Lisa Simpson
Mar 23,2010
In: Foreclosures

Increase in Foreclosures Points to the Urgent need of Implementing Consumer Protection

Increase in foreclosures points to the urgent need of implementing consumer protection.

The increase in foreclosures across USA both in residential and commercial sectors points to the urgent need of implementing consumer protection. One of the worst affected areas is Chicago.

The National People’s Action in tandem with Lakeview Action Coalition and South Austin Coalition Community Council published a report giving in details what impact the foreclosure crisis had on Chicago City. The news is gloomy – the foreclosure posting doubled from 2006 to 2008 and then high jumped by 16% in 2009 – it being the worst year for Windy City.

The foreclosure crisis started with the collapsing of the sub-prime mortgages. The Blacks in the south and west parts of Chicago were predated upon with these dangerous loans. It should be a reminder that policies that are racially unjust eventually negatively impacts on all the people. If these practices had been nipped in the bud then the nation would not be facing the crisis today.

When the sub-prime lending entered the localities alarm signals had been sent out but the banking regulators turned a deaf ear. NPA held numerous meetings with the Federal Reserve, the Comptroller of the Currency, the FDIC as well as with the office of Thrift Supervision but to no avail. NPA gave documental proof of the damage being done by the sub-prime mortgages placing questions about the predatory products and their sustainability. Unfortunately none who could take action responded. Hence the urgency of setting up an effective consumer protection agency arises but by housing it with the same people who had remained deaf, poses questions about its effectiveness. Neither the people nor the nation would be protected in future. The door would be kept open for another crisis.

The report submitted by NPA, The Home Foreclosure Crisis in Chicago shows that everyone will benefit if consumer protection is stepped up. Initially sub-prime loans triggered the crisis in Chicago. This started off the tailspin. Millions of jobs were lost and this spurred on a second surge of foreclosures this time caused by unemployment. No person or region has been unscarred by this financial crisis. 2009 saw 118 foreclosures per square mile in Chicago City. There were huge increases among those with high and middle income. In the past five years the average owner of residential house has seen the value of the house fall by $27,000. More than $15 billion in property wealth has vanished in the city during this span of time.