Report: $720 Million in Household Wealth Lost to Foreclosures in Orlando
May 21, 2013 | WMFE - In Orlando, the foreclosure crisis erased nearly $720 million in household wealth last year, according to a new report. Local activists say the report shows the crisis is ongoing, and they want lenders to do more to help underwater home owners through what's called principle reductions.
A principle reduction is when a lender reduces a mortgage amount so it's more comparable with a home's current market value.
Local activists say principle reductions help homeowners make their payments and save money – and that improves home values across the community.
State Sen. Geraldine Thompson says banks should do more to help underwater home owners – especially in communities with large minority populations.
"Wells Fargo in particular had an outreach program that went into black churches to sell mortgages at an inflated rate. And so yes banks would have to shoulder their share of the burden for this problem because they were instrumental in creating the problem."
The national community organizations Alliance for a Just Society, Home Defenders League and New Bottom Line authored the report.
It estimates more than 53,000 homes in Orlando remain underwater, or worth less than their mortgages. It shows communities with large minority populations are especially hard-hit.