Homeowners versus banks in fight against foreclosures; request for moratorium

Late Thursday afternoon, Oakland residents, foreclosed homeowners, and city workers filled the lobby of a Wells Fargo Bank at MacArthur Boulevard and Fruitvale Avenue—and not to deposit checks. The transaction: faxing a letter to the Wells Fargo headquarters in Iowa. The subject: “Stop illegal foreclosures in California.”

“We’re here to demand that the banks pay us what they owe us,” said Alysabeth Alexander, one of the rally organizers and a Service Employees International Union leader. She said Wells Fargo owns more foreclosed homes in Oakland than any other lender.

Union members were joined by the Home Defenders League, a group of California homeowners hoping to save their houses from foreclosure. Many of the protesters wore bright yellow shirts on Thursday with “ACCE” stamped across their chest. The Alliance of Californians for Community Empowerment is a statewide community organization that works to save foreclosed homes, improve access to health care, and advance immigrant rights. The group collaborated with the Service Employees International Union to organize Thursday’s protest.

Alexander and the other protesters stood inside the Wells Fargo holding “Save our homes” signs to call for a moratorium on foreclosures until banks can prove they are complying with state laws.  The rally is a response to acknowledgements within the last month by JP Morgan Chase and Ally Financial’s GMAC that the lenders may have improperly foreclosed on thousands of homes after employees signed affidavits about loan documents without personally verifying the files.

In 2009, President Barack Obama authorized the Home Affordable Modification Program, which orders banks to offer homeowners facing foreclosure a choice of modifications—a combination of reduced price, reduced interest or extended mortgages—to make their payments more affordable. Recent reports state that many lenders have instead rushed though paperwork in order to foreclose and, in many cases, altogether ignored borrowers requesting loan modifications.

In California, in early September state Attorney General and former Oakland mayor Jerry Brown demanded that JP Morgan Chase, one of the nation’s largest banks and the third largest U.S. mortgage servicer, suspend foreclosures until it demonstrates compliance with California law. “I’m taking this action to further protect California homeowners on the brink of foreclosure,” Brown said in a news release. “JP Morgan Chase, like GMAC/Ally Financial, has admitted that its review of key foreclosure documents was a ruse. I’m directing Chase to prove it is following the law before it continues foreclosures in California.”

Ally’s GMAC and JPMorgan Chase have already suspended pending cases in the 23 states where foreclosure requires court approval.  The participants at Thursday’s Oakland protest were working to make California state number 24. But California handles foreclosures outside the courts as a private transaction between lender and borrower, so it’s currently unclear how this may affect Californians whose homes are currently underwater.

This Friday, Bank of America announced it would immediately stop foreclosures and sales of foreclosed homes in all 50 states in order to review its procedures.

In California, Alexander said, “Banks need to stop, like they have in other states, and pay for the blight.” A blight ordinance was passed last year by Oakland’s city council to prevent homes from becoming run down once foreclosed on by lenders and vacated by former owners. Banks can be fined $1,000 a day for poor maintenance of their properties, a contributing cause of lower property values in neighborhoods that have experienced multiple foreclosures. However, Alexander said Oakland has had difficulty in enforcing the ordinance, while other cities like Los Angeles and Richmond, California, have been successful in collecting fines. “They have a simple system based on both complaints and inspection,” she said. “It pays for itself.”

Dorothy Hicks, 76, a leader of the Alliance of Californians for Community Empowerment, said she almost lost her Oakland house last year. A victim of a predatory loan, Hicks managed to get help from friends and family. “These banks are letting houses run down and they aren’t paying taxes,” she said. “The money is going to Wall Street.”

Oakland resident Marilyn Reynolds, 57, said she’s been protesting since last year after she asked Wells Fargo to modify her loan. “No one gets back to you. You can never get in touch with the person who is handling the loan,” Hicks said. She said she ultimately gave up the fight with her lender, settling for a short sale on her house which she bought for $179,000, and which was then appraised at $53,000. “Am I mad?” asked Reynolds. “Oh, you know I am!”

According to the California Housing Finance Agency, more than a third of California’s mortgage holders owe more on their homes than the market value of the house. Additionally, one in five California homeowners are 60 or more days behind on their mortgage payments. This figure is almost 4 percent higher than the national average.

According to the Irvine-based company RealtyTrac, California accounted for 20 percent of the total national foreclosures in August, with 69,143 properties receiving a foreclosure filing during the month—a 3 percent increase from the previous month but a 25 percent decrease from August 2009.

On September 1, the California State Assembly rejected legislation passed by the State Senate that would protect homeowners against foreclosure while they are pursuing a loan modification. If it had passed, the bill would have required institutional lenders to consider loan modifications on all distressed properties before making the decision to foreclose.

At the Oakland Wells Fargo branch on Thursday, protesters clapped and cheered as a teller handed a confirmation page to one of the organizers, showing that their faxed message had reached its final destination at the bank’s headquarters. As bank customers signing deposit slips looked on in confusion, an organizer with a megaphone announced, “OK, we came here to do what we needed to do.”

The Home Defenders League is preparing for another rally on Tuesday at 5 p.m. in front of Oakland City Hall. The group’s new statewide hotline and website offer tips and information for borrowers facing foreclosure at (877) 633-9251 and their website is HomeDefendersLeague.org.

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