Council Hears Options for Foreclosure Prevention Strategies for Homeowners Struggling in Seattle
SEATTLE – March 27, 2014 – (RealEstateRama) — Councilmembers considered presentations specific to mortgage principal reduction and other foreclosure prevention programs for homeowners who are struggling in Seattle, and options to revitalize the communities impacted. The discussion was held in a joint meeting of the Finance and Culture Committee, and the Committee on Housing, Affordability, Human Services and Economic Resiliency, Chaired by Nick Licata.
Resolution 31495 directed the formation of an Interdepartmental Team (IDT) to explore principal reduction and other foreclosure prevention programs that can help low- income homeowners who have significant negative equity and may be at risk of losing their homes due to foreclosure. Since 2006, nearly five million families nationally have lost their homes to foreclosure, nine million Americans have lost their jobs, and ten million families now owe more on their mortgages than their homes are worth. Foreclosures in Seattle have adversely impacted communities of color in Seattle with nearly 8% of Seattle’s African-American and Latino homeowners foreclosed upon to date as compared to 4.5% for white homeowners.
The IDT recommended several viable alternatives to foreclosure. In addition, panelists from Reset Seattle, a coalition of organizations working on promoting principal reduction, including the NAACP, United Black Clergy, Casa Latina, Natural Resource Law Group; and, Washington Community Action Network, also reported to the Joint Council Committee. They urged the IDT to go beyond recommending expansion of outreach and coordination of current programs, and to also seek innovative new solutions, including models that allow an underwater homeowner to rebuy their home at fair market value and reset their mortgage.
“The City should find new ways to provide assistance to Seattle homeowners who are struggling,” said Licata. “With mortgage debt overhang impeding economic recovery, principal reduction on underwater homes may aide in our economic recovery,” Licata added.
Today’s IDT report was preliminary, with final recommendations expected soon. In June they will provide a secondary report to the Joint City Council Finance Committee and Housing Committee that will include a strategic plan with a timeline and program development deliverables as well as potential partners with whom the city could work to fund a program.
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