Third World America - Arianna Huffington [27]
The barriers keeping homeowners from obtaining proper legal representation are twofold. The first is funding. In 1996, the budget for the Legal Services Corporation, the primary agency that provides help for low-income Americans in civil cases, was cut by a third.91 At this point, to match the funding level the Legal Services Corporation received in 1981 would require an increase of $753 million.92 If Goldman Sachs or Bank of America needed that kind of cash (or even ten times that kind of cash), Washington wouldn’t think twice. But low-income homeowners have no clout in D.C.
The second barrier is that restrictions to adequate legal help have been deliberately built into the system.93 Remember the 1994 “Contract with America”? It turns out that one of its provisions severely limited the ability of homeowners to get legal protection from predatory lenders. Homeowners represented by the Legal Services Corporation are barred from bringing class-action suits. Nor are they able to make the other side pay attorneys’ fees, even when the law would normally allow it. The chance to recoup attorneys’ fees when a defendant wins his case is critical in discouraging lending companies from dragging out proceedings merely to exhaust a defendant’s financial resources. The Obama administration has asked Congress to remove many of these limitations, to no avail. The $789 billion stimulus plan didn’t contain a single dollar for foreclosure-related legal help.94
Although Americans losing their homes are being treated like an afterthought, foreclosures are actually a gateway calamity. Every foreclosure is a crisis that begets a whole other set of crises. When families lose their homes, they are forced to move in with relatives, or into a motel, or live out of a car, or on the street. Meanwhile, the home sits vacant. Surrounding home values drop. Others in the neighborhood move out. In many communities, squatters move in. Crime goes up. Tax revenues plummet, taking school budgets down with them.
Almost forty-one million homes in the United States are located next door to a foreclosed property.95 The value of these homes drops an average of $8,880 following a foreclosure.96 This translates into a total property value loss of $356 billion.97 And vacant properties take a heavy toll on already strapped local governments. A 1 percent increase in foreclosures translates into a 2.3 percent rise in violent crimes.98
But the collateral damage of the foreclosure crisis is even more grave and far-reaching. It has a huge impact on future generations and on our children. A September 2009 New York Times story by Erik Eckholm on the surge of homeless schoolchildren caused by the foreclosure crisis haunts me to this day.99 A photograph that accompanied the article showed nine-year-old Charity Crowell of Asheville, North Carolina, modeling the green and purple outfit she intended to wear on the first day of school. The previous spring, when her parents lost their jobs and their car, she received Cs on her report card. She vowed to bring her grades back up. “I couldn’t go to sleep,” nine-year-old Charity said of her last semester. “I was worried about all the stuff.” As a result, she often fell asleep in class.
The family had been evicted and forced to move into a series of friends’ houses, then a motel, and then a trailer.
The National Center on Family Homelessness estimates that 1.5 million children in the United States are homeless—that is one in fifty children.100 San Antonio, for example, enrolled one thousand homeless students in the first two weeks of the 2009–10 school year—double