Foreclosures and Hopelessness and Answers

The damage to WNC from Helene grows. And no one is listening.

There is a silent epidemic creeping into western North Carolina-and I’ll wager it’s left a trail of tears everywhere else affected by natural disasters. (*note-we’re not talking about the weather manipulation right now, so come back for that*)

That epidemic is hopelessness. One of the factors that causes an increase is foreclosure.

Yes, foreclosure. 

I say that word, and for many of you-you’re thrown back into 2008-2012 and the great recession and the mass waves of homes repossessed by capital institutions who had extended loans to those least able to fulfill the terms and then took them back as a matter of course.

In that scenario, one could blame the person losing the house because they did not fulfill the terms of the note, which they read (maybe) and understood (maybe) and chose not to find a way to keep it.  We can argue about that until Kingdom comes-I sold a *lot* of foreclosures during the recession and my level of pity for the foreclosed was severely diminished after seeing the situations.

Now, let’s consider the family who survived Helene but whose house was destroyed. Not just damaged-but destroyed. Gone. Wiped out. Floated away on a 28’ storm surge in the mountains. Flattened to a pile of matchsticks by a landslide. They too had a note. They read and understood the terms of repayment. But the house itself is gone. No matter how you parse it-they did NOT bring this on themselves.  

Still, banks are starting foreclosure proceedings. These families have already lost everything-family members, cars, kids’ kindergarten drawings, jobs….and now they are watching their credit be destroyed by the banks they chose for the dream house mortgage.

‘They can file bankruptcy.’ That’s the argument I’ve gotten almost every time I’ve tried to discuss the situation.  Bankruptcy is not the easy solution that Michael Scott thought it would be in The Office, though. It’s a years-long interruption of opportunity. Attorneys have been helping explain the pros and cons to these North Carolina citizens, and it’s just not that easy.

‘Let the bank have it.’ That’s the other argument. However, for those who don’t do real estate and haven’t lived through the bank issues for years-you may not understand that if the bank forecloses-they get the collateral. In this case, the collateral no longer exists as the house BUT the land is still collateralized. If you’re on precious family land-you don’t want the bank to own what is rightfully yours.

Perhaps I get a little more frustrated and angry because I remember clearly what every American citizen has been told multiple times:  ‘Too big to fail.’ Sound familiar?  Yes, we the taxpayers have been bailing out banks for decades. Somehow, these huge corporate capital machines need my tax dollars BUT those same banks don’t seem to believe that any of their customers are also too big to fail.

If I had to help bail out a bank-should those same banks not be held to the standard of helping someone whose house no longer exists?

Now, being me, i don’t like to just complain. I want to help find solutions-and I want to see it happen quickly as there are LIVES on the line.  

I understand that banks need capital returned in order to lend it out again. Straight forgiveness sounds great but can put the institutions at risk-and I also don’t want to return to the time when there was no money to lend. Tight credit hurts in a cascading effect-because then no one else can get a loan when needed.

Congress could act. A provision could be added to the CRA (Community Reinvestment Act) that would provide a credit to a lending institution if they forgive principal debt for someone who is at 100% loss due to disaster. 

I did the math and it’s barely a drop in the bucket, considering how dollars are frivolously treated in current times. We lost an estimated 1875 homes in Western NC due to Helene (of course, this is NC only and doesn’t include homes in other states-so adjust accordingly). If half of those homes had a mortgage (which is likely conservative, as many of the destroyed homes were paid in full), and if we use the average home price for the impacted areas AND assume they owed 100% of market value (again, conservative since many would have purchased prior to the insane market run up during the C0VID era), THEN we’re talking a forgiveness amount of less than $200mil. 

In contrast, the US has provided $175 BILLION to Ukraine over the past 3 years. I’m asking for about 1% of that amount.  ONE PERCENT of what we have tossed overseas pays off the existing loans for hurricane ravaged families at a time when they need relief RIGHT NOW.

It’s doable.  It’s legal. It’s moral.

And NO ONE WILL LISTEN.  I’ve talked to Congressional reps about it. I’ve talked to housing policy people. Everyone agrees it sounds good but no next steps are taken.

I suppose that’s why I’m here. If you read this far and agree that this should happen, help me?  Send this to a Congressman-especially if that elected is on the Financial Services committee. Send this to a banking executive you know who could advocate for this as a sound policy.  Share to your circles. 

For the record-the loss of hope is a loss of light and life. Relieving financial burden will save lives.