Bottom Feeders, Home Dreamers, and Big Time Realty Schemers

foreclosureChicago     When neighborhoods are wracked by foreclosures and the abandonment that accompanied the 2008 Great Recession and financial chicanery that popped the real estate bubble, significant studies have documented the loss in value experienced not only by houses on the block, but also houses within a mile away that also lose value. Put enough abandonment together and there is a tipping point that can change the reputation and economic reality of an entire neighborhood. It’s what blockbusting, real estate speculation, federal financing restrictions, and legal segregation did to thousands of urban neighborhoods fifty years ago. It’s also what inadequate foreclosure relief and similar speculation, credit deprivation, and legal indifference has the capacity to do now in thousands of communities not only in urban areas, but also suburban and exurban developments where a lot of the foreclosure crisis was centered.

Working with former ACORN organizers in the Phoenix area in 2009 and 2010 on an anti-foreclosure strategy in close-in Phoenix neighborhoods that had been working and lower middle income, brick, one-story houses, some even with small swimming pools, the foreclosed houses at 35 miles per hour wouldn’t look much different from those that were occupied, but slowing down or walking by, we could identify one in three that were clearly somewhere in the foreclosure process or already vacant. Houses that could have been valued at $150 to $200,000 in 2006 could be had for as low as $25 to $50,000 if a family would have been able to get credit, which was increasingly difficult under the tighter lending standards that accompanied the subprime lending market. The new suburbs of $250 to $400,000 houses 20 miles and more from the city center in the farther edges of Maricopa County were even in worse shape. We had meetings on some blocks where half to two-thirds of the streets were in some process of foreclosure.

Looking at the 153,000 properties in Michigan, Illinois, and Ohio on the RealtyTrac foreclosure list more closely, there were a lot of conclusions that became clearer with more attention. The Fannie Mae dump of these houses wasn’t for pennies in 2012, 2013, and 2014. These were not $1000 giveaways. Yes, many of them were likely substantially devalued from their original purchase price, and that information wasn’t available to us, but we could see that these were not giveaways for the most part, but more market-corrections that could have been achieved if banks had modified by reducing principal to market, rather than forcing foreclosure. Now, in many cases as the houses moved the ones getting to eventual resale often were returning to higher assessed valuations.

The other thing that was increasingly clear is that we were wandering in the land of hopes and perhaps shady dreams more than we were dealing with big timers. Of the 153,000 plus homes, almost 115,000 were acquired from FNMA by individuals, maybe folks hoping for a home, and maybe small timers thinking they might make a buck on the come. Another 9000 or so bought between two and five from FNMA, and they were surely small time speculators, often concentrating on one suburb or city and hoping for the market to recover so they could make a buck. About 60 outfits including the big timer, Harbour Properties, picked up 50 homes or more. It’s worrisome to believe that targeting the big boys might not be enough to catch the small fry and to sort out where the devil might be swimming in the deep blue sea on predatory contract-for-deed purchases as well.

The impacts of all of these real estate plays are somewhat off the radar now, but their impacts in communities, more of which are suburban and exurban that was imaginable decades ago, is going to be huge.

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Looking Under the Hood at the Tragic FNMA Foreclosure Dump

screen-shot-2016-12-03-at-9-18-38-amChicago   Foreclosures are terrible experiences for families and neighborhoods. More than 5 million homes were lost to foreclosures in the 2007-2008 housing crisis. Even today as home prices have largely moved back up to 2006 prices nationally, there are still more than 1 million foreclosures annually. As we all know, despite the numbers touted by big banks and government, the number of mortgage modifications was minuscule compared to the desperation and need of families, despite billions of federal dollars, because the banks drove the process, stuttering and stalling all the way while leaving millions under water, where many are still swimming.

After the pickup trucks, borrowed station wagons, and occasional moving vans pulled a family out of their home, sometimes with a sheriff pushing and real estate agent pulling them at the door, many of these homes ended up unsold and piled up in a heap at Fannie Mae, the Federal National Mortgage Association, the quasi-public-private guarantor of the mortgage. Finally, in the early evening, our team in Chicago, trying to get our arms around a campaign to stop the predatory practices of contract-for-deed sales, got a list of 153,000 names and addresses of foreclosed properties that FNMA had dumped onto the market when they couldn’t be sold. These were just the properties in three states with about 50,000 in Illinois, 60,000 in Michigan, and 43000 or so in Ohio.

Going through the list, name by name, was a little like walking through a graveyard and trying to read the tombstones. These are the properties FNMA couldn’t sell and ended up packaging in twos and threes to individuals, tens to real estate brokers and construction companies, and hundreds to investors, and thousands to equity hedge fund operators like Harbour out of Dallas. Looking at the list, Harbour had picked 2500 roughly of its reported 6700 in just these three states. The Detroit Land Trust ended up with a pile, as did the Wayne County Treasury Department, and a number of other city and county receptacles of last resort when even these tranche investors of foreclosed properties couldn’t off load them.

A column in the list was even more depressing in some ways because it indicated where the FNMA dump still stands smoldering like the trash fires of La Matanza outside of Buenos Aires. The columns noted whether or not the properties were owner occupied or not. Yes, meant, yes. Zero mean no. Any random grouping of 30 or so entries would find as few as 8 and as many as 10 or one-third occupied.

We are still trying to pull the information out of the data to determine where predation in the form of contract-for-deed purchases are being used to continue the pattern of destruction and exploitation. What is clear to me so far though, as my fingers walk through the columns in the foreclosures dumped by FNMA, is that this kind of FNMA garbage heap destroyed thousands of families and thousands of neighborhood, lowering values and leaving abandonment and vacant, now deteriorating homes.

No matter what campaign we outline by the end of these days of meetings, there is no escaping the human and community tragedy all around us.

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Predatory Contract-for-Deed Sales Cast a Long Shadow in Chicago

Picture featured in the December 1968 edition of the Jesuit Bulletin.

Picture featured in the December 1968 edition of the Jesuit Bulletin.

Chicago  Sometimes it felt like fifty years ago.

That’s only partially because sometimes the conversation would toggle back and forth to the work the Contract Buyers’ League did on Chicago’s West and South Sides decades ago from 1967 to 1972 or so, as strategies and tactics that would address the current, horrid, predatory comeback of contract-for-deed purchases were compared to the old campaign in a day long and continuing conversation between CBL veteran organizers and leaders, contemporary activists, and concerned community and clergy. It is also because we were literally sitting among the remaining survivors of the ghettoization and depopulation of North Lawndale and Austin as we met in beautifully paneled rooms in one rectory in Lawndale and slept in the former rooms of long reassigned priests in the empty floors of another rectory in Austin managed by one priest now, where eight had once lived.

Real estate manipulation, financial exploitation, and banking and institutional abandonment and racism built these 21st Century neighborhoods, even as we examined the great battles 50 years ago that were heroic without being a turning point and sat among the beautiful architectural and institutional ruins of that time. Contract-for-deed purchases are a way that a seller buys distressed property and then exploits a buyer, a family, almost invariably low-and-moderate income and too often minority, by flipping the property without making repairs while extracting predatory payments at huge premiums almost hoping for a default since there is no equity and a quick eviction process, since there was no actual property transfer, allowing the seller to sell again to another victim or another greedy seller, and keep the cycle going again.

The Contract Buyers League was a campaign, spearheaded by Jack Macnamara, a former Jesuit seminarian then, who sat with us today, and a steady stream of almost eighty college students who did stints in summers and school semesters off-and-on for years as volunteers to staff the research, hit the doors, and help the members put together the weekly Wednesday meetings and constant diet of pickets, actions, and events. Around the table were some of those former students, including by old friends and comrades-in-arms from ACORN, the SEIU, and AFL-CIO Mike Gallagher from Boston and Mark Splain from the Bay Area as well as Jim Devaney, a former volunteer from Cincinnati. A former Black Panther from those days and other community leaders now tried to puzzle out how, with the reemergence of contract-for-deed activity now in the wake of the foreclosure crisis and home lending desert for lower income and working families, we might be able to refashion a Contract Buyers campaign that could work and win now.

It goes without saying that today is different than 50 years ago. Rather than being concentrated in neighborhoods like Lawndale and Austin in Chicago and other cities with large minority populations then, today the victims are spread throughout the metropolitan area. We looked at a sample list of contract buyers acquired by two vulture hedge fund operators and there were few in Chicago itself compared to working class suburbs and developments like Homewood, Hoffman Estates, and Orland Hills. How would we get the density that put hundreds in a room on a weekly basis 50 years ago? Estimates are as high as 7 million families who are under contract-for-deed agreements now nationally, but putting them together wouldn’t be easy. We were all veteran door knockers, but we talked about how to use data files, voter lists, robo-dialers, social media, and other tools to flush out the victims and leverage the public policy and political space to create change.

There’s more work to be done in coming days, but two things kept returning us to the task of today. One was hearing our new friends from these communities where we were meeting talking about how their father’s and grandmothers had bought and raised their families in contract houses. Another woman speculated that the mystery of how her sister had lost her house might have been through a contract-for-deed rip-off, and she left at the end of the day to call her and finally ask. And, then there were the stories of the actions, lawsuits, and even some victories of 50 years ago to continue to remind us that we could only really lose, if we refused to fight this plague once again.

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Realtors and Redlining Destroyed Neighborhoods – Was Alinsky a No-Show?

redliningNew Orleans   Looking into the rising return of the family crushing and neighborhood killing predation involved in contract-for-deed property transactions being revived by Wall Street veterans and facilitated by weak regulations and federal off-loading of foreclosure inventory from the real estate bubble of 2008, I stumbled onto an interesting book, Family Properties:  Race, Real Estate and the Exploitation of Black Urban America by Beryl Satter.  Published in 2009, Satter is not only a historian and chairperson of that department at Rutgers University, but has skin-in-the-game, since she was driven to the subject to understand the conflicting family story of her own father who died when she was a child and whether he was a crusading civil rights lawyer and advocate in Chicago or a slumlord himself.  

            Being only half through the book so far, I can’t definitively answer her question, nor have I arrived in my reading to the sections on the Contract Buyers’ League, which was central to my motivation in uploading the book to my Kindle.  On the other hand, I’m knee deep in an excellent, well-written, and researched history that puts race and real estate speculation squarely at the heart of urban neighborhood deterioration from the post-war decades until our current times.  In Little Rock, where I first ran into contract-for-deed exploitation, it was always clear that if there was a power structure anywhere in the city it was centered in the real estate interests, and from our 1972 campaign to “Save the City” forward, including forcibly confronting blockbusting in the Oak Forest neighborhood, they were our main opponents.  In that sense, Family Properties was a deep affirmation and an extension of the argument and those experiences across the urban battlefield of America.

            Somewhat unexpectedly though, I’ve found nothing subtle in Satter’s critique, and condemnation of Saul Alinsky and his community organizing in Chicago during those years.  She bells him repeatedly, beginning with his antipathy for organizing the poor, who were most exploited by all of these practices, and for his inability to strategically and tactically embrace the reality of race in his organizing and the practices of the organizations they built in Chicago.  She doesn’t argue so much that the problem was direct racism, as more fundamentally a weakness in the Alinsky organizing model itself, saying that

“…ineffectiveness of the OSC [Organization of the Southwest] and TWO [The Woodlawn Organization] highlighted the two major flaws of Alinsky’s model of organizing:  his insistence that organizing efforts be fully funded before they could be launched, which left him vulnerable to pressure by the wealthy donors, and perhaps more serious, his belief that they should tackle only issues that were ‘winnable.’”

Sharpening her point she argues that, “Unfortunately, Alinsky’s insistence on fighting only for winnable ends guaranteed that his organizations would never truly confront the powerful forces devastating racially changing and black neighborhoods.”  Ouch!

            She piles on evidence to the extent that her arguments are almost irresistible, include his scolding of his lieutenant, Nicholas von Hoffman and others, for getting too involved in real estate issues when he was in Europe, that he thought were jeopardizing organizational funding, his opposition to fighting black displacement in Hyde Park, and his view that fighting “racial discrimination that lay at the root of community decay…was ‘too complicated.’”  Satter adds that,

“Alinsky often cast urban renewal as an ‘unwinnable’ issue to be avoided.  TWO’s attitude toward housing was similarly confused.  The group apparently felt that the redlining policies that forced black Woodlawners to buy on contract were too complex for effective community mobilization.”

Satter even cites Alinsky’s own biographer in the claim that killing the Square Deal campaign was done on a totally transactional basis,

“According to Alinsky’s biographer, the Square Deal campaign was ‘intentionally terminated by Alinsky and von Hoffman’ because TWO wanted the financial support of merchants when it turned to ‘larger issues such as urban renewal.” 

Twisting the knife, she adds,

“The net result was that, instead of blazing a new path for community activism, TWO became yet another demonstration of the perils of reformers’ financial dependence on the very people they needed to challenge.”

            Adding insult to injury she argues that the creation of the West Side Organization and its achievements were “an overt challenge to Alinsky, who had warned him against organizing the very poor – an action that Alinsky believed would divide the larger community.”   During the Southern Christian Leadership Conference and Martin Luther King effort to take the civil rights movement north, she includes an assessment from one of the movement’s legendary organizers that was equally devastating, quoting…

“…James Bevell, a charismatic Mississippi-born African American who had participated in virtually all of the major Southern civil rights crusades.  In Bevel’s view, too, Alinsky ‘simply taught how to, within the context of power, grab and struggle to get your share.’”


            None of this is definitive, but it’s a critique that has weight and can’t be ignored.  Having organized and fought redlining, realtors, and neighborhood deterioration for decades, as organizers we may have to confront whether or not Saul Alinsky, as a primary architect of community organization, was not only a no-show when it mattered in Chicago, but abetted the problem by skirting the battlefields that counted, by not using issues to build power for the bigger fights, but instead running from the fights themselves.  If that’s the case, the legacy of that shadow could still be crippling the work that needs to be done in addition to the way the work is done.

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Fighting the Next War or the Last War with Trump

huge-2-14539New Orleans    Decisions, decisions, decisions.  It’s so hard these days for so many people to make up their minds.  Do they fight the next war over where Trump and his partners are trying to take the country or do they fight the last war over the results of the election?

            I interviewed a political activist on Wade’s World the other day named Gary Krane who was advocating a series of steps to attempt to overturn the recent election.  Clinton supporters in some of the battleground states have been calling for a challenge and recount in Wisconsin, Michigan, and Pennsylvania, though Clinton and her campaign have expressed no support for these efforts, even as her vote lead has surpassed two million over Trump.  Jill Stein, the Green Party candidate for President who polled a little over 1% of the vote, has a claim of standing in asking for a recount, and says that she has raised $5 million to fund the effort.   People are asking whether or not this is where they should put their energy.

            Nasty women are planning a huge march in Washington on January 21st, the day after the inauguration to send a message about how they hope to be heard and heeded in a Trump administration.  Busses are already filling up.  Plans are being made.  Numbers should be high.  This would seem to be an entry in the “let’s fight the next war, not the last war” campaign.

            The Wall Street Journal and some of its columnists, like former presidential speechwriter, Peggy Noonan, are arguing that Trump should totally divest himself of all of his business interests in order to guarantee that the Oval Office will not be wheel-and-deal central for Trump’s brand and interests.   There is no liberalism in their position.  They don’t want a classic blind trust, they want him to liquidate all of his holdings and take the losses.  Noonan says his career as a businessman is over, and now it is time for him to be a patriot.  Trump on the other hand claims he could run his business from the White House, and it would be legal since there is no statute determining a conflict-of-interest by a President.  Perhaps there should be.  Or, he argues, that his children could somehow handle it all without his say so.  His buddy, Ruddy Giuliani, while taking time out from his horrific campaign to be Secretary of State, says that would be fine, because he can’t put his children out of work.  This is an interesting campaign from the right.  We have to wonder if it has traction, and if it could use a push.

            Speaker Ryan and the conservatives in Congress are already moving towards their own version of a coup in order to try and capture a Trump presidency for their anti-people programs of privatizing Medicare, decimating what is left of any safety net, cashing out food stamps, and one draconian measure after another.  That seems like a battle worth engaging as well.  Add environmental issues to the list, holding onto the Affordable Care Act, the Consumer Finance Protection Board, labor unions, banking regulations and more, and it would seem we have more than enough coming fights that we need to be ready and able to suit up to wage.

            I don’t want to seem like a ninny, but I don’t know how to drive forward with my eyes on the rear view mirror.

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The Voting Numbers Say We Must Organize our Communities Now!

latinovotersNew Orleans   The post-mortem on the US election continues but as more data and information becomes available some of the early guesstimates are not as compelling as they were the morning after. It’s not that they were completely wrong, but they are not right enough to point the directions forward. Over and over again it is hard to escape the conclusion that the Clinton loss does not just fall heavily on her shoulders because she was such a flawed candidate, especially since Trump was even more flawed, but points to a massive failure of organization, and not just hers, but all of ours.

Karl Rove, the political mastermind behind George W. Bush, is not a go-to nonpartisan, objective analyst on this or any election, but as a columnist for The Wall Street Journal he’s always worth a read to understand not only what Republicans are thinking, but also as a reality check that we are not drinking our own Kool-Aid. A couple of days ago he made several interesting points based on a pretty deep review of exit polls, admittedly from Fox News, but whatever.

Among them were the following:

 

· “Both candidates this year won fewer white votes – Mr. Trump 1.6 million and Mrs. Clinton 2.3 million – than four years ago.”
· “…Trump didn’t win because he greatly expanded the GOP….”
· “…Clinton lost a significant chunk of the Obama Coalition. Compared with 2012 she dropped 1.8 million African-Americans, one-million voters age 18-29, 1.8 million voters aged 30-44, 2.6 million Catholics, and nearly 4.5 million voters with family incomes of $30,000 or less.”
· “…Clinton received nearly 9.4 million Latino votes, up 180,000 from Mr. Obama’s total in 2012. But because Mr. Trump won 29% of Hispanics, up from Mr. Romney’s 27%, the president-elect won 4.2 million Latino votes, roughly 690,000 more than Mr. Romney.”
· “Only 18% of voters had a high school education or less, down from 24% last time….Trump received 12 million votes from them, 2.2 million fewer than Mr. Romney, Mrs. Clinton got 10.6 million votes, 5.8 million fewer than Mr. Obama.”
· “…Trump’s advantage among voters with some college outweighed Mrs. Clinton’s among people with four-year degrees.”

 

You get the picture. This election was won and lost among low-and-moderate income families. These are our families and the heart of base. This election was also lost by our inability to convert Trump’s blatantly racist and anti-Latino campaign into actual voter turnout in our communities. Before the election I thought that if Clinton won she owed her victory to black and brown voters. In the same way she may owe her defeat to her inability to inspire these votes and our collective failure to build effective organization.

If progressives want to win, we have to go on the offense on issues and actions. The numbers also say that even more importantly we have to go back to the neighborhoods and barrios of our communities and organize people at the grassroots in the kind of organizing that has been the hallmark of ACORN. To the degree that is not happening as broadly and deeply in the United States as it needs to in white, black, and brown communities, these families are grist for the conservative mill, and not only voting against their interest, but more powerfully not voting at all. 43% of the electorate didn’t vote in 2016 with their feet but with their butts, and just sat this one out.

Rove makes one more interesting point which is a warning to Trump and should be a wakeup call to all of us. The numbers say it wasn’t globalization and trade, but the economy, stupid, and the lack of distribution and trickle down to our base.

This is call to go into our communities and rebuild effective organization or this crisis won’t be about the next four years but an entire generation or as long as it takes for us to get back to the streets and do the work.

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