew, some young musicians from the Chesapeake Center for Youth Development, composed and performed music for the film.

St. Ambrose hosted a special screening of American Casino at The Charles Theatre on June 9. Mayor Sheila Dixon attended along with over 200 others to view the film before its release to the public in August.

“American Casino is a powerful and shocking look at the subprime lending scandal. If you want to understand how the US financial system failed and how mortgage companies ripped off the poor, see this film.” —Joseph Stiglitz, Nobel Prize winning economist

NeighborWorks Plants and Paints

June 6–13 was NeighborWorks® Week this year. The theme was NeighborWorks® Plants and there were crews all over the neighborhood painting and planting.

NWPlants and Paints was a volunteer project where young men from Boys Latin School worked with the Facilities Maintenance staff to clean and green our local community.

Thank you to everyone who supported our efforts.

A City of Homeowners

Except for the past several years, Baltimore has always been an affordable town, and a town of homeowners. One reason was the savings and loan industry, which was brought over by East European immigrants. In the old ethnic neighborhoods, on every block you had a pub on one corner, and there would be a little saving and loan, or building and loan association, up on a second floor of a house. The men on the blocks could get together and pool their resources. They did it so that their children could buy a house in the neighborhood. It was a wonderful concept.

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A Real Culprit – Dearth of Affordable Rentals

One reality in cities like Baltimore is that for the past 40 years, we as a community have not built enough rental housing for low- and moderate-income families – especially two- and three-bedroom houses for families. That has put tremendous pressure on tenants who are living in abominable rat-infested, roach-infested housing and can’t find decent rentals. This is part of the reason so many people were susceptible to getting into these bad deals. They knew they couldn’t afford the loans, but they were so desperate to get out.

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Is CRA To Blame?

One theme that has come up in the election is blaming the Community Reinvestment Act (CRA) for the current financial situation. CRA came out of Congress in the ‘70s, and there were good, valid reasons to put pressure on banks to lend in areas where they weren’t lending. In the ‘80s Congress gave the law some by creating a rating system to evaluate how banks were doing on their CRA, and then banks had to take it seriously. They worked at getting outstanding ratings, and that was a good thing for a lot of neighborhoods that hadn’t seen private investment in years. But here’s the key thing: no one in the community development movement ever asked a banker to make a bad loan. Blaming CRA for the current housing crisis is really a crock of b.s.

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