Homeowners urge changes to ease Oakland’s foreclosure crisis
on September 16, 2011
A small group of Oakland homeowners led by the housing rights group Causa Justa, Just Cause (CJCC), gathered outside of Wells Fargo’s main branch in downtown Oakland Thursday afternoon to publicly propose solutions to the city’s foreclosure crisis.
Among other proposals, they want the Obama Administration to follow through on its promises of reducing mortgages for people whose homes are worth less than the loans that bought them. “We need people to stay in their homes,” said Robbie Clark, spokesperson for the group, which was formerly called Just Cause Oakland. “If we could stop the foreclosures, we could start building back our economy.”
Clark said the group staged their announcement outside of Wells Fargo’s main branch because two years ago the bank became the official bank of the City of Oakland. “Wells Fargo can play a direct role in stabilizing the Oakland community,” he said. “We have been putting pressure on them to modify loans, reduce principles and keep people in their homes.”
California has the second highest foreclosure rate in the nation after Nevada, according to a report released earlier this week by Realty Trac, which monitors real estate trends. Oakland has one of the highest foreclosure rates in California: 1 in 241 Oakland homes went into foreclosure in August alone, the report said. Meanwhile, the real estate trend analysis firm Corelogic found that 33 percent of homeowners in Oakland are behind on their mortgage payments
In August, the Obama administration began soliciting ideas for selling or renting out 250,000 foreclosed homes that became owned by the federal government as a part of the bail-out package for the mortgage giants Fannie Mae and Freddie Mac. Noting that many of those homes are located in Oakland, on Thursday CJJC representatives called for the government to rent out foreclosed homes as public housing. CJJC members argue that doing so would help alleviate homelessness and begin to replacing public housing units that have been closed across the country due to budget cuts.
“We want that housing to be placed in the public trust,” said Nell Myhand, a caregiver who fell behind on her mortgage payments after her partner suffered a stroke in 2010. She said that the government has an opportunity to take people off the street by turning foreclosures into affordable housing, rather than handing them off to the highest bidder.
The group is also asking the Obama administration to, at least temporarily, halt foreclosures and, instead, allow homeowners who are underwater on their mortgages to lease their own homes for up to five years. “Before you can stabilize the economy,” Clark said, “you have to stabilize the lives of the people hit hardest by these foreclosures.” Allowing people to lease their mortgaged homes would give them time to regain their financial footing so they can keep their home in the long term, he added.
In addition, CJJC members want the Federal Housing Finance Agency (FHFA) to change its policy on mortgage reduction. The FHFA has historically refused to reduce mortgages for homeowners who are underwater on their payments despite Obama’s efforts to do just that. Today, more than one-third of California homeowners owe more on their mortgages than their home is worth, according to CoreLogic, a figure that CJJC attributes to predatory lending practices on the part of banks.
“The banks targeted black and brown communities with bad loans,” Myhand said, noting that the bulk of foreclosures in Oakland are concentrated in three East Oakland zip codes. The result, she said, is ”massive displacement.”
Manuel De Paz, a Salvadoran refugee who is trying to renegotiate the mortgage on his East Oakland home, said he believes he was targeted for a bad loan because he and his family were uneducated about real estate and banking. “It’s hard to understand the language of the banks,” he said. “We never thought the market would go down. The banks made us believe that. Now I feel like a slave living in the 1800s, working for the banks, making them rich. I don’t want that to be my life.”
2 Comments
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What about those who bought homes with larger down payments and pay their mortgage on time? Shouldn’t they be entitled to a reduction or modification too? Why reward those who over extended at the expense of the tax payer and those who made a more conservative decision? Had prices gone way up then these same folks who want help would be touted themselves as geniuses.
I think it very sensible to look at halting the foreclosures for 5 years. Forcing people on to the streets isnt productive and only offers more low priced housing stock for investors to swoop in and profit from the situation as the banks have to put more write downs in place to cover the difference between loan and market value.
It would surely be beneficial for the banks to keep people in their home and come to an temp agreement over repayments.Prob is that banks want the toxic assets off, and not to wait and see?