Remarks by President of the Board of Directors LaMar Davis
Foreclosures and Financial Literacy
As we come to a close with 2012 and prepare for 2013, I took refelected on what we experienced in the housing market and financial literacy. What lessons we have learned and our partners who we aligned with to meet the challenges that faced our clients. One of our core programs is financial literacy and we continue to believe that understanding finances lead to a healthier and manageable knowledge regarding budgeting, savings, and planningthusbuilding financial wealth.
Recent research shows that American consumers have a limited understanding of financial concepts like compound interest and inflation. Financial illiteracy is particularly acute among specific demographic groups, including those with low education, women, African-Americans, and Hispanics. If individuals are financially literate, then they will be able to make better financial decisions for themselves and for their families when it comes to budgeting and buying, financing a home, or planning for retirement, for example. When individuals have a better understanding of financial and economic concepts, it is easier for them to understand what inflation is or the risk that it presents to financial well-being.
Earlier studies have shown that these aspects of financial literacy are large in poor parts of the populationand that individuals make systematic mistakes, such as underestimating interest rates from payment streams. Even greater concern however, is that differences in financial literacy are correlated with consumption and savings decisions. A low ability to perform simple mathematical calculations, for example, is correlated with lower levels of saving; less planning for retirement, lower comprehension of credit, and the feeling that spending is out of control.Indirect evidence also points to the possibility that increased financial literacy leads to lower delinquency rates.
In early 2009, as the unemployment rate soared to new heights, the challenge of foreclosure prevention increased among households. To address this challenge, PICB engaged in programs to assist homeowners in foreclosure prevention and financial literacy with asset building as tool to help consumers change learned behaviors and increase savings that lead to wealth building. Our partners in this endeavor include; Citi bank who sponsored a coalitions of non-profits that work together to improve credit and understand financial literacy; US Bank sponsored our first matched savings program that allows participants to increase savings, this program is thru a partnership with LISC who provided the model; Bank of America sponsored education in homeownership; Heartland Alliance provide research, education, partnerships, and tools for asset building; Woodstock Institute provides updated information and research on lending practices by financial institutions and foreclosure data. We became a sponsor of the Illinois Hardest Hit Fund that assist homeowners who are unemployed or underemployed with up to $25,000 to pay their mortgage and or become reinstated based on qualifying factors; Illinois Housing Development Authority programs, the Cook County Foreclosure Mediation program which provides assistance to consumers who have been served a summons with pro bono lawyers in partnership with HUD housing counseling agencies and Foreclosure Prevention Program that funds HUD counseling agencies so they can assist homeowners for no charge with modifications; National Foreclosure Mitigation Program and HUD Comprehensive Counseling grants thru National Coalition Reinvestment Corporation provide counseling to homeowners and renters facing foreclosure and education on fair housing, mortgage scams and predatory lending and donations from private donors who allow PICB to continue programs that assist homeowners and renters; The City of Chicago delegate agency grants that provide assistance to seniors who need small accessible repairs to remain safely in their homes as well as homeownership counseling for pre and post purchase; The Mirco Market program create by the City of Chicago to revitalize neighborhoods that have suffered foreclosure and blight.
Though 49 state attorneys general have settled a sweeping complaint covering a long list of fraudulent and deceptive foreclosure practices, a handful of states are pursuing lawsuits against the mortgage industry. New York Attorney General Eric Schneiderman, named to a federal task force to investigate mortgage fraud, hascharged lenders with deceptive and fraudulent foreclosure filings based on a national mortgage electronic registry system, known as MERS. The lawsuit claims that Bank of America, J.P. Morgan Chase and Wells Fargo, “have repeatedly submitted court documents containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have.” To that end, we continue to work with homeowners as a liaison with lenders to reach a positive solution for the homeowner and lender.
Moving forward into 2013 we will continue helping form partnerships that align with our Mission to create affordable housing and education in financial literacy. We look forward to more partnerships and homeowners.We thank all of our partners and clients who have helped us make 2012 a successful year.