For many Americans, the foreclosure crisis was a news story on TV. For others, the crisis was a national problem to be pondered “in theory.” In my case, however, the foreclosure crisis was personal and real. In 2003, in the midst of closing my failing African American bookstore in Denver, I defaulted on my home mortgage – finding myself the target of a foreclosure process, but also of predatory lenders and investors prowling my inner-city, gentrifying neighborhood. I avoided foreclosure by agreeing to a modification plan with my bank. Soon after in 2005, however, while working for the Denver Clerk and Recorder/Public Trustee’s office, I observed firsthand how the State of Colorado – the nation’s only public trustee state – overhauled its foreclosure process. I also observed procedures enacted by the Deputy Public Trustee, who volunteered on a committee to draft the state legislation on foreclosures which ultimately was enacted. Finally, in 2009, after moving to Dallas to accept a senior financial analyst position with a global Fortune 500 company, I purchased a foreclosed home myself – closing on the purchase only after months of delays due to paperwork backlogs. These delays added both time and frustration for myself, the seller and our realtors.
All of these experiences have given me a unique vantage point on which to base a solution for solving the foreclosure crisis. My four-pronged plan would favorably move our nation out of its immense predicament. On a personal level, however, my plan would help hurting families and individuals overcome the stigma of financial ruin, empower American homeowners to make better home-buying decisions and also improve the home-buying process. As well, however, this plan would help neighborhoods, communities and cities across the country recover from one of the worst housing debacles in history.
Where to start? First, education.
While it may sound simple on its face, my first solution involves requiring all home purchasers in the United States to take and pass a focused course of study on personal financial management. Topics would include household budgeting, plus budgeting for costs associated with real property purchases. Other topics would focus on the real property purchasing process, show buyers how to read mortgage disclosures and related financial documents, calculate mortgage payments and understand the legal and economical ramifications of buying a home. Additional topics would include a brief history on property rights, showing a homebuyer how property values are set and how values affect communities at-large. Upon completing the course, the prospective buyer would receive a certificate, also my suggested requirement to complete the loan package.
This first step, while basic, is a critical preventative approach. Indeed, a 2007 study by the Federal Trade Commission’s Bureau of Economics showed that prospective homebuyers, when given more education in conjunction with using an improved prototype...