Building the “American Dream”: Policies to Protect Wealth and Promote Homeownership

Committees of Jurisdiction, Housing; Law, Justice, and Ethics
Resolutions: HSE-13-13; LJE 13-39

Photo Credit: News OnePhoto Credit: News OneHomeownership is not only the cornerstone of the “American Dream,” it is also the foundation of wealth and economic empowerment for many American families. Historically, African Americans have purchased property as a means of building income and wealth creation. The basis of Black wealth, therefore, has been concentrated in the real estate and property market.
 
African-American portfolios were particularly hard hit during the 2008 recession, further widening the wealth gap that African Americans face. This loss of wealth is a significant concern for the vitality and stability of communities of color, contributing to several social issues, including stagnated economic development, lower health outcomes, and fewer public resources. State lawmakers have stepped in with legislative solutions that improve wealth and homeownership protection measures.



State Action

The following features select state legislation has been introduced to protect wealth and assets, primarily through property inheritance protection and foreclosure relief measures such as mediation, modification, and repayment periods.

Delaware

delawareHB 40 (Enacted 2013)

Sponsors Representatives Keely, Kowalko, Briggs King, Ramone, Barbieri, Bolden,* Heffernan, Jaques, Q. Johnson, Mitchell, Paradee, Schwartzkopf, B. Short, and Wilson and Senators Hall-Long, Townsend, Bushweller, Henry,* and Venables.

Summary This bill extends the Delaware Automatic Residential Mortgage Foreclosure Mediation Program for an additional four years (originally scheduled to expire in 2014).This state-run program provides homeowners with housing counseling and an opportunity to participate in a mediation session with counselors and lenders to prevent foreclosure.


Georgia

georgiaHB 744 Uniform Partition of Heirs Property Act (Enacted 2013)

Sponsors Representatives Lindsey, Ashe, Allison, J. Neal, Maddox, Abrams,* and Senator Hamrick.

Summary Nationally, African Americans owned at least 16 million acres of agricultural land in the United States in 1910, yet only retain ownership of 3,826,403 acres of that land out of a total of 922,095,840 as of 2007. This disparity is partly attributed to unfair and unclear partition laws in states throughout the country. Under previous Georgia law, generational assets, such as real property, were vulnerable to forced sale actions due to ambiguity in ownership during inheritance.

The Georgia Uniform Partition of Heirs Property Act provides greater protections for inherited property like homes or land. The law requires clear notice at pending partition indicating potential action. Additionally, the law requires independent appraisal of the value of the property to assess fair market value, and allows the court to determine whether a forced sale our buyout would be harmful to a co-owner, particularly if he or she were a resident of the property and sale would make it difficult to obtain other housing. 

Massachusetts

massachusettsS. 425: Act to Facilitate Alternatives to Foreclosure (Introduced 2013)

Sponsors Senators Chandler, Candaras, DiDomenico, Jehlen, Kennedy and Representatives Keefe, Khan, Andrews, Fox,* Madden and Walz.

Summary This bill would establish the Massachusetts Foreclosure Mediation Program, which would train neutral, third-party foreclosure mediators. The bill would require that lenders offer state-approved mediation to homeowners, and also require that these lenders negotiate alternatives to foreclosures in good faith. If mediation is refused or fails, the bill would require lenders to receive a certificate of good faith negotiations to be presented to carry out any foreclosure.

Minnesota

minnesotaHF 83 (Introduced 2013)

Sponsors Representatives Freiberg, Dehn, Clark, Moran,* J. Benson, Nelson, Winkler, J.E. Ward, Bly, Lien, S. Johnson, and Issacson.

Summary This legislation would require that lenders seeking to foreclose on a property designate a single point of contact to ensure clear line of communication between the lender and homeowner. The bill would also allow a 90-day “stay period” prior to foreclosure to allow time for mediation and/or loan modification attempts to be exhausted. The bill also requires lenders to indicate to homeowners that mediation is available to them, and mandates mediation before foreclosure action is pursued, which is paid for by the lender.

Conclusion
Due to loopholes and ambiguity in state law, predatory tactics have stripped hard-earned and much-needed wealth from communities of color. Black state legislators across the country continuously fight to protect wealth and assets for all Americans, particularly within vulnerable communities. The National Black Caucus of State Legislators supports these and other proactive steps to make sure all Americans have an opportunity to achieve the “American Dream.”