Families bear brunt of US housing crisis
On a quiet, tree-lined street in Charlotte, there’s a modest wood-frame house that the Sanchez family calls home.
In many ways the Sanchez’s are a real American success story. Gonzalo and Sylvia Sanchez came to the US two decades ago from San Luis Potosi, Mexico. Gonzalo worked hard in the construction industry. Sylvia cleaned houses to earn some extra money. They have five children, and their eldest daughter is attending medical school, hoping to be a pediatrician.
One day recently, just before the Democratic Convention came to town, I sat down with Sylvia Sanchez and her daughter Jessica at the family dining table. Three-year old Isaac quietly watch cartoons on TV and 11-year-old Gonzalo Junior tromped in from school, then ran out to kick around a soccer ball.
Jessica is a bright and frequently smiling 17-year-old. She was born with multiple birth defects and is often ill with kidney and other infections. Still, the teenager seems to get around just fine in her wheelchair. “I can’t walk, I can’t feel from my waist down,” Jessica says. “I have spina bifida and a shunt in my head” to control hydrocephalus.
The Sanchez’s bought it 12 years ago for $78,000, with a mortgage held by Bank of America. They modified the house to make it accessible for Jessica. “They worked a lot, day and night,” Jessica says.
Sylvia Sanchez says she and her husband had never owned a house before. The system of loans, fees and interest rates was a bit confusing for them. “We had a lot of confidence in the bank, because we didn’t exactly understand how the process worked,” Sylvia said in Spanish, through an interpreter. “So we put our faith in the bank.
As long as Gonzalo found plenty of work in the building trade, things went well. But then the recession hit. Charlotte was hit harder than most cities. The construction trade dried up almost completely.
“He was only able to find small jobs here and there, one or two days a week,” Sylvia said. The family income last year was only about $15,000, she said—far below the official poverty level.
As she took out loan documents and correspondence from a thick folder, Sylvia explained how they fell behind on their payments. She showed me a notice from the bank, saying it had made a mistake in the original paperwork. Because of the error, Bank of America said, the Sanchez’s would have to pay a higher rate of interest. Their interest rate went from 5.8 to 6.8 per cent.
“We were distraught,” Sylvia said, “because we didn't have the money to make the payments. Jessica was ill and her medicines cost so much and we had to choose between paying for Jessica's medical needs or for our mortgage.”
Bank of America, which is based in a soaring high-rise building a few kilometres from the Sanchez home, is the United States’ second largest financial institution. The bank made $2.5bn in the second quarter of this year.
Altogether, US banks profited to the tune of $34.5bn in that period - one of the best quarters for banks since the recession hit.
The Sanchez family says Bank of America has told them that unless they come up with $20,000 by September 14th, the bank will start foreclosure. Sylvia says so far, she’s raised $400.
A spokeswoman from Bank of America emailed a statement to Al Jazeera, saying: “Due to privacy laws, I cannot provide you any information about the customer’s financial status but I can say that we have and will continue to reach out to them so that we can help them retain their home ... We continue to work with customers throughout the foreclosure process and can always cancel foreclosure proceedings at any time during the process if we are able to identify a permanent solution.”
Since the housing bubble burst in 2006, roughly 4 million families have lost their homes to foreclosure. In July of this year alone, 58,000 homes were foreclosed on.
Analysts say one of the Obama administrations biggest failures was not acting more aggressively to help homeowners save their homes.
“They did too little”, said Kathleen Day, director of the Center for Responsible Lending in Washington DC. “They did more than the previous administration, but like the previous administration they too greatly underestimate the significance and how deep and how bad this was. Their response was inadequate. They know that. Obama has said that.”
The failure to solve the housing crisis is a major issue in the Presidential campaign. But the Sanchez family has a more immediate problem — coming up with $20,000 in a couple of weeks. Jessica says the strain is hard to bear. I asked her how she was feeling. “Depressed. Sad. Kinda confused.”
Then Jessica burst into tears. Her mother rubbed her shoulder to comfort her, but the girl couldn’t stop sobbing. “I just don't want to lose my home.”
A child's pain, and a family’s desperate dilemma — multiplied by the millions, in modest houses on quiet tree-lined streets all over America, as banks profits soar.
UPDATE: Media coverage of the Sanchez's situation has become widespread, including from the Telemundo network and Charlotte Observer. Hector Vaca, an Action NC community organiser, told our correspondent the Bank of America has contacted the family about a loan modification. The family is feeling much happier and more hopeful.