For generations, too many have viewed homeownership as a far-fetched dream. In low-income communities throughout our country, most populated by minorities, securing loans, regardless of how sound the investment, was nothing short of impossible. And for years, organizations like New York’s ACORN – the organization I was Executive Director of before becoming the National CEO for the last two years – worked to change that. Over time and with a great deal of hard work, eventually the Community Reinvestment Act became law. This allowed credit and capital to flow into communities that had long suffered a drought.
Recently, we have heard rumblings that it was the end of this redlining that led to the current foreclosure crisis. In fact, in the traditional effort to blame the victim, this post- foreclosure re-interpretation of history has become almost deafening. Somewhere along the line, the attempt to end discrimination among banks and lending institutions has become synonymous with sub-prime lending and predatory loans. The facts are quite different, though, and this “new” history has the danger of teaching us all the wrong lessons.
The concept of ending redlining was never intended to encourage banks to engage in bad loans or invest in property that doesn’t pass the smell test. The intent was to end discrimination on criteria like the color of skin or the community the investment was located in. Loans, we argue, should be based solely on the risk/benefit analysis of the transaction, not on historical, cultural habits. This worked. And for the past several decades, thousands of families were able to buy homes, making the realization of homeownership finally an attainable dream.
Sadly, many took this success, bastardized it, and began pimping their new financial products to families still in search of their dream. We saw the rise in the sub-prime mortgage and predatory loan field as well as adjusted rate mortgages (commonly referred to as ARM’S). These products targeted those families who could not qualify under much of our stronger criteria. In New York, we have counseled thousands of first-time homeowners. Data has been shown by banks which track the mortgages of homeowners who have been counseled, that the default rate is almost nil. The point is clear. The blame lies with those who profited on the exploitation of dreams, not those who worked to even the playing field. 21.75% of all African-American households are underwater on their mortgages. 20.62% of all Latino households in the 5 boroughs of New York are underwater. Neighborhoods in Brooklyn, Queens and the Bronx have been hit especially hard.
Over two years have passed since the banks were bailed out due to the foreclosure crisis. Following the bailout, these same lending institutions began slamming the door on the same families CRA was intended to help. They instituted a system of so-called robo-foreclosures; this resulted in turning what should have been deliberate decisions into automated ones. As a direct consequence, families who could have been kept in their homes through modification were thrown out onto the street. No recourse, mind you, from the products that these lending institutions created.
Make no mistake about it. Our families are underwater and they are drowning. Many have lost home value along with their jobs. Now they face an aggressive campaign to throw them out of their homes, and they are gasping for air. Though many have nowhere to go, there is something they can do.
First, demand to see the note. Who, in reality, owns the mortgage, and who intends to profit?
An alliance of groups guided by SEIU explains that “banks now buy and sell mortgages up and down Wall Street – slicing them up and repackaging them to sell to other banks. The bank you bought your mortgage from two years ago may not be the bank that owns it today. But, in all the shuffle, the mortgage notes often don’t get transferred along with your debt.”*
Second, stay in your home. Know your rights. We in the community are not the perpetrators, we are being victimized once again; we are not the guilty party.
“Recent events have exposed a handful of banks that are throwing families out of their homes even though they don’t have the mortgage note that proves they actually have a legal right to do so.”*
Third, take action. Demand that loans be modified. And we have to start in our own communities.
Families in every community have asked for modifications, and the numbers continue to rise. More than half of the families are denied a stable modification even under the Home Affordable Modification Program, repeatedly leaving them burdened further by interest or late charges. Adding insult to injury, bank representatives make the process increasingly difficult for individuals who directly seek out modification, as reports have been made to claim loss of paperwork and even denial of the call itself.
Do not, under any circumstances, give up your rights under the law.
The progress made by African-Americans and Latinos in homeownership within New York City must be protected. Stability is a requirement within our neighborhoods in order to support the efforts to better the educational system and decrease the crime rate. It is time that banks and servicers step up to meet the real needs of communities with families in danger of losing their homes. JPMorgan Chase and Citi, centrally located in the city, are the third-and-fourth largest servicers of mortgages, and it’s time they recognize the need for action.
If banks like JPMorgan Chase will not immediately modify all the loans of African-American and Latinos underwater, then we should not allow them to continue to victimize us a third time. If they want to foreclose and move us out of our homes, then we should close our accounts and move our money out of their banks.
If you are in danger of a foreclosure, or feel threatened by the growing crisis within your community, go to www.nycommunities.org/stayinyourhome or call (877) 503-3753 to speak with someone about your options.
*”Where’s The Note.” Take Action. SEIU Service Employees International Union.
Bertha Lewis, former Executive Director of ACORN, and Director and Founder of the Black Institute