Friday, October 29, 2010

Mortgage Fraud, Bank Bailouts Continue; Labor, Clery Coalition Formed in Detroit

Mortgage fraud, bank bailouts continue

By Jerry Goldberg
Published Oct 29, 2010 12:07 AM

The lifting of the major banks’ “foreclosure moratoriums” — which had
been instituted to stem the outcry over massive fraud in the
processing of foreclosure documents — demonstrates the necessity for
the working class to launch a struggle to win a genuine two-year
moratorium on foreclosures and evictions predicated on the premise
that housing is a fundamental human right.

With the federal government having essentially nationalized the
mortgage industry, the president has the authority to implement such a
moratorium through executive action.

Bank of America on Oct. 18 announced its intent to resume foreclosures in the 23 states which have judicial foreclosures. BOA had suspended foreclosures in those states on Oct. 1 due to revelations of fraud in the processing of foreclosure documents. BOA also announced it would resume foreclosures in a few weeks in the remaining 27 states. This move will likely encourage JP Morgan Chase and GMAC, who had similarly suspended foreclosures in the 23 judicial foreclosure states, to resume taking people’s homes. (New York Times, Oct. 18)

Barbara J. Desoer, president of Bank of America Home Loans, stated,
“We did a thorough review of the process and we found the facts
underlying the decision to foreclose have been accurate. We paused
while we were doing that, and now we’re moving forward.”

While even bourgeois commentators treated this announcement with the cynicism and derision it deserved, Bank of America was emboldened to make this move with the backing of the federal government.

From the onset of the exposure of massive bank fraud, the Obama
administration has opposed any calls for a national moratorium on
foreclosures. When David Axlerod, President Barack Obama’s chief
advisor, appeared on CBS’s “Face the Nation” Oct. 10, he came out
against a national moratorium. He was followed by Housing and Urban
Development Secretary Shaun Donovan, who published an article Oct. 17 in the Huffington Post that also rejected calls for a national
moratorium, saying it would hurt the economy.

Billions for banks

Bank of America noted that the major holders of its mortgages, Fannie
Mae and Freddie Mac, had been consulted during the review and had
signed off on the decision to resume foreclosures. Of 14 million
mortgages BOA services, one-half of them — worth $2.1 trillion — are
owned by Fannie Mae and Freddie Mac, the giant mortgage holding
companies controlled by the U.S. Treasury. (NYT, Oct. 18)

Fannie Mae and Freddie Mac were formerly government-sponsored
enterprises, private corporations chartered by the federal government
to give them enhanced standing to buy or back up mortgage loans.

However, in July 2008 Fannie Mae and Freddie Mac were taken over by the federal government due to massive losses they incurred as a result of the record rise in foreclosures caused by the fraudulent and
predatory lending practices of the banks. The federal government
placed Fannie Mae and Freddie Mac in trusteeship under the Federal
Housing Finance Administration, guaranteeing up to $200 billion in
federal tax dollars to back up their loans. That figure was raised to
$400 billion, and is now uncapped.

According to a June 3, 2009, statement by FHFA Director James
Lockhart, Fannie Mae and Freddie Mac own or guarantee 56 percent of single-family mortgages worth $5.4 trillion in the U.S. When combined with the Federal Housing Administration, the federal government backs or issues a whopping 75 percent of the country’s mortgages. (Associated Press, Sept. 9, 2008)

What this means is that when a borrower goes into foreclosure, the
bank which made the loan gets paid off at the loan’s full value by
Fannie Mae or Freddie Mac. In addition, the government pays the bank
to process the foreclosure. Then the government takes over the home,
evicts the homeowner and any tenants, places the home on the market, and sells it at a fraction of the loan’s value.

The difference in what the government paid the bank for the loan, and
what the home sells for after foreclosure and eviction, is paid for by
taxpayers. That arrangement amounts to a silent bailout of the banks.

For example, a home several doors from where this writer lives in
Detroit sold for $137,000 in 2001. The home was then foreclosed and
the loan was taken over by Fannie Mae. The home is now being listed by Fannie Mae for $31,000. The $99,000 difference between the $130,000 still owed on the home for which the bank received full value, and the $31,000 for which Fannie Mae is selling the home, is paid for out of taxpayer funds.

This bailout to the banks, which occurs with virtually every
foreclosure, has already amounted to $145 billion.

While the FHFA estimated that the total cost of this bailout will be
$221 to $363 billion, in 2009 the Congressional Budget Office
estimated that Fannie Mae and Freddie Mac would require $389 billion
in federal subsidies through 2019. (Bloomberg News, Oct. 21)

Barclays Capital Inc. analysts put the price tag as high as $500
billion, and Sean Egan, president of Egan-Jones Ratings Co., estimated that the total taxpayer bailout to the banks through Fannie Mae and Freddie Mac will total $1 trillion. (BN, June 13)

These figures do not include the additional hundreds of millions of
dollars in federal subsidies on FHA-backed loans.

Still-soaring foreclosures, no relief for homeowners

The Obama administration has announced modest loan modification
programs to help homeowners, such as the Home Affordable Modification Program, in exchange for this continued massive bailout.

HAMP and other programs are supposed to be mandatory for the banks. But the banks do not comply to help homeowners in any significant way. The government relies on the banks themselves to carry out these modifications, and the federal government and most courts have refused to enforce any sanctions for refusal to perform them.

With the banks knowing they will be getting paid full value on the
loans after foreclosure, the banks have little incentive to modify
loans and have sabotaged HAMP and led to the program’s virtual
collapse. As of August less than one-sixth of the 3 million homeowners
who were supposed to be helped have received loan modifications, and the number of borrowers being offered trial modifications has
drastically declined. (NYT, Aug. 20)

It was recently exposed that Fannie Mae and Freddie Mac are using the same law firms that prepared the fraudulent documents for the major banks in their processing of foreclosures and evictions. Fannie Mae and Freddie Mac are sanctioning loan servicers if they do not toss
people out of their homes within a short period of time. (NYT, Aug.
22)

Obama: Issue moratorium now!

Today the foreclosure crisis continues to intensify. An estimated 2.8
million foreclosures are projected across the U.S. during 2010, with
foreclosures totaling 9 million for the years 2009 to 2012. The total
lost home-equity wealth due to foreclosures is expected to be $1.9
trillion for the years 2009 to 2012. (Center for Responsible Lending,
Aug. 20)

Foreclosures and evictions are a direct product of persistent high
unemployment. Of the 1 million homeowners who received foreclosure
counseling through the National Foreclosure Mitigation Counseling
Program, 58 percent listed unemployment as the main reason for
default. (HousingWire, June 1)

With the federal government controlling or backing the vast majority
of mortgage loans, President Obama has the clear authority to
implement a two-year moratorium on foreclosures and
foreclosure-related evictions through an executive order.

A moratorium would let homeowners and tenants remain in their homes, stabilize communities and allow time to develop a long-term solution to this crisis. Then home loans could be restored to their proper value and housing for all guaranteed.

We must fight each foreclosure and eviction and begin implementing
such a moratorium through direct action. During the Depression of the
1930s, move-ins reversed many evictions and led to foreclosure
moratoriums being enacted in 25 states, which were upheld as
constitutional by the U.S. Supreme Court.

What is needed is for the working class to launch a mass struggle to
win this demand. It’s time to fight to reverse the government policies
which place the well-being of the financial institutions ahead of the
welfare of the people.

Goldberg is an anti-foreclosure attorney and a leader in the
Detroit-based Moratorium NOW! Coalition to Stop Foreclosures,
Evictions and Utility Shutoffs.
--------------------------------------------------------------------------------
Articles copyright 1995-2010 Workers World. Verbatim copying and
distribution of this entire article is permitted in any medium without
royalty provided this notice is preserved.

Workers World, 55 W. 17 St., NY, NY 10011
Email: ww@workers.org
Subscribe wwnews-subscribe@workersworld.net
Support independent news DONATE
Page printed from:
http://www.workers.org/2010/us/mortgage_fraud_1104/


People Before Banks Coalition launched

By Kris Hamel
Published Oct 29, 2010 12:15 AM

A broad coalition of labor, religious and community organizations held
a press conference Oct. 8 in Detroit to announce the formation of the
People Before Banks Coalition. This new formation is pressing for a
national two-year moratorium on foreclosures. It is also demanding
justice for workers losing their jobs and livelihoods due to the
practices of financial institutions.

The People Before Banks Coalition is comprised of the organizations
that spearheaded a mass march on Chase Bank during the U.S. Social
Forum held in Detroit in June. These forces have been leading a
campaign for divestment from Chase.

The coalition’s founding members and organizations include the United
Auto Workers International union; the Rev. Ed Rowe of Central United
Methodist Church in Detroit; the Rev. David Bullock, head of Detroit
Rainbow PUSH; the Moratorium NOW! Coalition to Stop Foreclosures,
Evictions and Utility Shutoffs; the Rev. Bill Wylie-Kellerman, a
leader in the Interfaith Justice Committee of the USSF; Jobs With
Justice; the Farm Labor Organizing Committee; and other organizations.

Anti-foreclosure attorney Vanessa Fluker spoke at the press conference on behalf of the Moratorium NOW! Coalition and warned that people should not be taken in by the banks’ pronouncements about allegedly halting foreclosures.

Fluker emphasized that the federal government now backs up the vast
majority of mortgages through Fannie Mae and Freddie Mac, along with the Federal Housing Administration. “Bailouts of the banks occur with virtually every foreclosure,” said Fluker. “President Obama has the power to declare a national two-year moratorium by executive order to really stop foreclosures, but he won’t do it.”

Rev. Bullock also joined the call for a two-year moratorium. “The
struggle against the banks is not just a fight for homeowners — we are
in solidarity with all workers and communities across the country.”

Bullock discussed the coalition’s support for farmworkers in North
Carolina represented by the Farm Labor Organizing Committee. FLOC has called for a national boycott of Chase because of the bank’s backing of R.J. Reynolds Co., which has refused to negotiate with FLOC for justice for the farmworkers.

UAW president Bob King issued a statement on behalf of the union which read in part: “While the UAW is happy that Chase Bank has taken [a] first step in halting foreclosures in several states, we hope [it
goes] further. We are asking that Chase Bank enact a two-year
moratorium on home foreclosures. A moratorium would allow homeowners at risk of losing their homes to pay a reasonable rent in lieu of mortgage payments, giving the homeowner time to recover in this period of economic emergency.

“We urge JPMorgan Chase Bank to intervene in the horrendous situation for tobacco workers in North Carolina where migrant farm workers suffer low wages and unsafe working conditions.”

King participated in a fact-finding tour of North Carolina tobacco
fields in September and experienced firsthand the inhuman conditions
under which the tobacco workers live and work.

U.S. Rep. John Conyers Jr. also spoke in support of a two-year
foreclosure moratorium. He announced that he has directed his staff to
call Michigan Gov. Jennifer Granholm, who leaves office in January, in
a last-ditch effort to get her to implement a moratorium. Conyers
stated, “It’s not rocket science. Even Republican governors in the
1930s did it.”

Michigan Democratic gubernatorial candidate Virg Bernero also attended the press conference and announced his support for the moratorium. Workers World got him to nail down this pledge by asking Bernero if he would use his executive authority under MCL 10.31 to declare a state of economic emergency and implement a two-year moratorium by executive order. Bernero responded, “You got it.”

The People Before Banks Coalition is beginning to plan for a national
conference in Detroit to press the struggle forward. The Moratorium
NOW! Coalition reports it is getting calls from around the country
from grassroots organizations ready to take on the anti-foreclosure,
anti-bank battle.

Responses are also coming in to the online petition for a two-year
national moratorium on foreclosures and evictions, which can be signed at bailoutpeople.org/moratoriumpetition.shtml.
--------------------------------------------------------------------------------
Articles copyright 1995-2010 Workers World. Verbatim copying and
distribution of this entire article is permitted in any medium without
royalty provided this notice is preserved.

Workers World, 55 W. 17 St., NY, NY 10011
Email: ww@workers.org
Subscribe wwnews-subscribe@workersworld.net
Support independent news DONATE

Page printed from:
http://www.workers.org/2010/us/people_before_banks_1104/

No comments: