Despite the recently announced $25 billion national mortgage settlement, it could take up to three years for banks to determine which foreclosure victims are eligible to receive any monetary relief.
The multistate settlement announced on Feb. 9 provided that Wisconsin would receive $140 million in relief for victims of deceptive mortgage practices. Gov. Scott Walker has said he intends to use $25.6 million to reduce the state budget deficit. However, Milwaukee Mayor Tom Barrett said the money should go toward foreclosure programs within the city, which has the most foreclosures in the state.
Even if all $140 million were to go toward foreclosed homeowners and prevention programs, advocates say it would not be sufficient.
“It’s a good start but it’s not going to be enough,” said Iris González, homeownership preservation program manager for Select Milwaukee. “It’s a drop in the bucket compared to the need.”
“The best part is [the settlement] sheds light on the situation,” González added.
In 2010, the last year for which figures are available, Select Milwaukee helped 238 people avoid foreclosures and 442 individuals who were facing foreclosure received education and advocacy services, according to the organization.
During 2011, new foreclosures were filed against 4,352 city of Milwaukee properties, according to Sam Leichtling, housing rehabilitation manager of the Department of City Development. He noted that 2,341 properties were foreclosed in 2011.
Select Milwaukee holds a foreclosure prevention workshop every first and third Tuesday of the month to provide attendees with information about how the process works and how they can avoid foreclosure.
A 55-year-old African American woman who asked that she not be identified attended a recent workshop. In this article she will be called Mrs. T.
“I’m hoping that [Select Milwaukee] will get me a decent interest rate so I can keep the house,” said Mrs. T. She has three daughters and six grandchildren, and works as a teacher for developmentally delayed and autistic children. She also counsels girls who are victims of domestic violence. A single mom, Mrs. T is a survivor of domestic violence.
She purchased her home in 1994 and said her mistake occurred when she refinanced it in 1998.
“Before refinancing I owed $28,000. After refinancing I owed $38,000,” she said.
Her troubles continued when she was unable to pay $2,000 in property taxes. The bank made the tax payment and then added interest charges to her payments. The interest was compounded daily and the amount owed on the house rose from $38,000 to $72,000.
Another financial blow came when her 24-year-old daughter was diagnosed with breast cancer. Mrs. T found herself caring for her daughter and adding her daughter’s medical and housing costs to her own bills.
Eventually, the payments became too much and she decided to speak with a realtor.
“The realtor said the most I could sell the house for was for $31,000 in today’s market,” Mrs. T explained. “I said ‘forget it.’”
The realtor suggested that rather than selling, she should visit Select Milwaukee in hopes of finding another option.
“We act as the go-between person and advocate for the homeowner,” González said. “We get results for our homeowners.”
The mission of Select Milwaukee is “to help people achieve and maintain homeownership to enrich their lives and strengthen neighborhoods and communities,” according to its website. The organization does this by offering workshops at which struggling homeowners get advice and guidance.
Homeownership preservation specialists Brenda Brown and Gerber De Leon conducted the workshop Mrs. T attended. After presenting a slide show with basic information on foreclosures, they spoke with the attendees personally to provide preliminary counseling on mortgages and loans.
“I’m supposed to be fairly educated but I’m not educated in these types of matters,” Mrs. T said. “I got duped.”
Select Milwaukee’s services are available to any Milwaukee resident in need of foreclosure prevention assistance. To learn more about Select Milwaukee, visit the website at www.selectmilwaukee.org or call 414-562-5070.