Maria finds herself in a difficult position. After years of physical and psychological abuse by her husband, she filed for divorce. To make life more difficult for her, Maria’s husband has contested the divorce, although it is inevitable. They bought a home together 10 years ago, with the Wells Fargo mortgage in his name. When the divorce proceedings started, he moved out, stopped making payments, and kept the bank from discussing the mortgage with Maria.
Apparently, privacy laws trump Maria and her daughter’s right to a secure home. Maria didn’t even know her home was in foreclosure until the real estate agents, vultures in a stagnant real estate market, began hovering around it. By then, most of the legal processes were finished, and Maria, who speaks English as a second language, was at a loss to understand what the options were or if there were any. Now, Wells Fargo or Freddie Mac, whichever one is claiming ownership at the moment, wants Maria out. She wants to buy the house at the current market value or even a bit more. She even has the down payment ready. But the mortgage holder would prefer to evict her in order to eventually sell the property to a speculator for perhaps 70% of what Maria is willing to pay. This is the world of high finance in 2012, and Maria is not alone.
Linda’s husband beat her often and severely. To make things worse, he convinced their 13-year-old son that it was all right to take a swing at his mother now and then when she didn’t obey. Her divorce was completed in the midst of a vindictive foreclosure that may leave Linda and her son without a home, despite the relative wealth of her husband, who can afford the best attorneys and restricts Linda’s communication with Bank of America, the mortgage holder.
Marta’s husband abandoned her in a huff, leaving three school-aged children and an unpaid mortgage owned by Bank of America. Marta speaks no English. Her tangles with the legal system are littered with misunderstandings. In one case, a court interpreter mistranslated one of her statements to the judge, completely changing the nature of her argument. By happenstance, a bilingual observer in court caught the mistake, but by then the judge had ruled and would not reconsider his decision. All three women have jobs and families, leaving them with little time to deal with the byzantine bureaucracies of Bank of America and Wells Fargo.
In Linda’s case, with the divorce finalized, Bank of America officials finally opened a dialogue on a loan modification, but they sent her on a wild goose chase, forcing her to submit copy after copy of the same documents for her case handler to continually lose. To complicate matters, Linda also faced simultaneous foreclosure proceedings, a case of “dual tracking” that is clearly unethical, but was only formally prohibited as of October 3, 2012. And to make matters even worse, Bank of America sent Linda down a path that would inevitably lead to rejection of the modification. Linda discovered this through a series of chance encounters that began with her storming out of a court hearing in downtown Chicago, enveloped in a sense of hopelessness that had characterized her life in recent months. In a fog of fury, Linda chanced on a demonstration against Fannie Mae organized by the Centro Autónomo de Albany Park. Fannie Mae is one of the federal agencies at the heart of the housing crisis. Fannie and its sister corporation, Freddie Mac, are secondary mortgage market agencies created by the federal government but owned, at least initially, by private shareholders. This nebulous public/private status gave the financial markets the notion that the government stood behind their debts, which proved to be the case when federal authorities assumed control of the institution after a taxpayer bailout on September 8, 2008. So far, the feds have pumped $188 billion into Fannie and Freddie, enriching stockholders and executives at taxpayer expense while at least 4 million homeowners suffered foreclosures. Together Fannie and Freddie own or are responsible for about half of current home mortgages, guaranteeing $5.3 trillion in mortgages and holding an additional $1.6 trillion directly on their books.
For members of the Centro Autónomo, Fannie and Freddie are recurring targets. Their federal overseer, Edward DeMarco, prohibits principal reductions, one of the most important strategies for keeping homeowners in their homes. The day Linda met the folks from Centro, they were protesting Maria’s case, asking for a principal reduction so she and her family could stay in the home. For the first time in her life, a tentative Linda picked up a sign and started marching. The demonstration soon moved a couple of blocks to Bank of America. By this time, Linda was chanting, joining in some of the Spanish-language chants even though she speaks no Spanish. In the midst of struggle, solidarity develops quickly. She boldly entered the bank and demanded an audience. She was a mother defending her home and her family, and the Bank of America personnel quickly realized it.
They couldn’t find her case at first, so one agent borrowed $20 from a secretary for taxi fare and took Linda to another branch. After an hour of searching, they finally located her documents, only to inform Linda that the track she was on would inevitably lead to the rejection of the modification. Linda was simultaneously confronting three distinct parts of the Bank of America bureaucracy—one office leading her down a dead end, another suggesting a different track without consulting the first, and a third proceeding with the foreclosure. Confusing? This dilemma was only just beginning. The bank official who borrowed money for the taxi ride—the only official who seemed to be in a position to resolve her case—suddenly left on vacation to Italy. Since her return to the bank, she hasn’t returned any phone calls. Things will only get worse when Bank of America lays off an expected 30,000 employees in coming months, most of them from the mortgage department.
Linda and dozens of fellow homeowners came together at the Centro Autónomo de Albany Park to collectively confront the banks. The Centro began its housing work in 2011, focusing first on vacant buildings in the Albany Park neighborhood. Members cleaned out a rat-infested property half a block from an elementary school and owned by an investor group, one of thousands of groups that entered the real estate market in the late 1990s and early 2000s to make easy money. Real estate prices skyrocketed as wealthy investors entered the market, facilitated by bankers with creative loans and federal agencies with lax oversight. When the market crashed in 2007, neighborhoods like Albany Park suffered the consequences. Foreclosed and abandoned houses sit alongside families without access to affordable housing. The stark contradiction was lost on no one, and Centro Autónomo members initially considered liberating the vacant properties for homeless families. This proved to be difficult, particularly for families without immigration papers, so we gradually moved to a two-pronged strategy: foreclosure/eviction defense and collective ownership of property.
In Albany Park, nearly one in five homes is in foreclosure or pre-foreclosure (meaning the owners are at least one month behind on mortgage payments). When the 2007 crisis hit, this immigrant neighborhood suffered more than most, with unemployment and underemployment exceeding 20%. Many homeowners are paying 7, 8, or even 10% interest on $300,000 mortgages for homes that are currently valued at $130,000. Homeowners and supporters came together at Centro Autónomo to analyze the problems and develop collective solutions.
The analysis was not complicated. Capitalism has a long history of booms and busts, with investors defining their rhythm. When they can earn money from having money (the definition of finance capital), without actually producing anything of value, they are happy as clams. But when too much cash goes in search of limited investment opportunities, the result is a bubble and an inevitable crash. In the end, it’s always working people who end up holding the bag—during the booms by paying increasingly higher prices for homes, and during the busts by paying off bank mortgages at wildly inflated prices or losing their homes to the next round of speculative investors. The people of Albany Park understand the rip-off in general terms, and the details become apparent when the bank forecloses on your home.
When members of the Centro shared their experiences, the same stories were repeated over and over: divorced women abused first by husbands and then by banks; immigrants experiencing unemployment; the old and infirm becoming superfluous; kids uprooted from schools and friends; unresponsive banks interested only in their bottom lines. We got organized, ultimately joining 50 foreclosure/ eviction cases into a movement centered mainly in Latino barrios on the north side of Chicago.
Despite all the forces arrayed against us, we won our first case. Melecio and Beatriz were facing foreclosure and couldn’t get anywhere with Citibank, so the group decided to take the case directly to the bank. The first public demonstration involved nine people who spent an hour and a half marching in front of a Citibank branch in Logan Square. The next day, Citi officials were on the phone to Melecio, and in two months he had a modification.
This kicked off nearly bi-weekly demonstrations in front of Wells Fargo, Bank of America, Chase, Citibank, and others, sometimes producing modest results. Apparently, afraid of bad publicity and perhaps ashamed by the constant honking of supportive drivers passing by, bank officials responded on occasion to the very reasonable demand that they to talk to their clients. Most of the cases are still pending. Two Centro members lost their homes, but the struggle continues. Even an extra six months in the home can help a family get its financial affairs in order before eviction. Each day is a small victory for working people over the heartless financial industry. The banks’ preferred resolution is foreclosure followed by eviction and a quick sale to the next generation of speculators, usually at 60 or 70% of the current market value. This amounts to principal reduction, but not for the homeowner, which would be a case of “moral hazard” according to the banks. Moral hazard is a term coined by capitalists in which individuals who don’t pay their bills, no matter how unjust, must be held accountable (or the world will somehow fall apart) while the financial sector, which is “too big to fail,” enjoys government bailouts. The class-based contradiction should be obvious to even a casual observer. But of course, most mortgages are insured by Freddie or Fannie, ensuring that the banks walk away with a bundle no matter what the outcome, an example of moral hazard writ large by our tax dollars. Even when banks write down the principal or donate the homes, they can make it up with tax deductions.
Despite the power of the banks in Washington, Centro Autónomo continues the struggle in Albany Park, and we will not be bullied.
After a few months of focusing on individual cases, members of Centro began to think in broader terms. We can’t resolve the housing crisis one house at a time, so what can we do in the medium and long term? We researched several experiments in alternative ownership models. We found the most progressive model, the Community Land Trust (CLT), begins from the assumption that housing is a human right, and tries to remove homes from the market dynamics of a capitalist system. The CLT comes in many forms, but in the most progressive models, communities own houses collectively rather than as individuals. Homeowners give up individual speculation, which hardly ever goes well for the working class, in exchange for the security of affordable housing, leaving the banks largely out of the formula. Members of the CLT own the houses in perpetuity, guaranteeing affordable housing for low-income residents while removing the houses from the speculative real estate market. The CLT sets monthly payments based on real estate taxes, insurance, upkeep, and the financial capacity of each resident to pay. Sick or elderly residents can pay reduced rent if the collective evaluates their situation favorably. Because the homes are donated by banks, a not uncommon practice made even more viable with the recent $25 billion settlement between the five biggest banks and attorneys general from 49 states that sets aside $2 billion for banks to donate housing to community groups, the residents aren’t saddled with outrageous, front-loaded interest payments.
Centro members are currently forming a CLT that will launch in January 2013. If the banks cooperate, Maria, Linda, Marta, and many others will be able to stay in their homes permanently, without the constant fear of eviction or the constant pressure of huge mortgage payments. Redefining housing as a human right takes power away from finance and speculators and puts it where it belongs: in the hands of hardworking families who need a secure place to live. ◊
Names have been changed to protect the innocent, but not the banks. For more information, contact Centro Aut.nomo de Albany Park, 3460 W. Lawrence Ave., Chicago, IL 60625. Tel (773) 583-7728.