Detroit Foreclosure Mosaic

At least there is something (well really just this one thing) positive resulting from the foreclosure crisis in Detroit - from the NY Times:

This mosaic, created with images from Google Maps Street View, shows one of the many enormous challenges facing Detroit as it tries to climb out of debt. As of January, the owners of these properties collectively owed the county more than $328 million in unpaid taxes and fees. Since then, some have paid their debts, entered in payment plans or qualified for assistance. But 26,038 properties, shown with [many] in jeopardy, and many are headed for public auction.

Here it is -- a mosaic of despair ....

Has America's Foreclosure Crisis Immigrated to China?

It appears so:

Foreclosures are starting to be reported in China, home to the most talked about housing market on earth.   According to the 21st Century Business Herald, three cities have reported increases in the number of bank repos of Chinese properties.  Has a foreclosure crisis begun in China? If so, the China housing bears would have been vindicated. (link)

LA's Lawsuit Against Wells Fargo Gains Further Steam

The City of Los Angeles' suit against Wells Fargo (previously covered here) made further progress this week:

"A federal judge has denied Wells Fargo's latest bid to end a lawsuit brought by the Los Angeles city government accusing the bank of discriminatory lending that led to a wave of foreclosures among minority borrowers.

In a ruling made public on Monday, U.S. District Judge Otis Wright denied the San Francisco-based bank's motion to have an appeals court decide whether Los Angeles has legal standing to recover damages under the U.S. Fair Housing Act.

Wells is one of four banks sued by Los Angeles for allegedly giving minorities mortgage loans they could not afford, causing defaults, lower property values and neighborhood blight.

The city is seeking damages for lost tax revenue and increased city expenses in affected neighborhoods."  (continue reading)

Foreclosure Poses Staggering Economic Risk to NYC Communities of Color

Is the foreclosure crisis a racial justice crisis?

A report from the office of State Senator Klein indicates that 80% of homeowners at risk of foreclosure are in communities of color:

"Of the 29,729 homeowners who have missed multiple mortgage payments as of last month, 10,308 are from Brooklyn, the report says.

New York State Senate Of the 29,729 homeowners who have missed multiple mortgage payments as of last month, 10,308 are from Brooklyn, the report says.

Another 10,060 live in Queens, 4,408 in the Bronx, 4,110 on Staten Island and 843 in Manhattan.

Klein’s report also finds that 80%, or almost 24,000, of those in preforeclosure are from minority communities across the city."  (link)

The report also notes the high cost of a foreclosure to surrounding homes nationally:

"This is an average rate of $23,157.89 in home equity lost for each surrounding property. An even higher rate was seen for [m]inority neighborhoods who lose an average of $40,297 of their property’s value." (link)

The report finds the potential lost tax revenue and home equity in NYC communities of color is staggering:

"Should the properties foreclose minority neighborhoods would experience losses of $64 million in property taxes and $13 billion in home equity." (link)

Below is an overview broken down by borough:

While the report somewhat overstates the numbers because its calculations assume that all those at risk of foreclosure will go into foreclosure, at a minimum, it underscores the urgent need to support (i.e. fund) counseling and legal representation for those at risk of foreclosure.

The full report can be found here.

Banks Allegedly Overcharged U.S. Government When Foreclosing on Homeowners

You think you understand the truly depressing extent of conduct of some banks before, during, and after the foreclosure crisis, and then you read this:

"(Reuters) - The U.S. Attorney's office in Manhattan is investigating at least five banks over whether they overcharged the government for expenses incurred during foreclosures on federally backed home loans, filings and interviews show.

PNC Financial Services Group Inc, PHH Corp, MetLife Inc, Santander Holdings USA Inc and Citizens Financial Group Inc, the U.S. unit of Royal Bank of Scotland, have all disclosed in filings with the Securities and Exchange Commission that they've received subpoenas. U.S. Attorney Preet Bharara's office is seeking information on claims on foreclosed loans insured by the Federal Housing Administration or guaranteed by Fannie Mae and Freddie Mac, according to records reviewed by Reuters." (link)

First banks caused the foreclosure crisis, then got bailed out, then lobbied against the bankruptcy bill that would have helped halt the crisis, then agreed to the Home Affordable Modification Program ("HAMP") but initially refused to actually properly modify mortgages under the program -- all the while foreclosing on homes without the legal right to do so because of improper paperwork and robosigning.

That was not enough?

"The subpoenas, coming years after the height of the foreclosure crisis, seek information about banks' foreclosure-related expenses, which generally include court filings and posting or mailing legal notices.

"You've got a lot of people trying to clean up the servicing industry, but the truth is we are seeing the same servicing problems over and over," said Ira Rheingold, director of the National Association of Consumer Advocates in Washington. "It was built into the model to charge as many fees as they could." (link)

You think you've seen it all . . . and then you see more.

SBLS Foreclosure Prevention Project: Don't Let Mandatory Foreclosure Conferences Sunset

Jennifer Sinton, Director of South Brooklyn Legal Service's Foreclosure Prevention Project, talks here on WCNY’s Capitol Pressroom about the important reasons for keeping the mandatory foreclosure settlement conference law going beyond the expiration date of February 15, 2015.

NY Times Opinion: "Why is it that the fear of moral hazard only applies to homeowners, and not to the banks?"

A great question artfully posed here.

Studies: Foreclosures Literally Bad for Your Health?

A little bit grizzlier than I would have wanted for a Sunday morning, but here it is anyways. 

A recent study, described below, by a Dartmouth professor found that state foreclosure rates may have been linked to suicide rates at the state level.  Previously, a different study had potentially linked foreclosures to increased blood pressure for the neighborhood - not just for those people actually in foreclosure. 

As if there weren't reason enough to get a handle on foreclosures - economic stabilization and economic justice and the like - now it looks like there may be another - public health.

The Dartmouth professor's study:

"Appearing in the June issue of the American Journal of Public Health, is the first to show a correlation between foreclosure and suicide rates.

The authors analyzed state-level foreclosure and suicide rates from 2005 to 2010. During that period, the U.S. suicide rate increased by nearly 13 percent, and the number of annual home foreclosures hit a record 2.9 million (in 2010).

'It seems that foreclosures affect suicide rates in two ways,' says co-author Jason Houle, an assistant professor of sociology at Dartmouth. 'The loss of a home clearly impacts individuals and families, and can arouse feelings of loss, shame or regret. At the same time, rising foreclosure rates affect entire communities because they’re associated with a number of community-level resources and stresses, including an increase in crime, abandoned homes, and a sense of insecurity.'

The impact of foreclosures on the incidence of suicides was strongest among adults 46 to 64 years old; those in this age group also experienced the highest increase in suicide rates during the recessionary period.

. . .

'Foreclosures are a unique suicide risk among the middle-aged,' Houle says. 'Middle-aged adults are more likely to own homes and have a higher risk of home foreclosure. They’re also nearing retirement age, so losing assets at that stage in life is likely to have a profound effect on mental health and well-being.'" (link)

Report: Stalled New York Foreclosure Settlement Conferences

Anybody who has ever represented a homeowner in a New York foreclosure settlement conference knows all to well the contents of a report about bank misconduct in these conferences.

MFY Legal Services has, however, compiled the information in a convenient report available to all - advocate and non-advocate alike:

"New York has coped with the foreclosure crisis by implementing a pioneering settlement conference process administered by the court system, designed to promote negotiation of affordable home-saving solutions. These conferences present a remarkable opportunity for lenders and borrowers to meet face- to-face in a court supervised settlement conference at which creative solutions can be forged, and have allowed thousands of New Yorkers to avert foreclosure. But banks routinely flout the law by appearing without required information or settlement authority, causing delays that cost borrowers money and can make home-saving settlements impossible.  The process can be far more effective, and less prone to delay, if the courts rigorously enforce the requirements of the settlement conference law, as this report recommends." (link)

To make the point:

"Non-profit legal services attorneys representing low-income New York City homeowners in New York State Supreme Courts recently concluded a survey to monitor compliance with New York State’s law requiring that lenders and the law firms representing them appear at foreclosure settlement conferences with full authority to settle and resolve such cases

. . .

The survey confirmed what homeowners’ advocates in the settlement conference have long-known:

• The banks routinely violate the settlement conference law requiring them to appear at conferences with full authority to negotiate settlements and with required information needed for meaningful settlement conferences— they violated the law in 80% of the observed settlement conferences.

• The banks’ systemic violation of clear law frustrates New York’s policy to foster the early settlement of foreclosure actions as a means of preserving homeownership.

• The delay caused when the banks violate the settlement conference law harms homeowners, because interest and fees add up with each month that banks delay the process.

• Courts should rigorously enforce the settlement conference law and deter banks from violating it by penalizing parties who appear in court without the authority and information needed to negotiate in good faith" (link)

Time for a more aggressive revised foreclosure settlement conference law in New York?

Sounds like it.

Barclays Accused of Predatory Lending Targeting Minority Homeowners in NYC

The story is available here, the class action complaint filed by MFY Legal Services is available here, and the press release is excerpted below:

"Plaintiff Tony Wong, a long-time Staten Island homeowner and school security officer for the New York City Police Department, alleges he fell prey to Barclays’ scheme to market risky, predatory mortgages in New York City’s minority neighborhoods. He claims that in September 2007, he was duped into refinancing with Barclays’ wholly owned subprime subsidiary EquiFirst Corporation.  With high monthly payments and an 11.075% interest rate, Mr. Wong’s mortgage was engineered to fail but only after his savings ran dry in his attempt to keep up with the mortgage payments. 

According to publicly available records, Mr. Wong was not the only minority who received a disastrous EquiFirst loan. During the year Mr. Wong’s loan was originated, the vast majority of the predatory loans EquiFirst issued in the New York City area were for homes in minority neighborhoods. Taking advantage of New York’s segregated housing market, Barclays, through EquiFirst, sold nearly 50% of its predatory loans to homeowners who lived in neighborhoods with 80 percent or greater minority populations. Mr. Wong’s home is located in a neighborhood that is now 69 percent minority and was 56 percent minority in 2007. These subprime mortgages were largely bundled, securitized and sold on Wall Street by investment banks like Barclays in the form of mortgage-backed securities. (link)"

MFY attorney Elizabeth M. Lynch explains:

“This lawsuit demonstrates that the profits Barclays made in the housing market run-up in the mid-2000s came on the backs of minority borrowers in New York City like Mr. Wong,” said Elizabeth M. Lynch, a staff attorney at MFY. “Barclays should be held responsible for its fraudulent conduct, and borrowers like Mr. Wong should be made whole for the suffering Barclays caused them. While the media touts the recovery of the housing market, communities of color are still reeling from the effects of the mortgage crisis.” (link)