Public discussion of foreclosure is usually confined to government and banks, experts and government, etc. That won’t work because it leaves out the power of the people. The mortgage wreck is a systematic fraud against homeowners by the banks.

Esmay Parchment bought her home in Irvington in 2004. At the time sales and turnover were everything in the housing market. Price fixing by the banks was universal. Speculators flipped houses every day to rake off profits from zooming prices. Huge closing fees were to be had by realtors.

Parchment’s realtor prevented her from looking at the basement of the home she bought, which had problems. The city inspector’s report made no mention of major defects of the roof. Her attorney alerted her to none of these dangers.

Then the mortgage market began its collapse, and the economy went into crisis. Nonetheless Ms. Parchment paid her mortgage every month plus an extra $1000 for early principal reduction.

In 2009 she applied for a mortgage modification. The servicer took her package of documents and did nothing, only to ask months later that she re-apply. The runaround happened repeatedly. Millions of homeowners have had the same experience with the Obama administration’s Home Affordable Mortgage Program (HAMP). It was a scam to allow banks to string homeowners along so that millions of foreclosure filings would not hit the courts all at once.

In 2012 Parchment had serious health issues. Appealing to the mortgage servicer for help, she was told, “The bank is in business to make money.” A little later she was told she would receive no modification. Currently her house is valued at half what she paid for it, but she holds 60% of equity against the price she paid. If there were any such thing as justice she would gain full ownership plus a 20% rebate of current value, based on the fraudulent original pricing.

Earlier this year she began to attend meetings of the Coalition to Save Our Homes. “Then I realized I was not the only one,” she said to a storm of applause.

Linda E. Fisher of Seton Hall Law School had earlier told the assembly of the “mind-boggling level of fraud” by mortgage bubble lenders. They made loans they knew borrowers could never repay. Brokers falsified mortgage applications; falsified documents were submitted in closings: mortgage security trustees cannot verify that they own mortgage notes. Court rulings favorable to homeowners have shown fraud.

Mortgage securities investigator Laura Walsh went even further. She charged that trustees never verified that mortgages allegedly belonging to securities issues were actually held by them. She charged that many mortgage based securities contain no mortgages at all. Many are held by retirement funds. Retirees might think there is $100 million in a mortgage fund for their pensions but there is nothing there. “We want people to be held accountable,” she said, calling for enforcement of securities laws.

Homeowner Michael Spruill said mortgage bust terminology deals with water – banks get bailouts, mortgages are under water. “They sucked money out of our community and poured it back on us,” he said. “If nothing is done they will continue sucking that money out of us. The same people are investing in prisons while schools are being closed. They don’t want to educate us. If you are educated you understand the government has responsibility – deregulation allowed it all to happen.”

Irvington Township Councilman David Lyons replied, “When a banker, a respected member of the community, tells you that you can afford a home you believe him. But he’s no more than a thug. If a thug on the street took your money he’d be in jail.”

Cynthia Johnson talked of a high note of homeowner resistance last year when many individuals joined and picketed at her mother’s house in Orange on the day she was scheduled for eviction, forcing a postponement. After that, ongoing people’s struggle forced giant JP Morgan Chase to admit it had no financial interest in the house. Johnson said her mother had been subjected to so much stress she still won’t leave home for fear she will not be able to get in when she returns. Speaking of local officials, she said “Leaders should step up and be leaders. If they empty out the cities nothing will be left.”

The Irvington Municipal Council had passed a resolution the day before that included a list of action items to address the mortgage crisis, appended below. The resolution was read aloud at the end of the assembly, in an inspiring atmosphere of people’s unity.

The meeting was sponsored and organized by a range of grassroots people’s organizations including the Coalition to Save Our Homes, NJ Communities United, the Irvington Branch of the NAACP and the People’s Organization for Progress.

Big financial corporations are the dominant institutions of United States society. Government and regulators are controlled by them. Their unquenchable thirst for profits is swallowing the means to meet every human need. But they have a weakness: a great many people hate them. The hearing showed that when people come together in a united effort to oppose them the struggle can indeed surge upward. What happened in Irvington can happen in virtually any community in the United States.

The action items of the municipal resolution are as follows:

• There must be federal and state criminal investigations of lender wrongdoing in the housing bubble. • County prosecutors must investigate wrongful lender claims of foreclosure standing for possible criminal violations. • There must be comprehensive and uncompensated write-downs of overvalued mortgage bubble principles to reflect the true market values of homes. • Eminent domain must be used as a tool for mortgage principal reduction. • Bring mass pressure for an Essex County moratorium on foreclosure evictions until mortgage principals are reduced to true market value. • The County needs to put procedures in place to determine whether or not plaintiffs hold a valid interest before foreclosures can proceed in court. • The State of New Jersey must make more timely allocation of funds for homeowner assistance. • Enforce Irvington's vacant property ordinance to bring much-needed revenue to local coffers and offset the negative budget impacts of the foreclosure crisis. • Bring a class action suit on behalf of homeowners against the banks. • Congress must speedily approve an appointee to head the FHFA, which holds Fannie Mae in receivership, who will proceed to write mortgage principals down according to Pres. Obama’s directive.

#IrvingtonNJ #HousingStruggles #mortgageCrisis #CoalitionToSaveOurHomes #HomeForeclosures

Trenton, NJ – People gathered here to rally and hold a press conference, March 29, on the need for uncompensated write-down of overpriced mortgages contracted during the housing bubble, the period after 1997. The event marked a court hearing aimed at elimination of ‘robo-signing,’ foreclosures undertaken by banks that cannot prove ownership of the mortgage.

Participating organizations included the People's Organization for Progress (POP), the Irvington Branch of the NAACP, the Newark Teachers' Association, New Jersey Citizen Action (NJCA) and the Fair Share Housing Center.

Robo-signing is a terrible abuse. Rally participants all said it must be ended. But the end of robo-signing will prevent no one from being foreclosed. In fact the stated aim of the court hearing was to make the foreclosure process in New Jersey more efficient.

In the hearing a court-appointed attorney presented an agreement he had worked out with six of the largest mortgage lenders. The essential point is the banks agreed to proceed only in foreclosures based on “personal knowledge and accurate business records.” Several homeowner advocates objected that the agreement was vague or that it was procedurally inadequate to protect homeowners. Judge Mary C. Jacobson found in favor of the agreement. Whether or not it eliminates robo-signing will have to be seen from experience.

The people's forces said at their press conference that what really has to happen is enforced write-down of overpriced mortgages to the level of true market value at the time they were contracted. A POP statement was read by Debby Strong. It said the banks had harmed millions of people. They didn't care at all about the terrible risks into which they dragged home buyers. Lenders lured borrowers into mortgages they knew full well the borrowers could not pay. They did things like sell a house for $300,000 when it was only worth $180,000. The banks have been rewarded for it and the victims have been left without help.

POP announced that it will launch a mass campaign to enlist victims of the housing bubble to demand that New Jersey Attorney General Paula Dow prosecute mortgage lenders for manipulation of the housing market. Penalty upon conviction will be write-down of mortgage principals to reflect true market value by an objective and uniform standard.

Kathleen Witcher of the Irvington NAACP gave a vivid picture of the suffering caused by the housing bubble. She said that 40% of the houses in Irvington have been foreclosed and the rate may go as high as 80%. Drastic rates in property taxes have resulted. Many homeowners cannot pay the higher taxes, which creates another risk of loss of homes.

Phyllis Salowe-Kaye of NJCA noted that all 50 state attorneys general have submitted an “Accountability Proposal” to resolve the ‘robogate’ problem, but without any requirement for principal write-downs in programs like the Home Affordable Mortgage Program (HAMP.) The AGs set no specific goals or quotas for write-downs. They need to institute mandatory measures for loan servicers. 60% of homeowners could remain in their homes if the mortgage was reduced to the actual market value. “Allowing significant principle modifications would stem the flow of foreclosures and reduce the uncertainty about the housing market and mortgage securities, giving more time to devise approaches to the messy problem of clouded titles and faulty loan conveyances,” she said.

A basis for legal action in existing law and practice was given by people’s attorney Bennet Zurofsky. He said, “The lenders and investors were the ones in the best position to know that they were profiting from a bubble that they themselves were inflating. The law calls this unjust enrichment and the New Jersey Attorney General has the power to do something about it by bringing a lawsuit against the lenders and the investors on behalf of the people of New Jersey to return the riches they have unjustly obtained from the people of New Jersey.” He noted that actions have been brought against persons who benefited from the Bernard Madoff ponzi scheme on the basis of unjust enrichment.

A POP member said that there is a power that can act effectively against entities as powerful as big banks. It is the power of the people! Not even the administration of reactionary New Jersey Governor Christopher Christie can ignore the will of the people who have been harmed by the housing bubble, once they are aware and united. It was also noted that the total overvaluation of the housing market was about $2 trillion, and that no recovery from the depression is possible until this burden in removed.

Cries of “power to the people!” and “mortgage write-down now!” rang out. It is clear that the people of New Jersey can make write-down their issue and their demand and create a powerful mass movement for it.

#TrentonNJ #POP #Foreclosures #HousingStruggles #mortgageCrisis #PeoplesOrganizationForProgress #housingBubble

At each stage of the crisis the U.S. government and central bank have had to take bigger and bigger actions to try to stabilize the crisis. The Federal Reserve has loaned out about $500 billion to banks and other institutions, while the U.S. government has committed another $300 billion in loans. Now the Bush administration is planning to commit up to $700 billion more to buy up bad mortgages to try to aid struggling banks. The Federal Reserve will start to provide loans to businesses in addition to banks. Each of the past ‘rescues’ have failed to stabilize the economy and there is no good reason to think the latest plan will either.

The Bush administration wants to ‘avoid finger pointing’ when all the fingers are pointing at the free-trade and deregulatory policies of the Bush years that contributed to the free-wheeling and fraudulent mortgage mess. Nor can former Federal Reserve chairperson Alan Greenspan escape responsibility for the low interest rates and lack of enforcement that contributed to the housing boom and bust.

But the roots of the crisis go much deeper than just the laissez-faire (free-market) policies of Bush and Greenspan. The economic system of monopoly capitalism itself is the cause of the current crisis. Today giant multinational corporations that can produce more than they can sell dominate the world economy. Even with advertising that invades every corner of our lives and easy credit, these corporations can produce more cars, steel, airplanes etc. than can be sold.

U.S. businesses have been on an anti-union drive for 25 years, making it easier to cut wages and benefits. Their lobbying in Congress has led to cuts in welfare, the minimum wage and unemployment benefits, forcing more and more workers to take low-paying jobs. They shamelessly exploit millions of new immigrants, even children, and call the ICE if the immigrant workers try to fight back. Corporations send their work to other countries, eliminating better paying jobs here in the United States. At the same time the workers in Asia and Latin America earn just a fraction of what the jobs were paying in the United States.

While this leads to ever-greater profits for a handful of super-wealthy, it means that the masses of working people cannot afford to buy back what it produced. This is not just a result of greedy CEOs (although there is no lack of them). This is a result of drive for profit that is part and parcel of capitalism. Under a capitalist economic system, production is social, with tens of millions of workers contributing to the production, distribution and sale of goods and services, while the means of production (factories, transport and stores) are privately owned, with the profits flowing to a small capitalist class. This contradiction is at the root of economic crisis under capitalism.

With a lack of investment opportunities in the production of goods and services, profits have flowed into a financial sector that has been growing like a cancer the last 30 years. Today there are more than $600 trillion of financial derivatives such as Mortgage-Backed Securities (MBS), Collateralized Debt Obligations (CDOs) Credit Default Swaps (CDS), etc. whose value is 40 times the entire U.S. economy.

The deregulation of the 1980s and the growth of basically unregulated financial institutions was not just a policy of the Reagan era, but an outgrowth of the need for capital to have new places to invest. Today the pendulum is swinging back, with many billionaires, politicians and mainstream economists abandoning their free-market rhetoric and calling for more regulation and government monies to help shore up the financial system. Billionaires and their armies of lawyers are masters of corporate manipulation and it is beyond a doubt that they will skim hundreds of millions and even billions of dollars off of these government rescue plans – just look at what the military contractors have done for years.

Of course, as socialists, we have no problem in principle with government intervention in the economy. But we have to point out the hypocrisy of the Bush administration, which opposed spending a few billion more for health care for low-income children, opposed extending unemployment insurance for laid off workers and which was not willing to spend one dime on millions of households losing their homes to foreclosures. But when the big banks and insurance companies are in trouble, all of a sudden hundreds of billions of dollars are available.

Another danger is that right-wingers will call for even more cuts in government spending, saying that there is no money. Of course, there is a grain of truth to this, as the Bush administration has cut taxes for the rich and spent almost $700 billion on wars in Iraq and Afghanistan. But this crisis should help expose the Bush-McCain program to privatize Social Security and Medicare and put our retirement and health care in the hands of private insurers like AIG, which only avoided bankruptcy through a government takeover.

This crisis has made it painfully clear how much the U.S. relies on foreign capital to keep the economy running. The government takeover of Fannie Mae and Freddie Mac was in part to calm the fears of other countries, which have lent Fannie and Freddie more than a $1.5 trillion. In the second quarter of 2008 (April through June), foreign investors sold $150 billion of Fannie and Freddie debt, the largest outflow ever. Just before the government takeover, the Secretary of the Treasury was meeting with foreign investors to calm their fears.

In the past, the U.S.-dominated International Monetary Fund and World Bank have inflicted painful austerity plans involving cuts in government spending, privatization of government services and higher interest rates in return for loans to developing economies in financial distress. Some foreign investors may well ask why the U.S. should not have to take the same painful medicine if U.S. businesses need capital now.

In the face of growing cuts at the state and now federal level, our focus needs to be building a grassroots movement that can fight for the people’s needs: to fund our schools, to provide health care for all, to provide jobs for laid-off workers and to stop the wave of foreclosures. The struggle to protect our schools, clinics, jobs and homes needs to unite with peace and justice movements to end the wars in Iraq and Afghanistan and to stop the wave of raids and deportations targeting Latino communities. Only such movement can put the heat on any new administration to meet the people’s needs.

Our slogan needs to be: Make the rich pay! Taxes need to be raised on the rich, starting with making the Social Security payroll tax apply to all income and restoring the top income tax rates on high-income households. We need jobs or income for unemployed workers! We need a universal health care system that will eliminate costly insurance companies and tell the big drug companies to lower their prices – or else. We need an extension on unemployment benefits and the social safety net must be extended.

The crisis has made it even clearer for all to see that both the Republicans and Democrats are parties of big business. Both parties’ leadership and presidential candidates supported the $700 billion bailout for bankers and billionaires. Having said that, the defeat of the Republicans would be a repudiation of their leadership on deregulating the economy into crisis at home and charging into war abroad. But only a massive people’s movement can force Democrats in power to win more reforms that benefit working people and at the same time show more and more people that Democrats are not for real change; only socialism can bring that about.

#UnitedStates #Editorial #Socialism #capitalistCrisis #IncomeDisparity #bankBailout #mortgageCrisis

The Mortgage Bankers Association of America (MBAA) reported that a bit more than three-quarters of one percent (0.78%) of all mortgages went into the foreclosure process in the three months ending in September. This was the highest level since the MBAA began reporting this statistic in 1972. In addition, 5.59% of residential mortgages were at least 30 days late, which was the highest since 1986. These numbers show that the housing market continues to worsen, as a perfect storm of adjustable rate mortgages resetting to higher rates, falling home prices, and a slowing economy batter home-buyers.

The problems in the mortgage market are spilling over into other credit markets, despite the Bush administration and Federal Reserve claims that they were ‘contained.’ Late payments for auto loans from finance companies and dealers rose to 2.77% in the April to June period, which is the highest since the recession in 1991. Many school districts, cities and counties in Florida were also swept into the growing credit crisis when the Florida State Investment Pool stopped withdrawals after almost half their deposits fled upon news that the pool held billions of dollars of investments backed by subprime mortgages. This left these local government without the cash to pay their bills and payrolls.

The Bush administration mortgage plan was worked out with big banks and mortgage lenders. It calls for subprime mortgages whose rates are resetting starting Jan. 1, 2008 until July 2010 to have the initial low rates continue for up to five years. However most homebuyers who are in financial trouble will not be covered by this plan. First of all, only homebuyers who have adjustable rate mortgages and poor credit will qualify. This covers a minority of homebuyers (45%) going into foreclosures. Homebuyers in this group who are already behind on their mortgages more than 60 days or in foreclosure are not covered. Also those who are deemed able to pay the higher rate are not included. Each mortgage borrower would have to negotiate their extension individually. With all these hoops to jump through, the California Greenlining Institute said that only 12% of subprime mortgages and 5% of oppressed nationality homebuyers would end up benefiting. Finally, the whole plan could be dragged out by lawsuits from investors who bought investments based on these mortgages.

One detail reported in the Wall Street Journal, but not in other newspapers, is that only subprime mortgages packaged into securities and sold to investors are covered by the plan, not loans made and held by banks. While mortgages made and held by banks are only a small part of the total subprime mortgages, this is another example of how the big banks who funded, processed and profited from the securitization of mortgages are being let off the hook.

Take, for example, the mess in Florida. Local governments want the state to guarantee their moneys in the State Investment Pool, while the state wants the local government to share the losses on investments. But nobody seems to be pointing their fingers at the big banks that set up the ‘Structured Investment Vehicles’ or SIVs that the state pool invested in. The banks should be forced to take over the SIVs and cover any losses to the local governments.

Tough times require tough solutions. The country is facing the biggest housing bust since the great depression of the 1930s. We know the Bush administration record on dealing with disasters from New Orleans after Hurricane Katrina. We can’t afford to let the Bush administration and their masters on Wall Street continue to propose band-aids while whole neighborhoods, especially poor, African American and Latino communities are engulfed in an economic disaster. What working people need is a New Deal on housing, which will put families and neighborhood needs over the greed of Wall Street.

We need a foreclosure moratorium of at least a year on owner-occupied homes together with a moratorium on evictions of tenants in foreclosed properties. During this time laws covering mortgages need to be fixed by banning prepayment penalties and putting a freeze on mortgages resetting to higher interest rates. We need to change bankruptcy laws so that they cover home loans and allow home buyers in financial distress to repay their loans at lower, fixed interest rates. Finally, owners of foreclosed properties must either maintain them or have them condemned and seized without compensation as financial, health and safety hazards to their communities. These condemned properties should be turned over to local governments who can sell some, rent out others or put them to some other use for communities.

#SanJoseCA #Analysis #crisisOfCapitalism #housingCrisis #bankBailout #mortgageCrisis

But Fannie and Freddie only have about one-fifth of late mortgages. The other 80% are in the hands of big banks and investors. We need state governments and congress to act!

1. State legislatures should pass an immediate ban on foreclosure evictions for both owner occupied homes and tenants. This ban should last until Congress changes the law to protect tenants and owners who live in their homes.
2. State legislatures and Congress must pass a law banning evictions of tenants when their landlords go into foreclosure. Tenants should be allowed to stay under their previous contract (whether by lease or month-to-month).
3. Congress must change the bankruptcy law to allow residents to modify their mortgages. Bankruptcy judges should be empowered to reduce the principal amount of loans for owner-occupied homes to 80% of the home’s current market value and require the lender to offer a 30-year, fixed interest rate loan.
4. Congress must also change the law to allow a ‘right-to-rent for homebuyers who can’t pay their mortgages and don’t want to go through bankruptcy. This would allow the homebuyer to stay in their home and pay the market rent. It would also be an incentive for lenders to modify the mortgage.

Of course the big banks and wealthy investors will argue that this will be bad for them, which will mean that they will lend less, which will hurt homebuyers. But they are the ones who helped to cause the crisis with their fraudulent lending! They should pay! And they are not lending anyway! The banks are sitting on $800 billion in cash, despite getting hundreds of billions from the Bush bank bailout!

But the people should not just pressure their legislatures and congress. When African Americans were denied their rights under Jim Crow segregation laws, they used civil disobedience and direct action to desegregate businesses and public facilities. Working people need to confront unjust and unfair evictions where ever and whenever they can. The evildoers need to be exposed and their agents in the government need to be protested.

#UnitedStates #Editorial #Editorials #HousingStruggles #capitalistCrisis #housingCrisis #mortgageCrisis