“Reset Seattle” Proposes Solutions for Underwater Homeowners

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Last week, a new coalition seeking to help homeowners in foreclosure— kicked off their new campaign called Reset Seattle.  

On their website, they announce that, “With over 16,500 Seattle homes foreclosed on and over 42,000 homeowners underwater, Washington CAN! is working with faith, community and labor groups to launch a campaign calling on City Council to stop at nothing short of principal reduction to provide real relief to struggling families.” 

The timing is good for such an effort.  Last month, RealtyTrac reported that although foreclosure filings nationally saw a decre

ase of 1% from February and down 23% from the previous year, in Washington State they were up 154% over the previous year.  Similarly, property repossessions nationally saw a decrease of 3% from February and down 21%  from March 2012, in Washington State they were up 88% over the previous year. 

In March the City Council agreed to explore new local solutions for homeowners and communities impacted by the foreclosure crisis, when they passed Resolution 31434, for which I was the prime sponsor, joined by Councilmembers Bagshaw and Harrell.

Here are couple sobering facts: 

·         According to the 2012 2 nd Quarter Zillow report, 38% percent of all homeowners are underwater on their mortgages and the average amount of negative equity carried by the individual homeowner because of the loss of value in their homes is approximately $92,200

·         According to the Seattle Office of Housing, between 2008 and November 30, 2012, 9,491 Seattle families have lost their homes due to foreclosures stemming from the housing crisis and approximately 34 percent of those are concentrated in Southeast Seattle where 14% of the City’s homeowners live.

Nationally, homeowners owe $700 billion more on their mortgages than their homes are worth and banks have received more than $700 billion in bailout funds.  Yet, these tax payer dollars are only marginally used to help struggling homeowners, while the industry continues to be unwilling to renegotiate loans on any meaningful scale.  The result is that the increase in consumer spending that is so necessary to our economic recovery isn’t occurring.

I’m excited to begin our review of the circumstances and causes of foreclosures as well as the foreclosure methods and practices of lenders, not to mention the inequities people in Seattle face. We’re working with a prominent expert in this field who has experience consulting for the Federal Reserve Bank of New York, the International Monetary Fund, and a number of federal and state legislators and local governments. Together, the City Council, in collaboration with the Office of Housing will explore all legal options to assisthomeowners who continue to suffer from the housing crisis.

If you want to read more about the impact upon Seattle homeowners and communities from the foreclosure crisis, check out the new report Reset Seattle has released in conjunction with the United Black Clergy, entiled: “The Wall Street Wrecking Ball.”