companies.31 The agreement replaced an independent review process that had been launched. From the start, the review process was fraught with problems, including the facts that: (1) Lenders were allowed to select their own consultants to conduct reviews despite the fact that the reviews were intended to be independent; (2) The review consultants were not required to have had any experience or expertise in outreach to at-risk borrowers or underserved communities and, as a result, relatively few of the 4.2 million estimated eligible borrowers for the program applied to be included in the program; (3) Consultants were not required to speak with borrowers when determining whether borrowers had been inappropriately foreclosed upon, but rather they were allowed to rely solely on the servicers’ files. This was a major flaw in the program design since the most often cited concern with servicers’ behavior was the servicers’ alleged loss of borrower documents; and (4) The fees being charged by the consultants were excessive, ultimately costing more than $2 billion at the time the program was halted.32
The Rebound of the U.S. Economy and the Housing Market Recently, the economy and the national housing market have shown important signs of improvement. The stock market has repeatedly hit new highs33 and profits for many of the nation’s largest corporations have never been better.34 More than 90 percent of the amount of total aggregate wealth lost during the collapse of the housing market and the subsequent recession has been recovered. However, this wealth recovery is not equally shared across households as a large proportion of this recovery has occurred for stocks that are disproportionately held by highincome, typically non-Hispanic White, households. 35 Also, over the past few years the unemployment and underemployment rates have increased (as discussed above) and the labor force participation rate has declined, especially for African Americans and Latinos, as illustrated in Figure 4 below. This decline has implications for future opportunities and wealth building.
31 These servicers and their affiliated mortgage companies are America’s Servicing Company, Aurora Bank, Aurora Loan Services, BAC Home Loans Servicing, Bank of America, Beneficial, Chase, Citibank, CitiFinancial, CitiMortgage, Countrywide, EMC Mortgage Corporation, Goldman Sachs, HFC, HSBC, JPMorgan Chase, Litton Loan Servicing LP, MetLife Bank, Morgan Stanley, National City Mortgage, PNC Mortgage, Saxon Mortgage, Sovereign Bank, SunTrust, SunTrust Mortgage, U.S. Bank, Wachovia Mortgage, Washington Mutual (WaMu), Wells Fargo Bank, N.A., and Wilshire Credit Corporation. 32 National Consumer Law Center, National Association of Consumer Advocates, and National Fair Housing Alliance (2013, January 7). Statement Regarding Settlement with Banks to Settle Foreclosure Abuses and End Foreclosure Reviews. Washington, DC: National Consumer Law Center, National Association of Consumer Advocates, and National Fair Housing Alliance.http://www.nclc.org/images/pdf/pr-reports/ pr-banks-settlement-forecl.pdf 33 M. Farrell (2013, May 28). Super Tuesday: Dow closes at record high. CNNMoneyInvest. http://money.cnn.com/2013/05/28/investing/ stocks-markets/index.html 34 M. Gongloff (2013, January 17). Corporate Profits Soar To Record, Now More Than Double Their Peak Under Ronald Reagan. The Huffington Post. http://www.huffingtonpost.com/2013/01/17/corporate-profits-record_n_2494743.html N. D. Schwartz (2013, March 3). Recovery in U.S. Is Lifting Profits, but Not Adding Jobs. http://www.nytimes.com/2013/03/04/business/economy/ corporate-profits-soar-as-worker-income-limps.html?pagewanted=all&pagewanted=print. 35 W. R. Emmons and B. J. Noeth (2013, June 6). Still Digging Out: Real Net Worth per Household Has Rebounded 63 Percent Since Hitting Bottom in Early 2009. In the Balance: Perspectives on Household Balance Sheets 4, 1-2. http://www.stlouisfed.org/publications/pub_assets/ pdf/itb/2013/In-the-Balance-issue-4.pdf. M. L. Chang (2010). Shortchanged: Why Women Have Less Wealth and What Can Be Done About It. Oxford: Oxford University Press.
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The State of Housing in Black America 2013