The first 100 Days of the presidency of Donald Trump are not nearly over and already much has changed in the political climate of the United States. Numerous executive orders have been signed that, if enforced, can affect almost every aspect of American life. From education to overtime pay to immigration to correctional facilities, almost no facet of governmental interest seems unchanged.
This leads us to consider: what – if any – effect will the Trump Administration have on foreclosures and mortgage loan modifications? While there is no actual evidence that any of the following trends will come to fruition under President Trump, the following are some estimations of upcoming trends in housing and foreclosure due to the change in administration.
One of President Trump’s biggest campaign platforms was that of undocumented immigrants in the U.S. The Administration has focused many efforts on the deportation of millions of immigrants, even those who have been living and working in the country for years without committing any criminal offenses. The consequences of drastically increasing deportation can directly lead to an increase in foreclosures.
Researchers at Cornell University studied the direct correlation between deportation and foreclosure rates. This is not because the undocumented individuals are being granted mortgage loans themselves, but instead because an estimated one-third of illegal immigrants live in homes owned by legal residents. The unlawful immigrants contribute significantly to support the household and pay the mortgage and related bills and, when they are suddenly deported after years, the family members who remain are unable to make the mortgage payments and end up defaulting and losing their homes.
This potential increase in deportation-related foreclosures would only compound the foreclosure crisis for Latino families, who already account for the highest percentage of foreclosures than any other race group. The inflated numbers of Latino foreclosures seem to stem from the fact they were specific targets for subprime mortgages. The Cornell study found that as deportation rates rose, the foreclosure rate rose almost in proportion as such:
If President Trump acts on his intended “millions” of additional deportations, the foreclosure rate will likely increase quickly.
While Donald Trump has long focused his career on real estate, his campaign included very few plans to improve affordable housing for the middle-class and lower-income families. He did state that he planned to rescind the Affirmatively Furthering Fair Housing (AFFH) rule implemented by the Department of Housing and Urban Development (HUD), the agency that seeks to improve housing policy and curb foreclosures in the U.S. In addition, members of the Administration have stated intentions to phase out the government’s interest in housing finance, specifically Fannie Mae and Freddie Mac. This, in turn, will threaten the funding of the Housing Trust Fund, which focuses on assisting families in need of affordable housing.
Solely privatizing housing finance may further eliminate any chance of objective, government-sponsored mortgage loan modifications, such as those under the Home Affordable Refinance Program (HARP), which will be effective through late 2017, or the newly-announced Fannie Mae Flex Modification Program, which is being developed to assist in foreclosure prevention across the United States.
Without any government-sponsored programs, struggling homeowners will only have the option of seeking a proprietary loan modification directly from their lenders. Such modifications can be subjective, inconsistent, and difficult to obtain. With a potential decrease in standards for loan modifications, we could see an increase in successfully foreclosed homes.
While this may not directly affect the future of foreclosures in the United States, President Trump’s selection for Secretary of the Treasury certainly sends a message that the President does not necessarily hold potentially abusive foreclosure practices in disregard. Commonly known in banking circles as the “Foreclosure King,” Steven Mnuchin oversaw tens of thousands of home foreclosures initiated by lender OneWest, which was previously IndyMac.
During his tenure of leadership, the bank known as the “Foreclosure Machine” was accused of using unlawful foreclosure practices to take advantage of already struggling homeowners. In addition, a whistleblower lawsuit in 2014 accused One West of defrauding the Home Affordable Modification Program (HAMP) of $206 million.
Mnuchin defended his work at OneWest in his confirmation hearings,1 stating he inherited many of the mortgages that required foreclosure and that he revamped the bank as part of the “recovery for the American economy.” Despite his remarks in his defense, his confirmation as Treasury Secretary does indicate the Administration’s attitude toward questionable foreclosure practices of banking giants.
While the future of foreclosure and modification trends in the United States is still unclear, there are still a substantial number of homeowners who are approaching default or who are facing a foreclosure action in and around Long Island. Regardless of the presidential administration of the time, the New York court system is backlogged with foreclosure cases and many people are in danger of losing their homes.
It is highly important for anyone who is having difficulty paying their mortgage to seek assistance from a skilled New York foreclosure and mortgage modification lawyer. There are many debt relief options available to help you cure a delinquency or default and to assist you in avoiding a foreclosure case whenever possible.
At the Law Office of Ronald D. Weiss, PC, we have many legal tools and resources to help homeowners, business owners, and consumers resolve their debt problems and regain control of their financial situation. If you would like to discuss your options today, please call our office at 631-271-3737 for help.