Anti-Foreclosure Movement Gains Steam With National Day of Action for MN Family
After fighting their family's foreclosure for nearly two years and facing down five eviction attempts in the past month, siblings Alejandra and David Cruz are travelling cross-country in the hopes of meeting face-to-face with the bank officials they say wrongfully foreclosed on them. As they arrive today at the Pittsburgh headquarters of PNC, the original holder of their home's mortgage, solidarity demonstrations are being held in 19 cities, targeting PNC branches across the country and demarcating a new level of coordination in the fight against foreclosures and evictions.
Pittsburgh is the last stop on a two-day trip that the siblings are taking with supporters, but the group stopped in Chicago yesterday for a demonstration with local housing rights activists at the regional headquarters of Freddie Mac, which now holds the title to the family's home. During a press conference the Cruzes, both college students in Minneapolis, told the story of how a glitch in PNC bank's online payment system triggered their family's foreclosure—as well as an alleged illegal eviction attempt that activists say symptomizes mortgage lenders' policy of intimidating families rather than negotiating with them. PNC did not respond to a request for comment on the case, but it is one of eight firms that the Federal Reserve investigated for “unsafe and unsound practices in their loan servicing and foreclosure processing" and recommended for additional fines outside the mortgage settlement.
David Cruz told In These Times that, when his family was unable to afford the two months of payment demanded by the bank after PNC's system failed to process a payment in June 2010 (they say this amounted to a lump sum of $3,300), the home went into foreclosure and was eventually sold to Freddie Mac. The family says Freddie then began trying to evict them illegally. “They were expecting that they could just get us to leave,” he said of a notice they received in February, which he claims told them they had 48 hours to vacate the property. “We didn't know at first that we could defend our home. But now we do, and we're saying, 'enough is enough.'”
Since then, the family has joined up with Occupy Homes Minnesota, a group that has of late achieved a string of successes by working house-by-house to organize press conferences, rallies and eviction defenses with families in foreclosure.
Though a nationwide movement against foreclosures is gradually gaining momentum, commentators often ask why organizers are sinking immense organizational resources into fighting cases one by one instead of pushing for legislative changes. A month-long eviction defense at the Cruz family's home, where demonstrators locked themselves to concrete barrels to avoid being removed from the property, resulted in the arrests of more than 20 of their supporters (and, according to a letter from the Minneapolis police chief to the city's mayor criticizing the use of "public resources to defend big banks,” cost taxpayers $42,429).
But the Cruz family's case exemplifies one of several reasons why the present policy context is unlikely to provide many solutions for struggling families. Freddie Mac, the secondary market lender that holds the title to the family's home, has thus far refused to offer principal write-downs to homeowners who owe more on their home than its market value. That's because Edward DeMarco, acting director of the Federal Housing Finance Agency (FHFA) that oversees government-owned mortgage lenders Fannie Mae and Freddie Mac, has staunchly opposed principal reductions on the grounds that they could create a “moral hazard” where borrowers default intentionally in order to receive better mortgage terms.
But at least one in every five mortgaged homes is already underwater, and such write-downs could save Fannie Mae and Freddie Mac $1.7 billion by allowing borrowers who would otherwise fall into foreclosure to continue to make mortgage payments, accoding to an analysis by the FHFA released earlier this year. The two mortgage giants collectively control about half of all home loans and tend to set standards for the industry, so DeMarco's opposition to the policy has proved a major stumbling block to preventing foreclosures in cases like the Cruzes'.
Though, as I reported previously, long-time housing rights activists caution that principal reduction as a solution to the housing crisis will not increase the stock of affordable housing or help most unemployed homeowners, an increasing number of policy analysts and federal officials (joined recently by the White House) have expressed support for a large-scale principal write-down as the best way to stabilize the housing market, and have criticized DeMarco harshly for his refusals.
Alejandra Cruz, who has also been an activist with the movement for the DREAM Act, said in front of Freddie Mac yesterday that just as President Obama signed an executive order to halt the deportations of undocumented youth, he should also take action to change the leadership at Freddie Mac and stop the displacement of immigrants and communities of color, who are disproportionately affected by the foreclosure crisis.
Andrew Leonard, writing in Salon last week, suggests that the narrative of DeMarco's naysaying may be just that—a narrative that allows the Obama administration to continue protesting, despite the fact that it was responsible for appointing DeMarco, that it would take bolder action if not blocked by conservative bogeymen. (Yes, you've heard this one before).
Moreover, beyond De Marco's instransigence, federal efforts to incentivize banks to negotiate with homeowners are yielding little fruit thus far. Though the five large banks involved in this year's mortgage abuse settlment (Chase, Bank of America, Citigroup, Wells Fargo and Ally Financial) are now required to offer $10 billion in write-downs to customers, reporting by Ben Hallman at the Huffington Post indicates that banks are simply not doing this yet: Of twelve housing counseling agencies in three states surveyed by Hallman, nine said that they had only seen one or two principal reductions granted in the three months since the mortage settlement, and the other three said that none of their clients had yet received write-downs. Though the banks are due to report on their efforts to the government in September (and are incentivized heavily to complete principal reductions within the first year of the three-year program), they are not yet releasing any numbers for how much principal they have actually written off.
In short, though mobilizing to win negotiations for families one-by-one is slow, it appears to be much faster than what the banks are offering absent popular pressure. And the ability to hold coordinated demonstrations against a single bank may represent a new height in the movement's capacity to exert pressure.
Anthony Newby, an organizer with Occupy Our Homes Minnesota, says that the immense response the group received to their call for solidarity demonstrations today shows that the movement is picking up pace.
“We've gone from a point where people perceive [foreclosure] as an issue of private shame to one where the dissent is bubbling over,” Newby told In These Times. “We've finally rounded a corner where people realize this is a systemic problem.”
After rallying at Freddie Mac headquarters yesterday, a group of about 20 people at the demonstration in Chicago proceeded to a local PNC branch, where the Cruz siblings attempted to enter with their loan modification documents in hand. Police blocked off the entrance, and a PNC official came outside and told them that they would have to fax in their documents or return at another time--to which one of the demonstrators replied, “If it were that easy, the family would've done it already.”
The Cruz siblings say that the bank has refused to accept their loan modification documents, and that all they are hoping for is a “good faith negotiation” with a PNC official in Pittsburgh. Solidarity demonstrations are being held today in New York, Washington, D.C., Atlanta and 16 other cities, according to Occupy Homes Minnesota.
Correction: A previous version of the article did not make note of the fact that Freddie Mac purchased the title of the Cruz's home before eviction attempts began.