Making Banks Pay to Maintain Foreclosed Properties

John Tanner of SEIU Local 721
John Tanner of SEIU Local 721

New Orleans One disclosure after another leads the news disclosing the bad behavior of banks, servicers, and others in the foreclosure racket, but often to the victim it seems like little more than water hitting the rocks whose impact none of us will survive to see.  In recent weeks close reading of major papers would have detailed the larding on of fees by servicers that stand as barriers to modifications, the home break-ins and property destruction and seizures authorized by banks and carried out by thugs, and the “widespread fraud” revealed in filings against Bank of America by Arizona and Nevada law enforcement authorities, all piled on top of questionable record keeping, auto-signatures, and almost zero effort to self-supervise an effective loan modification program.

When I walked recently in block after block of the western neighborhoods of Phoenix with Arizona Advocates & Actions (www.advocatesandactions.org) and looked at the damage abandoned properties owned now by banks are doing steadily and surely to fine, working family neighborhoods, I wondered why cities are not doing more in face of such dramatic consequences.  The common city excuse is lack of resources in the wake of the recession, but it also is a lack of will and wisdom in dealing with the community killing banks and their irresponsible practices.

Los Angeles has taken a step in the right direction thanks to a successful campaign led by ACCE (the Alliances of Californians for Community Empowerment, formerly California ACORN) and SEIU Local 721, which represents Los Angeles city workers who have “skin in the game” both as workers and residents, and other political and community allies.  They prodded the City Council to pass an ordinance which establishes clear accountability to the banks and tough penalties for inaction.   They created a “foreclosure registry” requiring lenders to maintain foreclosed properties or be fined $1,000 per day, up to $100,000 a year. Lenders will have 30 days to straight up the properties before fines are imposed.  SEIU Local 721 set up a website allowing citizens to easily report problems (“Hoodwinked LA” Web page), and given the revenue stream it is in the interest of the City to actually keep their feet on the bank’s neck to get them to fix up or pay up.  If ACORN were still alive this would be a campaign being waged in 50 cities now as communities with the same problem moved to replicate the model won in Los Angeles, but even without an ACORN to pull the trigger, word of this kind of victory needs to get out and about.

In Los Angeles these community-labor partners are clearly going to keep stoking up the fire under the banks.  Long time organizing veterans like Amy Schur with over 20 years at ACORN and Peter Kuhns, another veteran of ACORN organizing who has spent his entire organizing career in Los Angeles, will no doubt keep adding fuel to the fire.  In a picture the other day of civil disobedience at one of the banks, I could see John Tanner, long time SEIU International organizer and now the head of SEIU 721 for Los Angeles city and county workers among others, towering over the crowd and listed among those arrested.

They’ve done their part, now the rest of us need to get busy!

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Widespread Fraud at Bank of America

Bank-of-America-300x285Orange Beach, Alabama Better late than never, the Attorney Generals of Nevada and Arizona sued Bank of America for “widespread fraud” on the bait and switch of promising that a loan modification is in progress and then foreclosing and selling the house out from under the homeowner at the same time.  The Times and the Wall Street Journal describe the complaints as harshly worded, but working in the Phoenix area with Arizona Advocates & Actions, my experience is that they understate the severity of the theft and deceit by a long shot.

Frances Gomez’s home still says it all for me, and is a continuing indictment of Bank of America’s horrible bad faith, because her case was a situation where Bank of America was caught red handed in exactly this kind of fraud.  She had been approved for a modification and then in the same week Bank of America foreclosed and sold the house.  We raised holy hell and Bank of America publicly admitted that they had made a mistake.  They had foreclosed on her because they had overlooked her income figures.  Bank of America representatives – the local lawyer they retained for this mess assured Ms. Gomez and me they were buying the house back and that they wanted to remedy the situation rapidly.  It all sounded great, but that was now six (6) months ago, and Frances Gomez is perhaps farther today from moving back into her home of 30 years than she was then.

The negotiation process has been Kafkaesque or in more American terms a classic situation of Bank of America and its lawyer never seeming to know who is on first and what is on second.  Months after we had gone back and forth, the lawyer would act like he was surprised that Frances was not back in her house, even though no terms or modification had been agreed and worse the only solid offer they made was to reinstate the original terms of her loan, meaning that she could start paying again on a $300,000+ note for a house that had been appraised at $125000 to $150000 and sold at foreclosure for about $165000.  That’s not a modification at all, but simply the same problem that led to the problem in the first place, and the modification that they had been working on at the point of foreclosure was completely forgotten, while the attorney pled, perhaps sincerely at some level, total ignorance.

Subsequently pushing for a real modification, and trying to make sure that Bank of America was not trying to pretend that Frances had reoccupied her old home and thereby try to argue that she was incurring more arrearage even as she tried to strike some kind of deal to come back home, everything stretched painfully along as Bank of America continued to once again pretend that they could not figure out Frances’ income.  Frances is self-employed as a stylist and hairdresser at her own salon with long time customers.  Surely before the recession and her husband’s death, the salon had been larger with 3 or 4 the number of workers, but she had never been out of work or bereft of income.  The problem is that in the “new” world, Bank of America doesn’t have “stated income” loans which make it very difficult for the self-employed.  Frances keeps submitting her bank statements and monthly cash flow on her business, and Bank of America and its lawyers keep pretending that they do not understand her income and that she is being unresponsive.   I don’t want to give the impression that the situation is going back and forth like this, because really the situation is going nowhere.  Bank of America clearly just hopes that this “fraud” goes away.

Meanwhile the house deteriorates.  Frances drives by and cries.  Bank of America does nothing to maintain the house.  Vandals have been about.  The pool is moving almost beyond repair.

In the Wall Street Journal spokesfolks for Bank of America claim that they are open to revisions in the “dual track process,” meaning the process that has a modification moving forward at the same time that a foreclosure is also moving ahead.  This is the situation that sank Frances Gomez and her 30-year family home in Phoenix.

Of course Bank of America is lying.  They could stop the dual track process in a minute and with a memo.  They prefer the shuck and stall process which in silence finally strips away the home and hope of people like my friend, Frances.

For six months we pled with the Arizona Attorney General’s office to do something about this.  We argued that it would even help Attorney General Goddard in his election campaign for Governor if he stepped up for foreclosure victims.  We are delighted that it is finally happening, but this is the 11th hour for Goddard with his term expiring in about two weeks.

This is how “widespread fraud” works and how it is allowed to continue bumping from one failed program to another from one scandal to another and still taking homes from people, destroying neighborhoods, and pulling down whole cities around the greed that echoes from Charlotte to Wall Street to San Francisco to Chicago and the other headquarters of the perpetrators leaving the victims to live with the ruins.

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