HOUSING ADVOCATES SOUND THE ALARM:
LOUISIANA IS APPROACHING A FORECLOSURE CRISIS
Data shows we need $140 million per month to stabilize Louisiana homeowners.
NEW ORLEANS – Monday, October 5, 2020 – A new report reveals Louisiana is months away from a foreclosure crisis. Statewide housing advocacy group, HousingLOUISIANA, says based on the report, Homeowners on the edge: Is America on the Brink of a Foreclosure Crisis, when the CARES Act foreclosure protections expire as early as January 2021, Louisiana will need $140 million per month to stabilize homeowners. 10% of Louisiana homeowners (nearly 110,000 households) were unable to pay their mortgage in August.
“In essence, we’re four months away from the 2008 foreclosure crisis repeating itself in Louisiana, states Andreanecia Morris, President of HousingLOUISIANA. “The data in this report makes that very clear. Last month in the Greater New Orleans area alone, more than 21,000 households did not pay their mortgages. What is going to happen to these families come January, when the federal protections expire? HousingLOUISIANA is sounding the alarm now because we have to take action now. Louisiana legislators are in session and we need them to act. Members of congress will be running for re-election, and we need to know what they plan to do about this before we cast our ballots.”
The report was compiled by UrbanFootprint on behalf of Center for Planning Excellence and focuses on HousingLOUISIANA’s nine regions. As is the case with the rental crisis, homeowners who are falling behind on their mortgages are disproportionately low-income, non-white residents.
More than 50% of those who were unable to pay their mortgage have a household income of less than $50,000 a year.
Non-white communities in Louisiana have a non-payment rate that is nearly twice that of white communities — 14% and 8%, respectively.
“The report’s findings on the state of home ownership amidst the COVID-19 pandemic, along with what we already know about the rental needs in Louisiana, make clear that we cannot wait for this looming crisis to unfold — the stakes are too high,” states Camille Manning-Broome, President & CEO of the Center for Planning Excellence. “The state of Louisiana cannot afford the economic instability and the deepening disparities that will result if our lawmakers fail to put forth proactive, data-driven, equity-driven policies and programs to address this housing crisis. As we navigate the impacts of the pandemic, addressing Louisiana residents’ most basic needs by ensuring they have food on the table and a roof over their heads should be legislators’ top priority during this special session.”
The report also found homeowner risk and mortgage payment gap are concentrated in Louisiana’s urban parishes, with an estimated 36,000 households (nearly 10% of all owner-occupied households) in the New Orleans and Baton Rouge metros unable to pay their mortgage last month. The Greater New Orleans area is facing a $34 million monthly mortgage gap. Baton Rouge, Lafayette and Northshore homeowners are estimated to be more than $20 million behind in monthly payments in each metro, totaling more than $60 million per month.
“We need to be looking this now and not just waiting until next year because by then, homeowners will be in such a financial bind that they won’t be able to catch up,” says Kentrell Jones, HousingLOUISIANA Northshore Board Member and Executive Director /CEO East St. Tammany at Habitat for Humanity. “We need to at least start fixing this problem now, before the moratorium ends.”
“Historically, homeownership has been the primary way for Louisiana families of modest means to build net worth and secure their future, says Melinda Taylor, HousingLOUISIANA Lafayette Board Member and Executive Director, Lafayette Habitat for Humanity. “Allowing low- and moderate-income homeowners to slide into economic instability through losing the largest asset they own will create a cascade of negative impacts in Louisiana communities that will far outlast the COVID pandemic. Our legislators at both the state and federal levels have an increasingly narrow window for action to provide relief to at-risk homeowners and prevent a catastrophic wave of foreclosures in 2021.”
“This report should be a clarion call to our federal delegation to pass a comprehensive economic relief package that provides vulnerable Louisianans with the aid they need to stay in their homes,” states Louisiana Budget Project Executive Director Jan Moller. “The partisan stalemate that has kept aid from being reauthorized has to end.”
After reviewing the data with partners like Enterprise, National Community Reinvestment Coalition (NCRC) and the New Orleans Redevelopment Authority (NORA), HousingLOUISIANA recognizes the need for action at the state and local level. The partners are calling on leaders to #PutHousingFirst by taking immediate action to help homeowners, including these policy recommendations to close the state’s mortgage payment gap:
- Determine if existing soft second mortgages can be used to refinance vulnerable homeowners
- Establish loan fund/assistance fund with unexpended Road Home Assistance
- Create federal policies that would require loan modifications and not allow the banking industry to abandon vulnerable homeowners
- Examine state policy changes to insurance, property taxes and utility payments to provide some relief to vulnerable homeowners
- Demand that congress pass relief bills that provide rental assistance AND financial support for homeowners
“This is exactly why the Louisiana Legislators need to work with Governor John Bel Edwards and end any discussion of removing the Governor’s emergency powers,” says Ashley Shelton, Executive Director of the Louisiana Power Coalition. “This evolving crisis will not align with the legislative schedule and will require a rapid and thoughtful response.”
HousingLOUISIANA is joined in this effort by Center for Planning Excellence, Louisiana Budget Project and Louisiana Power Coalition for Equity and Justice.
HousingLOUISIANA is a statewide network of housing practitioners and advocates whose primary goal is to ensure that all Louisiana’s housing needs are met. Through our statewide network of the nine regional housing alliances in Alexandria, Baton Rouge, Houma-Thibodaux, Lafayette, Lake Charles, Monroe, New Orleans, Northshore, and Shreveport, we work to better coordinate efforts and build collaboration across the state on housing issues.