Home foreclosures will remain at the rate of 2 million per year well into 2008. Before the crisis is over, 3 million families — homeowners and renters — may have been kicked out of their homes, often losing everything in the process.
People from every part of the country, of every age, income level, race and ethnicity, are losing their homes. Low-income families, particularly African Americans and Latinos and senior citizens, are most likely to be victims of this crisis.
Many families facing foreclosure are victims of high-pressure scams in which real estate agents and mortgage lenders collected fat fees while homeowners are stuck with subprime mortgages. The majority of these families do not know that after an initial period their payments will increase, leaving them completely unprepared when they are suddenly faced with higher payments.
This is a problem first of all for the families that lose their homes. It is also a problem for their blocks and neighborhoods, where vacant houses, often poorly maintained, become a magnet for vandalism and crime. It is a problem for whole communities, which are losing revenue through unpaid taxes and declines in building permit fees.
Think nationally, act locally
At the national level, legislation should require the financial institutions that are responsible for this crisis to bear the costs. They should be required to restructure outstanding mortgages so that both the principal and interest are payable. But that doesn’t mean that individuals and communities should wait for a president and Congress who will stand up to Wall Street.
The AFL-CIO is offering a national hotline (866-490-5361) to “provide information and advice to help union members and their families avoid foreclosure.”
The national community organization ACORN also offers a hotline (866-67-ACORN). It also does grassroots organizing against predatory lending practices.
A county in rural West Virginia is considering legislation to allow foreclosed families to stay in their homes in return for a fair rent.
In Cleveland, where community organizations have picketed the homes of mortgage company executives, an important precedent was set when 14 foreclosures were dismissed because the bank failed to prove they owned the mortgages on the properties they wanted to seize.
(If readers know of other examples, drop me a line).
Local governments, working with unions, religious and community organizations, can do a lot more. Here are some places to start.
Education and outreach
Success relies on early intervention. There is a much greater chance of success if action is taken before a homeowner falls behind in payments. This makes education and outreach particularly important.
• Compile a list of all foreclosures in the city in the past two years, and track pending and future foreclosures.
• Using public records, review residential property purchases and refinancing for the past three years and track new purchases. Follow up with letters, phone calls and personal interviews with the owner to determine: type of mortgage; if and when the mortgage will reset to a higher rate; if the homeowner has trouble or expects to have trouble making payments.
• Hold neighborhood hearings to get testimony on the extent and seriousness of problems and to inform homeowners and potential home buyers.
• Form a commission including representation from the local government, and from community, union and activist groups. The commission would investigate actions being taken in other communities around the country and make recommendations for local action.
Immediate help from A to F
What you can do to help residents in danger of losing their homes:
A. Provide help through city or community agencies for homeowners to negotiate with lenders. Negotiations should aim to avoid foreclosure by reducing monthly payments to no more than 25 percent to 30 percent of household income. This should be done by writing down the principal of the loan to a payable level, converting the loan to a fixed rate at prime mortgage interest levels and forgoing any special fees or penalties.
B. Identify lenders who hold a large number of local mortgages. Open negotiations with them for a streamlined process for dealing with problem mortgages.
C. Vigorously enforce existing regulations and pass new regulations where needed, requiring owners of repossessed property to maintain current tax and utility payments and to maintain the property in good condition.
D. If a multifamily property is repossessed, any tenants should be able to remain at existing rents, and the bank or other owner must maintain the property in compliance with all codes.
E. If a house is repossessed, the former owner should be allowed to remain in the house as a tenant at a fair market rent.
(Note that points C, D and E all have the effect of making it more expensive for a mortgage holder to repossess a house — this gives them an added incentive to reach an agreement instead of foreclosing.)
F. Local governments should initiate and support community efforts for grassroots organizing in city neighborhoods. Forums, petitions and demonstrations should all be used to focus attention on lenders whose discriminatory and deceptive practices have created this crisis, and to pressure state and national governments for a comprehensive solution.
Lessons from the past
In the 1930s, during the Great Depression, an even bigger wave of foreclosures and evictions swept the country.
People fought back. In the cities, when a family was evicted, neighbors gathered to help. They put the furniture back in the house, rigged the electric and gas meter, and defied the police if necessary. In rural areas, when the bank foreclosed on a farm that had been in a family for generations, neighbors would pack the auction and prevent anyone from bidding more than a penny for the land. The neighbor who bought the land for a penny would turn it back to the original owner.
Those tactics might not work today — not in the same way. But we can still learn some lessons from them, especially using the following principles:
• Solidarity. This is everybody’s problem.
• Militancy — be bold and imaginative.
• Organization is a must.
• Grassroots action creates the climate that passes national legislation.
Two numbers to call: (866) 490-5361 or (866) 672-2676
Art Perlo (pbp @peoplebeforeprofits.net) is the chair of the Communist Party Economics Commission.