The clients’ foreclosure rate was far higher than that of other homeowners. In 2009, for example, at least seven of Obama’s former clients got foreclosure notices. That’s roughly twice the rate of completed 2009 foreclosures in Chicago’s minority neighborhoods, according to a 2010 report by the left-wing housing activist group National People’s Action.
That 2009 rate is also roughly eight times the nation’s post-bubble foreclosure rate of 0.5 percent per year, according to a report by the government’s Federal Deposit Insurance Corp.
2009 wasn’t an aberration: Obama’s client list had averaged 5.3 foreclosure notices a year during the 1990s.
The foreclosures temporarily halted in 2010, but are expected to accelerate following a 2012 federal government deal with several major banks.
Nationwide, another 5 million home owners are expected to get new notices between 2012 and the end of 2015, according to Moody Analytics. In May, 1.5 million homes were 90 days or more behind in payments.
More of Obama’s clients likely will be on that list.
“[I have] been paying the mortgage with no problems since 1969, until about [the] last two months, when I had taken ill and wasn’t able to work and take care of the business,” Samuel Wilson told TheDC. He’s also behind on his state taxes, he said. Wilson runs a hardware shop and a laundromat and also rents apartments, but his Englewood neighborhood is poor and crime-wracked, he said.
There were 186 client-enrollees in Obama’s class-action lawsuit. Of those, at least 88 got foreclosure notices or went bankrupt.
As few as 19 of the 98 remaining clients own homes today.
City records show that 29 of the 98 do not hold mortgages, and at least four are deceased. As many as 16 may have foreclosure records.
The progressives’ anti-redlining claims were intended to boost African-Americans’ rates of homeownership. But by 2011, the rate had dropped 2 points below the 1990 level of 45.2 percent.
Moreover, TheDC’s count of 19 homeowners among Obama’s 186 clients may be too large. That’s because the lawsuit included people who bought houses years earlier.
Marcella and Arthur Wilson, a U.S. Marshall who was one of Princeton University’s first African-American graduates, used a Citibank mortgage to buy a house in 1954 for $17,500.
Other clients said they never had problems getting housing loans.
Citibank “didn’t turn me down,” said John Geoghegan, a 68-year-old retiree who expects to pay off his mortgage in several years. “I really have never been turned down for a loan.”
The current value of many clients’ houses is far below their bubble-inflated mortgage loans.
TheDC compared Cook County’s mortgage data with Zillow’s real estate assessments and concluded that 31 of Obama’s clients in the mortgage lawsuit likely borrowed more than the current value of the houses they lived in at the time.
Those 31, all now likely underwater, includes clients who are still paying mortgages and some who have sold their houses during the last four years. It does not include people who have had foreclosures or bankruptcies.
TheDC can’t determine if Obama’s home-owning clients are further underwater than other Chicagoans, partly because the city databases don’t show how much the clients still owe on their mortgage.
But Zillow’s data does show that Chicago has one of the highest underwater mortgage rates in the country, with some ZIP codes showing a higher rate of underwater houses than Las Vegas’ 71 percent or Detroit’s 56 percent.
Many of Obama’s clients lived just a few miles south of the president’s own $345,000 house in Chicago’s Kenwood neighborhood.
Seventeen clients lived in ZIP code 60619, where 43 percent of homes are now underwater, according to Zillow’s “negative equity” map. Another 15 clients lived in 60628, where 46 percent of owners are underwater. Eleven lived in 60649, where 61 percent of homes are underwater.
Nationwide, roughly 24 percent of home mortgages, or 11 million homes, are underwater by an average of roughly $60,000, according to an August 2012 report by Corelogic, a real estate analysis firm. Homes owned by mid- and low-income people are twice as likely to be underwater as high-income homes.
The current average values of homes in Chicago’s 60619, 60628 and 60649 ZIP codes are only $106,800, $88,000 and $83,100 respectively, according to Zillow.
The underwater, bankrupt or foreclosed clients also likely have little or no wealth for their retirement.
Foreclosures also damage borrowers’ credit records and make it difficult for them to get subsequent loans, homeowner’s insurance and auto insurance, or even to meet employers’ hiring requirements, says Chi Chi Wu, a lawyer at the progressive National Consumer Law Center law firm.
The overall loss of wealth among Obama’s African-American clients likely exceeds the nationwide average for African Americans.
And because of the housing bubble, “[f]rom 2005 to 2009, inflation-adjusted median wealth fell by … 53 percent among black households, compared with just 16 percent among white households,” according to a July 2011 report by the Pew Research Center.
In 2005, half of all African-American families had wealth greater than $12,124. By 2009, the families’ median wealth had plummeted to $5,677.
Chicago’s housing values only started to recover in July 2012. “I don’t want to depress myself … [but] I know that the value of this house is nowhere where it was four, five, six years ago,” Renee Brooks told TheDC.