Low-Income Homeowners Fear Lurking Foreclosures
RENEE MONTAGNE, Host:
Families with lower incomes have been especially hard hit by this recession, and the lowest-priced homes have suffered the deepest drops in value. All of that has meant even more pressure on the poorest homeowners. NPR's Joshua Brockman has our report.
JOSHUA BROCKMAN: Tracy Diggs(ph) is desperately trying to keep the house she's owned for the last 18 years.
TRACY DIGGS: This is our home. It's not a house. It is a home. I have put love in this home. I have children who I have had in this home from day one.
BROCKMAN: Diggs is a single mom living with her four sons in a three bedroom row house. They live in southwest Washington, D.C. Diggs says she's having a tough time, because there used to be two incomes to support her family, and now there's just one: her salary from a social services job.
DIGGS: I am just barely making it.
BROCKMAN: Have you ever thought about just walking away?
DIGGS: Absolutely not. I mean, where am I going walk and go to? This is my home.
BROCKMAN: For generations in America, through the policies of both parties and tax codes, we've promoted the idea of homeownership. Economist Dean Baker of the Center for Economic and Policy Research says many people automatically believed that it was better to buy than to rent.
DEAN BAKER: And oftentimes, that can be true, but the idea that homeownership is an automatic ticket to the middle class is just silly.
BROCKMAN: That's because prices don't always go up, and during the boom, people took out bad mortgages to pay for their homes. A sizeable number of homeowners have simply decided to walk away from their homes. Almost 20 percent of strategic defaults through much of last year were intentional. That's according to a new report by Experian and Oliver Wyman. Baker says there are some good reasons for low-income home owners to think about walking away.
BAKER: So they're paying more to stay in their home every month than if they were to look at a rental, a comparable rental. And they aren't going to accumulate equity. So in that context, I think walking away could make a lot of sense.
BROCKMAN: Joshua Brockman, NPR News.
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MONTAGNE: This is NPR News.
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