The foreclosure crisis continues to destroy wealth on a large scale across the U.S. and here in Seattle. Due to historical inequities and predatory banking practices, the most devastating impact has been felt in communities of color.
The foreclosure rate for majority communities of color is more than twice as high as it is for segregated white communities (11 per 1,000 and 5 per 1,000 respectively).
These are among the key findings of a new study by the Alliance for a Just Society, “Wasted Wealth: The Foreclosure Epidemic, a Generational Crisis for Communities of Color.” The report was released today by Washington Community Action Network, the Alliance for a Just Society and the Seattle King County NAACP.
Speakers at the press conference included Dixie Mitchell, a Washington CAN! member whose home is underwater, Jill Reese, Associate Director at the Alliance for a Just Society, Seattle City Councilmember Nick Licata, and Gerald Hankerson of the Seattle King County NAACP.
The Wasted Wealth report analyzes 2012 foreclosure data to calculate lost wealth, examines the ongoing threat of foreclosures-in-waiting, and explores the economic impacts of principal reduction.
Here’s a snapshot of the impact on Seattle:
- Citywide, communities in Seattle lost $289 million in wealth due to the foreclosure crisis in 2012, or $900 per household;
- Communities with higher concentrations of people of color saw more wealth lost per household: $1,400 per household for majority-people of color communities compared with $600 per household for segregated white communities;
- Even communities with only above average people of color population saw over one-and-a-half times the amount of wealth lost per household than segregated white communities;
- There are over 48,000 underwater mortgages in Seattle on the books in 2012, and another $805 million in wealth at stake if a share of these mortgages go into foreclosure;
- Resetting mortgages to fair market value could save underwater homeowners an average of $9,300 annually, generate $511 million in economic activity, and create 7,600 jobs.