Urgent Action Needed to Stem Foreclosures, Greenlining Institute Warns

Group that warned of crisis in 2005 sounds new alarm as Senate examines crisis.

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(WASHINGTON, D.C.) - The Greenlining Institute, whose 2005 warnings of a growing crisis in subprime lending were ignored by then-Fed Chair Alan Greenspan and other regulators, sounded a new alarm today as the Senate Banking Committee prepares to examine the ongoing foreclosure crisis. Greenlining urged aggressive action to stem a pending tide of foreclosures, including a moratorium and principal reductions.

“As the film ‘Inside Job’ so strikingly documented, we warned of the subprime crisis years before officials started paying attention, but were ignored,” said Greenlining Institute Executive Director Orson Aguilar. “Now we have a new warning: The foreclosures that have devastated neighborhoods so far will be dwarfed by the new tide of foreclosures that’s coming, and the result will be unbelievable misery. We urgently need a national foreclosure moratorium while we put in place a program of across-the-board principal reductions that will keep people in their homes.”

Statistics assembled by the Greenlining Institute indicate that seven percent of white homeowners have been foreclosed upon or are in imminent danger of foreclosure, while the comparable figures for African Americans and Latinos are 11 percent and 17 percent, respectively. Foreclosures are expected to drain $273 billion from Latino and African American communities nationally.

“Millions of hard-working Americans risk losing their homes due to shady lending practices and an economic downturn that they did not create,” Aguilar said. “We completely agree with Federal Reserve Governor Daniel Tarullo, who said last Friday that foreclosures simply cannot be better than modifications, including principal reductions – but to be effective, action must happen now.”

Source: The THE GREENLINING INSTITUTE a Multi-Ethnic Public Policy, Research and Advocacy Institute