The fight against foreclosures in Albany Park

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Maria finds herself in a difficult position. After years of physical and psychological abuse by her husband, she filed for divorce. He wants to make life difficult, so the divorce is contested, though inevitable. They bought a home together ten years ago, with the Wells Fargo mortgage in his name. When divorce proceedings started, he moved out and quit making payments, while also prohibiting the bank from discussing the mortgage with Maria. Apparently privacy laws trump the right to a secure home for Maria and her daughter. Maria didn’t even know her home was in foreclosure until real estate agents began hovering around like vultures in a largely stagnant real estate market. By then, most of the legal processes were finished, and Maria, who speaks English as a second language, was at a loss to understand her options – or even if there were options. Now Wells Fargo – or Freddie Mac, whichever one claims ownership at the moment – wants Maria out. She wants to buy the house at the current market value, or perhaps even for a bit more, and she has the downpayment ready. But apparently Wells Fargo would prefer an eviction, with an eventual sale 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 it was alright to take a swing now and then when his mother didn’t obey him. 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 who controlled 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, again with Bank of America. Marta speaks no English, and her tangles with the legal system are littered with misunderstandings. In one case, a court interpreter mistranslated one of her statements to the judge, which completely changed the nature of her argument. Only the happenstance of 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 bureaucracy that characterizes 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, only to send her on a wild goose chase, submitting endless paperwork, which her case handler promptly lost, forcing her to submit copy after copy of the same documents. 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.

She found out through a series of chance encounters, beginning with a very upset Linda storming out of a court hearing in downtown Chicago, enveloped in a sense of hopelessness that seemed to characterize her life in recent months. In a fog of furry, Linda chanced upon a demonstration by the Centro Autonomo de Albany Park in front of Fannie Mae organized. 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 left the general perception in financial markets that the government stood behind their debts, which proved to be the case when federal authorities assumed control after a tax-payer bailout on September 8, 2008. So far, the feds pumped $188 billion into F and F, enriching stockholders and executives at taxpayer expense, while at least 4 million home owners 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 Autonomo, 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 principal reduction so the 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 blocks to Bank of America. By this time, Linda was chanting, even joining some of the Spanish language chants though she speaks no Spanish. While in struggle solidarity develops quickly. She boldly entered the bank and demanded an audience. This was a mother defending her home and her family, and the Bank of America personnel quickly realized it.

At first they couldn’t find her case, 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 lead to inevitable rejection of the modification. So now 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 but without consulting the first office, and a third proceeding with foreclosure. Confusing? Her 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, apparently to Italy. And since her reappearance at the bank she won’t return phone calls. And things will only get worse when Bank of America lays off an expected 30,000 employees in coming months, most from the mortgage department.

Collective response

Linda and dozens of fellow homeowners came together at the Centro Autonomo 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 90s and early 00s for the 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 Autonomo members initially considered liberating the vacant properties for homeless families. This proved to be difficult, particularly for families without immigration papers, so they gradually moved to a two-prong 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 under-employment exceeding 20%. Many home owners are paying 7 or 8, even 10% interest on $300,000 mortgages for homes that are currently valued at $130,000. Home owners and supporters came together at Centro Autonomo 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 the rhythms. 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 bubbles, and eventual crashes. The excess cash comes from workers who are paid less than the value of their production – surplus value in Marxist terms. Money then goes in search of more money in the endless logic of accumulation that defines capitalism. 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.

Members of the Centro started by sharing experiences, and the same stories were repeated over and over – divorced women abused first by husbands and then by banks; immigrants experiencing unemployment, the ultimate form of racism; the old and infirm becoming capitalism’s throw-aways; kids uprooted from schools and friends; unresponsive banks interested only in their bottom lines. They 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 them, they won their 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 included 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.

There’s nothing like success to build success! 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 passing drivers), bank officials actually responded – on occasion – to the very reasonable demand 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 gets 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, only not for the home owner, which would be a case of “moral hazard” according to the banks. Most mortgages are insured by Freddie or Fannie, so no matter what the outcome, the banks walk away with a bundle, in an example of moral hazard on a massive scale financed by our tax dollars. Even when banks write down the principal or donate the homes, they make it up with tax deductions. Despite the power of the banks in Washington, Centro Autónomo continues the struggle in Albany Park and the organization will not be bullied.

Long term solutions

After a few months of focus 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?” Research revealed several experiments in alternative ownership models. The most progressive began from the assumption that housing is a human right, and tried to remove homes from the market dynamics of a broken capitalist system. The Community Land Trust comes in many forms, but in the most progressive models, communities own houses rather than individuals. Home owners have the opportunity to trade individual speculation, which hardly ever goes well for the working class, for the security of affordable housing, while leaving the banks largely out of the formula. The recent $25 billion settlement between the five biggest banks and attorneys general from 49 states helps make this a realizable goal. The settlement sets aside $2 billion for banks to donate housing to community groups committed to long term affordable housing. Centro members are currently forming a Community Land Trust that will launch in November. If the banks cooperate (and why shouldn’t they – they win through tax deductions, through reducing their liability in the AG settlement, and through better public image), 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, with hard working 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 Autonomo de Albany Park: 3460 W Lawrence Ave, Chicago, IL 60625, Tel 773 583 7728.