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Housing and Foreclosures

Require Banks to Provide Mortgage Principal Reduction and Stop Profiting from the Housing Bubble They Created

Its Our Economy, March 8 2012

A root of the economic collapse was the bursting housing bubble created by unethical mortgage lending by banks, countenanced by government pushing greater home ownership. Homeowners were swept up in the promise of home value-based wealth by deceptive marketing. The result — values of homes grew into a bubble that burst and destroyed the economy.

Banks continue to reap profits from mortgages based on false values created during the bubble, made worse by unethical adjustable rate mortgages, and are protected by government shared-loss agreements that make foreclosure profitable. Roughly one in four Americans owe more on their mortgage than their home is worth. No meaningful recovery can occur until this is fixed.

Requiring banks to provide principal reduction on all underwater mortgages would fix the housing crisis especially if coupled with a three-year moratorium on foreclosures for occupied dwellings where the borrower honestly disclosed their income. This would only cost $71 billion a year; “only” because the nation’s top seven banks paid out more than twice the cost of the plan in bonuses and compensation alone ($151 billion in 2010, $156 in 2011). The nation’s banks hold historically high level of cash reserves – $1.67 trillion. In 2011, U.S. bank profits hit a new high – $119.5 billion.

Mortgage correction would not add to government debt, would not cost the taxpayers and would finally have the banks do what they should have done when they received $14 trillion in taxpayer-funded bailouts – fix the housing crisis they created which led to the economic collapse. This would finally be the stimulus the United States needs, pumping $79 billion into the economy annually. As the New Bottom Line concluded in The Win/Win Solution, this would:

-          Create 1 million jobs every year; over 300,000 in California, the state hit hardest by the financial crisis.

-          Pump over $71 billion per year back into communities; 12 billion dollars per year in Florida, the state hit second hardest.

-          Save the average family over $543 per month on mortgage payments (6,516 per year).

-          Solve the foreclosure crisis; provide a foundation for economic recoveryThe positive stimulus effects would be significant in every state; in New York the annual stimulus would equal $1.25 billion, Ohio, $1.64 billion and $2.9 billion in Illinois. The economic boost would create jobs all over the country, in Massachusetts over 35,000 jobs, Illinois nearly 43,000 jobs and in Nevada 40,850 jobs.

What is the effect of the housing crisis continuing? Currently, 23% of houses are underwater, 6 percent of mortgage holders are two months behind in their payments and 800,000 houses were re-possessed in 2011. Paul Krugman notes, “The big drag on the economy now is the overhang of household debt, largely created by the $5.6 trillion in mortgage debt that households took on during the bubble years.” The result is a negative spiral: the unemployed can no longer afford their mortgages, resulting in foreclosure. Foreclosed homes further drag down home values in neighborhoods; homeowners become more financially insecure; they spend less, causing more job loss. The whole cycle starts again as the housing and jobs crisis feed off each other, preventing economic recovery.

What would be the effect on the banks? The banks have paid back a portion of the $14 trillion given to them in bailouts; they could subtract this $709 billion from the trillions they owe. Or regulators could allow banks to report the losses over a period of years, rather than all at once.

Banks created the housing crisis with their reckless practices. They should stop profiting from the housing bubble. Americans lost jobs, homes and life savings while banks posted billion-dollar profits and paid billion-dollar bonuses. Taxpayers rescued the banks; now the banks should be held accountable for the damage they caused.




How Many People Experience Homelessness?

Many people call or write the National Coalition for the Homeless to ask about the number of homeless people in the United States. There is no easy answer to this question and, in fact, the question itself is misleading. In most cases, homelessness is a temporary circumstance -- not a permanent condition. A more appropriate measure of the magnitude of homelessness is the number of people who experience homelessness over time, not the number of "homeless people."
Studies of homelessness are complicated by problems of definitions and methodology. This fact sheet describes definitions of homelessness, methodologies for counting homeless people, recent estimates of homelessness, and estimates of the increase in homelessness over the past two decades. Additional resources for further study are also provided. 
As a result of methodological and financial constraints, most studies are limited to counting people who are in shelters or on the streets. While this approach may yield useful information about the number of people who use services such as shelters and soup kitchens, or who are easy to locate on the street, it can result in underestimates of homelessness. Many people who lack a stable, permanent residence have few shelter options because shelters are filled to capacity or are unavailable. A recent study conducted by the U.S. Conference of Mayors found that 12 of the 23 cities surveyed had to turn people in need of shelter away due to a lack of capacity. Ten of the cities found an increase in households with children seeking access to shelters and transitional housing while six cities cited increases in the numbers of individuals seeking these resources (U.S. Conference of Mayors, 2007).
On an average night in the 23 cities surveyed, 94 percent of people living on the streets were single adults, 4 percent were part of families and 2 percent were unaccompanied minors.  Seventy percent of those in emergency shelters were single adults, 29 percent were part of families and 1 percent were unaccompanied minors.  Of those in transitional housing, 43 percent were single adults, 56 percent were part of families, and 1 percent were unaccompanied minors.  Those who occupied permanent supportive housing were 60 percent single adults, 39.5 percent were part of families, and .5 percent were unaccompanied minors (U.S. Conference of Mayors, 2008).
The average length of stay in emergency shelter was 69 days for single men, 51 days for single women, and 70 days for families.  For those staying in transitional housing, the average stay for single men was 175 days, 196 days for single women, and 223 days for families.  Permanent supportive housing had the longest average stay, with 556 days for single men, 571 days for single women, and 604 days for women (U.S. Conference of Mayors, 2008).  The homeless population is estimated to be 42 percent African-American, 39 percent white, 13 percent Hispanic, 4 percent Native American and 2 percent Asian, although it varies widely depending on the part of the country. An average of 26 percent of homeless people are considered mentally ill, while 13 percent of homeless individuals were physically disabled (U.S. Conference of Mayors, 2008). Nineteen percent of single homeless people are victims of domestic violence while 13 percent are veterans and 2 percent are HIV positive.  Nineteen percent of homeless people are employed (U.S. Conference of Mayors, 2008).
In addition, a study of homelessness in 50 cities found that in virtually every city, the city's official estimated number of homeless people greatly exceeded the number of emergency shelter and transitional housing spaces (National Law Center on Homelessness and Poverty, 2004). Moreover, there are few or no shelters in rural areas of the United States, despite significant levels of homelessness (Brown, 2002). The Council for Affordable and Rural Housing estimates that about nine percent of the nation’s homeless are in rural areas (The Council for Affordable and Rural Housing). As a result of these and other factors, many people in homeless situations are forced to live with relatives and friends in crowded, temporary arrangements. People in these situations are experiencing homelessness, but are less likely to be counted. For instance, of the children and youth identified as homeless by the Department of Education in FY2000, only 35% lived in shelters; 34% lived doubled-up with family or friends, and 23% lived in motels and other locations. Yet, these children and youth may not immediately be recognized as homeless and are sometimes denied access to shelter or the protections and services of the McKinney-Vento Act (U.S. Department of Education).
Researchers use different methods to measure homelessness. One method attempts to count all the people who are literally homeless on a given day or during a given week (point-in-time counts). A second method of counting homeless people examines the number of people who are homeless over a given period of time (period prevalence counts).
Choosing between point-in-time counts and period-prevalence counts has significant implications for understanding the magnitude and dynamics of homelessness. The high turnover in the homeless population documented by recent studies (see below) suggests that many more people experience homelessness than previously thought and that most of these people do not remain homeless. Because point-in-time studies give just a "snapshot" picture of homelessness, they only count those who are homeless at a particular time. Over time, however, some people will find housing and escape homelessness while new people will lose housing and become homeless. Systemic social and economic factors (prolonged unemployment or sudden loss of a job, lack of affordable housing, domestic violence, etc.) are frequently responsible for these episodes of homelessness. Point-in-time studies do not accurately identify these intermittently homeless people, and therefore tend to overestimate the proportion of people who are so-called “chronically homeless” -- particularly those who suffer from severe mental illness and/or addiction disorders and therefore have a much harder time escaping homelessness and finding permanent housing. For these reasons, point-in-time counts are often criticized as misrepresenting the magnitude and nature of homelessness.
There is another important methodological issue that should be considered. Regardless of the time period over which the study was conducted, many people will not be counted because they are not in places researchers can easily find. This group of people, often referred to as "the unsheltered" or "hidden" homeless, frequently stay in automobiles, camp grounds, or other places that researchers cannot effectively search. For instance, a national study of formerly homeless people found that the most common places people who had been homeless stayed were vehicles (59.2%) and makeshift housing, such as tents, boxes, caves, or boxcars (24.6%) (Link et al., 1995). This suggests that homeless counts may miss significant numbers of people who are homeless, including those living in doubled-up situations. 
There are several national estimates of homelessness. Many are dated, or based on dated information. For all of the reasons discussed above, none of these estimates is the definitive representation of "how many people are homeless.”  In a recent approximation USA Today estimated 1.6 million people unduplicated persons used transitional housing or emergency shelters.  Of these people, approximately 1/3 are members of households with children, a nine percent increase since 2007.  Another approximation is from a study done by the National Law Center on Homelessness and Poverty which states that approximately 3.5 million people, 1.35 million of them children, are likely to experience homelessness in a given year (National Law Center on Homelessness and Poverty, 2007).
These numbers, based on findings from the National Law Center on Homelessness and Poverty, Urban Institute and specifically the National Survey of Homeless Assistance Providers, draw their estimates from a study of service providers across the country at two different times of the year in 1996. They found that, on a given night in October, 444,000 people (in 346,000 households) experienced homelessness – which translates to 6.3% of the population of people living in poverty. On a given night in February, 842,000 (in 637,000 households) experienced homelessness – which translates to almost 10% of the population of people living in poverty. Converting these estimates into an annual projection, the numbers that emerge are 2.3 million people (based on the October estimate) and 3.5 million people (based on the February estimate). This translates to approximately 1% of the U.S. population experiencing homelessness each year, 38% (October) to 39% (February) of them being children (Urban Institute 2000).
It is also important to note that this study was based on a national survey of service providers. Since not all people experiencing homelessness utilize service providers, the actual numbers of people experiencing homelessness are likely higher than those found in the study, Thus, we are estimating on the high end of the study’s numbers: 3.5 million people, 39% of which are children (Urban Institute 2000).
In early 2007, the National Alliance to End Homelessness reported a point-in-time estimate of 744,313 people experiencing homelessness in January 2005. 
One limited measure of the growth in homelessness is the increase in the number of shelter beds over time. A 1991 study examined homelessness "rates" (the number of shelter beds in a city divided by the city's population) in 182 U.S. cities with populations over 100,000. The study found that homelessness rates tripled between 1981 and 1989 for the 182 cities as a group (Burt, 1997).
A 1997 review of research conducted over the past decade (1987-1997) in 11 communities and 4 states found that shelter capacity more than doubled in 9 communities and 3 states during that time period (National Coalition for the Homeless, 1997). In two communities and two states, shelter capacity tripled over the decade.
These numbers are useful for measuring the growth in demand for shelter beds (and the resources made available to respond to that growth) over time. They indicate a dramatic increase in homelessness in the United States over the past two decades. Additionally, in the U.S. Conference of Mayors report from 2008, 19 of the 25 cities reported an increase in homelessness from 2007.  More specifically, 16 cities reported an increase in the number of homeless families.
Also, due to the recent foreclosures crisis, homelessness has been on the rise.  In the U.S. Conference of Mayor’s 2008 Report, 12 of the 25 cities surveyed reported an increase in homelessness due to foreclosures and another 6 didn’t have enough data to be sure.  Thirteen of these cities had adopted policies to deal with the recent increase in victims of the housing crisis, but 10 cities had not implemented new policies.
By its very nature, homelessness is impossible to measure with 100% accuracy. More important than knowing the precise number of people who experience homelessness is our progress in ending it. Recent studies suggest that the United States generates homelessness at a much higher rate than previously thought. Our task in ending homelessness is thus more important now than ever.
Aron, Laudan Y. and Janet M. Fitchen. "Rural Homelessness: A Synopsis," in Homelessness in America, Oryx Press, 1996. Available for $43.50 from the National Coalition for the Homeless, 1012 14th Street, NW, Suite 600, Washington, DC 20005; 202/737-6444      . 
Brown, Leslie. “On the Outside”, in News and Record (April 7th, 2002).
Burt, Martha. "Causes of the Growth of Homelessness During the 1980s," in Understanding Homelessness: New Policy and Research Perspectives, Fannie Mae Foundation, 1991, 1997. Available, free, from the Fannie Mae Foundation, 4000 Wisconsin Avenue, NW, North Tower, Suite One, Washington, DC 20016-2804; 202-274-8074      .
The Council for Affordable and Rural Housing. “Homelessness in Rural America”. Available from
Koch, Wendy.  “Homelessness in Suburbs, Rural Areas Increases.”  USA Today.  July 9, 2009:
Link, Bruce et al. "Life-time and Five-Year Prevalence of Homelessness in the United States" in American Journal of Public Health, (December 1994). Available from Dr. Bruce Link, Columbia University, 100 Haven Ave., Apt. 31-D, New York, NY 10032-2626; 212/0631. 
Link, Bruce et al. "Life-time and Five-Year Prevalence of Homelessness in the United States: New Evidence on an Old Debate," in American Journal of Orthopsychiatry, 65 (July 1995) 3: 347-354. Dr. Bruce Link, Columbia University, 100 Haven Ave., Apt. 31-D, New York, NY 10032-2626; 212/0631. 
National Coalition for the Homeless. Homelessness in America: Unabated and Increasing, 1997. Available for $6.25 from the National Coalition for the Homeless, 1012 14th Street, NW, Suite 600, Washington, DC 20005;  202/737-6444      . 
The National Law Center on Homelessness and Poverty. “Homelessness in the United States and the Human Right to Housing,” (January, 2004).
U.S. Conference of Mayors. 2008 Status Report on Hunger & Homelessness.  Available from
U.S. Conference of Mayors. A Hunger and Homelessness Survey, 2007. Available from
U.S. Conference of Mayors. A Status Report on Hunger and Homelessness in America's Cities: 2006. Available for $15.00 from the U.S. Conference of Mayors, 1620 Eye St., NW, 4th Floor, Washington, DC, 20006-4005, 202/293-7330      .
U.S. Conference of Mayors. A Status Report on Hunger and Homelessness in America's Cities: 2001. Available for $15.00 from the U.S. Conference of Mayors, 1620 Eye St., NW, 4th Floor, Washington, DC, 20006-4005, 202/293-7330      . 
U.S. Department of Education. Education for Homeless Children and Youth Report to Congress, 2000.
Urban Institute, The. A New Look at Homelessness in America. February 01, 2000. Available from the Urban Institute, 2100 M Street, N.W. / Washington, DC 20037 or on the website at



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