The Great Recession Hits Home: Asset Depletion and Foreclosure in Boston

Transcription

1 The Great Recession Hits Home: Asset Depletion and Foreclosure in Boston Dr. Hannah Thomas, Ph.D., SSRC Emerging Scholar Dr. Curtis Skinner, Ph.D., Discussant Emerging Scholars Webinar #8 Thursday, September 25, :00PM EDT

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5 Selection Criteria To nominate someone for SSRC s Emerging Scholars Initiative, her/his name and CV to the SSRC: ssrc@opressrc.org Graduate student or degree recipient No more than 10 years of experience Currently doing research on selfsufficiency issues related to SSRC topic areas Conducting high quality research that fills a knowledge gap or addresses a selfsufficiency issue that warrants greater visibility Working in academic, program, thinktank, or agency setting

6 Hannah Thomas, Ph.D. Emerging Scholar July September 2014 Senior Research Associate, Institute on Assets and Social Policy, The Heller School for Social Policy and Management, Brandeis University Education Ph.D., Social Policy and Sociology, Brandeis University, 2012 M.A., Sociology and Social Policy, Brandeis University, 2009 MA (Cantab), Geography, Cambridge University, 2001 Research interests and current research: Intersection of wealth, family, and community Individual and family relationships to wealth its accumulation, depletion, and uses Wealth access and social mobility/opportunity Wealth accumulation through housing and work Recent Work Keeping Dreams Alive: The Lane-Changer Costs of Financial Disruptions (2014) Hard Choices: Navigating the Economic Shock of Unemployment (2013)

7 Curtis Skinner, Ph.D. Discussant Labor Economist and Director of the Family Economic Security Team, National Center for Children in Poverty Education Ph.D., Economics, Fordham University, 2000 B.A., Philosophy and Political Science, Columbia College, 1978 Research Interests Comprehensive poverty measures for states and localities State best practices in protecting the social safety net in the aftermath of the Great Recession Dynamic trends in labor market outcomes for young adults raised in poor households. Recent Publications Basic Facts About Low-Income Children: Children Under 18 Years, 2012 (2014) Income and Beyond: Taking the Measure of Child Deprivation in the United States (2014) Knowing What Works: States and Cities Build Smarter Social Policy with New and Improved Poverty Measurement (2013)

8 Q&A Submit questions any time through the Question and Answer feature (bottom right of screen). Questions will be answered: after the presentations; or if we run out of time, via responses posted on the SSRC with other Webinar materials after the event.

9 Hannah Thomas, Ph.D. SSRC Emerging Scholar September 25, 2014

10 Rappaport Institute at the Kennedy School Department of Neighborhood Development at the City of Boston Department of Housing and Urban Development Federal Reserve Bank of Boston Thomas Shapiro

11 Context of Foreclosures Wealth and Homeownership Consequences of foreclosures Context of the study Asset depletion and exhaustion Motivations to deplete assets Policy Implications

12 Stability and well-being

13 Builds Wealth Greater Civic participation Children improved school performance Benefits of owning a home Improved health Greater Emotional satisfaction Greater financial predictability and stability

14 Wealth pond of financial resources Wealth is unevenly distributed

15 Material deprivation e.g. hunger, homelessness Opportunities for the next generation College Home ownership Future retirement insecurity Managing future emergencies

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17 Providing some context

18 2007 to million homes in foreclosure (Center for Responsible Lending, 2013) Many more NEW foreclosures: January million homes in foreclosure January ,000 homes in foreclosure July ,000 homes in foreclosure

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20 Carolina Reid, 2011, Addressing the Disparate Impact of Foreclosures on Communities of Color, presentation given at the Bay Area Asset Funders Network Conference, Addressing the Disparate Impact of Foreclosure on Households and Communities of Color, April 5, 2011, San Francisco.

21 The process of losing a home

22 Owner cures default Short Sale Owner goes into default Foreclosure Auction Owner requests loan modification Loan modification rejected Loan modification approved

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25 Financial impacts Health Impacts Consequences for the household Psychologi cal Impacts Social Impacts

26 Health impacts Social impacts More frequent visits to the doctor Higher levels of stress Increased residential mobility increases risk of behavioral and emotional problems in children Higher risk for depression and suicide More food deprivation Lower performance on children s test scores Lower voter turnout Less trust in banks Financial Impacts Reduced wealth - $7 trillion estimated in 2012 Lower credit scores Bankruptcy

27 37 Interviews in Boston 2007 and 2008

28 2007 & 2008 start of foreclosure crisis 37 in depth interviews in Boston Predominantly with Hispanic, Caribbean black and African American households Geographically representative of foreclosure filings in Boston Partnered with City of Boston, Department of Housing and Urban Development

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30 it got completely emptied out now I m on deficit spending. Ralph

31 In this point in our life, we needed to have something that we owned so we could try to have a steady cost we could fix within my fixed income. Well, it didn t completely empty it out, but... it got it down pretty low and... then when the escalations came on, that completely emptied it out, which was this year. Well, not this year, last year, 2007, that s when it got completely emptied out. And now I m on deficit spending. It s gone now. It s just a memory (laughing). A memory from when the housing boom was going high, and I had more work than I could handle, and I was able to put something away.

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33 Asset Depletion Unbalanced Budgets Income Reduction Unsustainable household expenses Spent household assets Took on debt Used extended family resources Asset Exhaustion

34 Motivations Decisions Identities

35 Solomon: Ah, why I wanted to buy a house? Because it s always the American Dream. One wants to buy one s own house to live well and to be paying for oneself.

36 Katarina: I found this person was going to my porch, opening the doors, doing whatever he wants in my apartment. So, I feel like it s dangerous because at nights those apartment don t have a key on every room.... When my other two kids come to this country, I better have something safe for them because it was, to me it wasn t safe. Nothing happened to me, but it was like, you know, door open, cigarettes, things in my apartment, and sometimes there was marijuana next door. So, it s better me living here. So, that s why I was looking to buy an apartment.

37 Yolanda: a place where children could run and play, [where she could] raise children without a headache. Jana: You know what is sad? If you don t have any kids I mean, you don t care, you just go pay rent somewhere else or do something but when you have kids, you look at them, at your situation. You don t think about you, you think about them. What is going to happen to them if they call home and there is no home anymore? And when they re too young to understand these kind of things, so you have to try to... and tell them, well, it s not our house anymore, we have to move, we can start again. But kids get used to things like anybody does.

38 Donna: I inherited it from my grandmother.... about 20 years, maybe more. I took care of my grandmother, lived there. It s a family house.

39 Future deprivation? Future asset insecurity?

40 Incentives for saving Financial Security Tax Credit Individual Development Accounts Matched retirement savings accounts Sufficient income and jobs with benefits Programs to help replace income during financial potholes

41 Sustainable mortgages E.g. Self-Help Community Advantage Program Appropriate terms Homeownership education Development of affordable homeownership opportunities Safe and secure renting options

42 1. Counseling requirement for retirement fund cash outs 2. Financial asset vulnerability assessment tool 3. Mortgage payment grace period 4. Therapy

43 Rebuild credit scores Asset rebuilding Individual development accounts targeted to post-foreclosure reality and matched savings Credit counseling

44 For more information please me at:

45 Q&A Submit your questions through the Question and Answer feature (bottom right of screen). If we run out of time, responses to remaining questions will be posted on the SSRC with other Webinar materials after the event.