Some Good News for Low-Income Families Hoping for Homes in Cincy & Detroit

New Orleans       For lower income and working families in these days of escalating rents and no money flowing in the credit deserts, the old saying that if it “weren’t for bad news, there wouldn’t be any news at all” feels too much like an everyday story.  In Detroit and Cincinnati recently, there was some good news that should create some hope for some families trying to keep homes out of foreclosure or buy homes through installment land contracts.

The Detroit story is a hard one to get your arms around, like so many things in Detroit.  The topline is that a suit led by the ACLU reached a settlement with the City of Detroit that may allow some families to stay in their homes.  As the Detroit News summarized,

The ACLU sued the city in Wayne County Circuit Court two years ago over how it administered the state-mandated property tax break for the poor, arguing it was inaccessible to the vast majority of homeowners who were needlessly losing their homes to foreclosure.

To be clear, the city didn’t allow lower income families to get the property tax exemption approved in state law and instead tallied the delinquent property taxes for several years and then after being in arrears for more than three years, foreclosed on the houses and put them up for sale at tax auction.  Nothing pretty about that story.  It’s almost a Ripley “believe or not” tale.

The settlement forces the city to have to step up.  As the Detroit News reports:

Under the plan, a group of homes headed to this year’s fall tax auction will instead be bought by the city and sold to owner-occupants who prove they qualified for the city’s poverty tax exemption, which lowers or eliminates tax bills.

All good so far, though it gets tricky.  Families that can prove that they were wronged have to buy back the homes for $1000, which, frankly, I don’t understand at all.  The money they say is going to come from private foundations.  The whole affair is being administered by some fantastic folks the ACORN Home Savers Campaign was privileged to meet earlier in the campaign at the United Community Housing Coalition.  UCHC has already qualified about one-hundred families.  There are more than 4000 homes scheduled for the fall auction with over 2000 occupied by owners or renters, so of course there is concern that there may be more people trying to win justice under the settlement than there is money available from foundations, but fingers crossed.  This is still good news and the city can’t claim to be protecting home owners from foreclosure even while cheating them earlier so I’m sure there will be a fix if there’s a shortfall.

In Cincinnati, an ordinance was passed unanimously to assure that any house offered under an installment land contract had to first establish that it was up to code.  Given the history of how companies have operated there, this is also a good step forward.

In both cities these are steps forward and offer hope of more progress for lower income tenants, potential homeowners, and existing homeowners in the future.

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Wells Fargo Caught Again in Predatory Lending Scheme

WellsFargocolorFLYERLittle Rock       We need to get rid of the three strikes program for people and institute it for banks, whose criminal conduct continues to rage unabated. Wells Fargo, the West Coast based banking center, is a serial abuser of mortgage borrowers using predatory practices. Cook County, home of Chicago, and 5 million good people, has sued the bank under the Fair Housing Act for racially discriminatory practices targeting African-American and Latino families from the point of origination past the point of payment and even foreclosure to make sure they always get theirs in a practice Cook County called equity stripping.

According to Bloomberg News,

“Equity stripping is an abusive form of ‘asset based lending’ that maximizes lender profits based on the value of the underlying asset and onerous loan terms, while in disregard for a borrower’s ability to repay,” according to the complaint. Aimed also at minority women, the bank’s fee structure and its practice of bundling mortgages to sell as securities allowed the lender to make money off loans even in the event of a foreclosure, the county said.

Who is surprised anymore?

Cook County is asking for $300 million in relief from Wells Fargo. The bank of course denies everything, but they can’t possibly have any credibility left with anyone. As always, they were obnoxious and combative in their response, having a spokesman say that it would be better if Cook County kept wasting its time trying to work with them rather than getting justice for their citizens.

Cook County is not the first metro area to push forward to protect its citizens these days with a Fair Housing claim. Earlier similar suits have been filed in Miami and Los Angeles against banks for similar practices. Miami’s suit was dismissed as untimely and is on appeal, but attempts to throw out the California claim have been unsuccessful.

Banks have been paying billions to settle mortgage abuse suits in record fines, yet little seems to have led them to stop such predatory practices. Suits have also been brought recently in other cities under the Community Reinvestment Act for direct discrimination in lending.

The New York Times and others continue to argue that the only proven path to citizen wealth is home ownership, and there is some merit to the claim, but with prices outstripping any possibility of ownership in many cities, and banks, like Wells Fargo, arguably targeting the very working people trying to create income security through home ownership, there seems to be a giant “L” for loser on the foreheads of low-and-moderate income families throughout the country. Recently Massachusetts Senator Elizabeth Warren announced her refusal to vote for approval of an undersecretary in the Treasury Department saying that the President and others needed to get the message that Wall Street should no longer be allowed to set the economic policy for the United States.

As long as banking and its allies play “throw the rock and hide the hand” in a persistent criminal conspiracy, working families can’t build wealth, and Warren and Cook County are right that we need more protection from these crooks.

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