WHILE THE MEDIA love to cover stories about the rebounding housing market, the total value of U.S. owner-occupied homes is still $3.6 trillion below what it was eight years ago. Nearly one in five homeowners hold mortgages well above the home’#8221;s current market value (“underwater”), and therefore are more likely to default. (See “Underwater America,” Haas Institute for a Fair and Inclusive Society, University of California Berkeley report, 2014)
With Detroit’#8221;s high unemployment rate, median household income of just $26,955 — about half of the national median — and 47% of all homeowners with underwater mortgages, our city suffered at least 5,000 mortgage foreclosures in 2013. An equal number are predicted this year. And just as mortgages are well above market value, city property taxes for owner-occupied homes are based on exorbitant assessments. This year 29,000 homeowners have been issued tax foreclosure notices and face their homes being auctioned off in the fall.
Various plans for “revitalizing” Detroit always insist that the city devote a considerable sum to reducing “blight.” In fact, ever since the end of the Coleman Young administration, Detroit mayors promise to tear down thousands of “blighted” homes each year — and each has done so. But there is no light at the end of the “blight” tunnel as long as evictions continue. Usually within a week of a house being abandoned, scalpers methodically strip it. Many are later set on fire.
The solution: Keep homeowners in their homes by reducing the mortgage and property taxes to market values.
The Federal National Mortgage Association, a government-sponsored program better known as Fannie Mae, was founded in 1938 to provide mortgages from lenders, thereby providing them with more liquidity so they can loan to more buyers.
Thus Fannie Mae and its brother Freddie Mac are a secondary market for U.S. mortgages so their policies set the industry standard. While they have sold foreclosed homes to investors below market value, they refuse to do so for the homeowner, claiming this would “reward” irresponsible behavior.
When the Richmond, California City Council voted last year to use eminent domain to help 624 homeowners with their underwater mortgages, the Federal Housing Finance Agency (FHFA) issued a statement threatening to take legal action against cities that used the procedure to restructure mortgages.
I’#8221;m active in Detroit Eviction Defense (http://detroitevictiondefense.org), which attempts to stop evictions by combining legal defense with direct action. Originally formed as an Occupy Detroit working group, the committee has brought together other activist organizations fighting evictions.
We work with homeowners to persuade the banks or Fannie Mae/Freddie Mac that they need to reduce the mortgage principal on underwater homes or sell back foreclosed homes to owner-occupants at market rates. We leaflet neighbors to call the banks or Fannie Mae; we flood them with emails.
We organize rallies at the foreclosed home, picket local banks, arrange speakouts where homeowners and community members can hear testimony, arrange legal clinics, coordinate with local block clubs and publicize each foreclosure. Several of our most active members are people whose homes the committee has defended.
We have held vigils in front of a few homes in order to prevent the bailiff from setting a dumpster in front of the home (signaling that whatever is left in the house within a couple of days will be thrown into the dumpster as the occupants are escorted out and the locks changed).
• Our committee learned that the Garretts were in danger of being evicted from their northwest Detroit home, which the elderly couple had lived in for more than three decades. The bank had refused to work with them and the eviction was scheduled to happen in a couple of days.
We held an emergency meeting at their house over the weekend and contacted the neighbors. That Monday morning we had vigilers in place from 6am. We parked cars on the street so that there would be no place for the dumpster, and when we saw it coming, blocked it. After several minutes, the annoyed driver backed up and went to find the police. But since it was a civil matter, the police declined to come to the house and confront us.
Meanwhile Mrs. Garrett and another group went to the bank’#8221;s downtown office, demanding to see the officer in charge. Mrs. Garrett lay down on the floor of the bank’#8221;s offices, saying she would not leave until the bank officers dealt with her case. They agreed to investigate and within days the bank agreed to sell the Garretts their home at market value.
• Jennifer Britt was never able to transfer the home her husband owned to her name following his death. The bank sold the mortgage to Fannie Mae and was servicing it for the agency. It was willing to take her mortgage payment, but when she lost her job and was unable to make the monthly payment, Fannie Mae was not interested in selling to her and sought to have her evicted.
Detroit Eviction Defense leafleted her neighbors, and organized a 12-hour a day, five-day a week vigil to prevent the dumpster from being set up at the family home. We held our weekly meetings on the front lawn and organized a couple of community potlucks there. After Fannie Mae had two separate assessors look over the house, the agency agreed to sell it to a non-profit, the Grandmont-Rosedale Development Corporation, which sold it to Jennifer Britt at market value.
• The Cullors hired a lawyer to renegotiate their mortgage when they got behind in their payments and falsely assumed the lawyer would be able to help them keep their house.
One morning a neighbor called to say a dumpster had been put on the side of their home. Since the dumpster was already there, people decided the best strategy was to fill it up. It was fall and for many blocks around there were bags filled with leaves waiting to be picked up.
When the bailifff’#8221;s officers showed up, they found the dumpster filled with bags of leaves; officers said they’#8221;d order two more dumpsters that very morning. Meanwhile one of the movement lawyers was in court to get a stay on the eviction order. By the time the new dumpsters showed up, we got the temporary stay so there was no eviction.
We leafleted the neighbors and organized a rally in the Cullors’#8221; front yard. We marched to the local offices of the Bank of America and leafleted outside. Although they didn’#8221;t allow any of us to come inside, a bank officer later called and agreed to work out an arrangement with the Cullors, who are still living in their house.
• The Hernandez family fell behind on their mortgage payments when the father, Ludim, lost his construction job. Nationstar, the loan server for Fannie Mae, failed to communicate with Ludim or Gabriela Hernandez in Spanish — as the law requires.
Attempting to buy back the home they had lived in for over a decade, the family met with Nationwide Consulting Group, LLC, which claimed to hold the deed. Ludim and Gabriela Hernandez gave the group’#8221;s head, Kenneth Sandoval, $15,000, their life savings, but kept receiving notices of their eviction. Sandoval, a scam artist, claimed these were bureaucratic errors, but of course Fannie Mae was proceeding with the eviction.
Through a movement lawyer we tracked Sandoval down. Members of the Hernandez family, neighbors and committee members went to his suburban address. He promised to pay the Hernandezes back, but didn’#8221;t.
Later indicted for scamming approximately $900,000 from various families, Sandoval pled guilty and after hearing from seven of his victims, on May 2014 the judge sentenced him to 4-20 years in prison and ordered him to repay the families.
The state of Michigan will replace the $900,000 lost from the fines the banking industry has paid, so the Hernandez family will have their $15,000 returned by the summer.
Although the market value of the house is somewhere between $10,000-$20,000, Fannie Mae informed the Hernandezes that they could purchase their home back — for $83,000! On that block alone there are seven unoccupied or burnt homes so the last thing the neighborhood needs is another empty house.
A nonprofit offered to purchase the house at its market value with the intention of turning it over to the Hernandezes, but Fannie Mae was not interested.
The committee distributed a bilingual leaflet throughout the neighborhood, encouraging neighbors to join our dawn to dusk weekday vigil. We organized a successful Halloween party on the Hernandez’#8221;s front porch and marched through the neighborhood, passing out Halloween candy and leaflets. UAW members from as far away as Toledo came to the rallies we held.
Two of the daughters took leaflets to school and several of their teachers were regulars at the vigil. Cesar Chavez charter school teachers who had voted to unionize also came by to vigil; we also supported their picket lines when charter school management fired a couple of the pro-union teachers. (The teachers have now won their jobs back and are in contract negotiations.)
By the expiration of the 56-day eviction order it was so cold we were were vigiling in full winter gear — but the dumpster never arrived. Then Fannie Mae offered to sell the house to the Hernandezes for $10,000 more than their original outrageous offer! But since the house is insured, the real value of the house is inmaterial to the lenders.
In Detroit over 80 community groups, churches and unions have signed onto a call to Fannie Mae/Freddie Mac to suspend foreclosures, reduce the mortgage principal to market value and permit the sale at market value of repossessed homes back to owner-occupants, either directly or through nonprofits prepared to return the home to the owner.
As for the tax auctions slated this fall for Detroit homes, Detroit Eviction Defense is calling for retroactive reduction of tax assessments to fair market value and using Michigan’#8221;s Step Forward program to aid distressed homeowners. Currently almost half of those who apply are rejected, often because of red tape or technicalities. Only 20% of the funds have been spent, yet there are proposals to allot 20% to gutting homes.
Detroit Eviction Defense has also joined with more than a dozen national and local similar committees around the country to present a list of demands to the incoming FHFA director, Mel Watt, who oversees Fannie Mae/Freddie Mac.
Since Watt’#8221;s appointment at the end of 2013, Fannie Mae has adjourned eviction proceedings against several families who have been supported by Detroit Eviction Defense — including the Hernandez family — but with no final resolution on any.
Shortly after Watt’#8221;s confirmation, Wall Street’#8221;s Securities Industry and Financial Markets Association issued a statement insisting that he “explicitly address the continued threat” of using eminent domain to stabilize neighborhoods by enabling homeowners to stay in their homes.
When Watt finally made a public statement in May, it was long on generalities and short on specifics. He spoke of a launching a pilot program in Detroit, a Neighborhood Stabilization Initiative, evaluating homeowners for loan modifications or allowing delinquent loans to be transferred to NGOs to “work with serious delinquent owners to determine the most feasible outcome.”
NGOs might be able to purchase foreclosed properties for repair, demolishment, donation to another owner or even put up for auction. But this initiative does not address any of the demands Detroit Eviction Defense and the national network have raised.
July/August 2014, ATC 171