10 Million Americans Foreclosed, Often at the Point of a Gun
|November 12, 2013||Posted by Staff under Financial|
Since 2007, the foreclosure crisis has displaced at least 10 million people from more than four million homes across the country. The displaced are young and old, rich and poor, and of every race, ethnicity, and religion. They add up to approximately the entire population of Michigan.
In many cities and towns, lots are filled with “Cheap Bank-Owned!” trailers. Cities hire contractors dubbed “Blackwater Bailiffs” to keep pace with the dizzying eviction rate. This type of militarized reaction is often the outcome when communities — especially those of color — organize to resist eviction.
Between 2009 and 2012 African Americans lost just under $200 billion in wealth, bringing the gap between white and black wealth to a staggering 20:1 ratio.
The crimes started at the top. Banks peddled toxic mortgages like crack, paying employees cash incentives to push them in African American neighborhoods. The loans exploded, so they forged millions of foreclosure affidavits to speed state-enforced evictions.
Once homes are vacant, bank contractors insufficiently seal and maintain them, allowing intruders to strip the houses of their copper wiring, plumbing, and sometimes even the furnace. The copper alone sells for anywhere from 50 cents to a dollar per pound. Finally, people dealing drugs begin to use the houses at night as distribution centers. The street-level crime drags down neighboring property values, spurring more foreclosures and evictions. And so the cycle continues.
These uninviting neglected houses, disproportionately located in communities of color, are most often being snapped up by investors rather than families. Overwhelmingly, the investor of choice is the Blackstone Group, one of the world’s largest private equity firms and now the nation’s largest owner of single-family homes. Since April 2012, Blackstone has spent more than $4.5 billion buying at least 30,000 houses concentrated in cities hard-hit by foreclosure; the company often makes its purchases in cash.
There’s big money to be made in rental properties these days, given that there are millions of displaced, former homeowners with wrecked credit scores looking for places to stay.
Declines in property tax revenues caused by vacancies have led cities to cut funding for public works, libraries, parks, recreation programs, and school districts. One city even cut a program intended to address vacant foreclosed properties, thanks to a tax revenue shortfall.
Ed. Notes: A few months later, she treated the topic in more depth.