To see such a sight on an ordinary residential street in a spanking new Brooklyn Park subdivision was a bit of a shock: some 20 clergy and their followers carrying a huge cross of rough wood lashed together with rope and studded with nails. While chanting prayers, they lay down their burden on a modern-day Golgotha, the driveway of a four-bedroom, two-and-a-half bath home that had gone into foreclosure after its owner lost his job.
The ceremony was not only an observance of the holy week before Easter but a bit of political theater designed by Isaiah, an interfaith coalition of 100 congregations in the metro and St. Cloud, to prod the state Legislature into passing a bill of rights for people whose houses are in foreclosure.
The cross, says Chris Becker, pastor of Amazing Grace Lutheran Church in Inver Grove Heights, signifies “suffering, rejection, disgrace — what people feel when they are going through foreclosure.”
The gathering was a stark reminder that the tsunami of foreclosures has not ended. Although the seven-county area has seen a drop to 7,500 foreclosures from a peak of about 10,000 in 2010, the number is still three times higher than in 2005, according to reports by HousingLink, a clearinghouse on affordable housing. In Hennepin County, there were 363 foreclosures in the month of January, on track to exceed last year’s total of 4,132.
When it will all subside is anybody’s guess. While home values have stabilized and even increased in some areas, jobs are none too secure; large local employers like SuperValu and Best Buy have announced layoffs of hundreds of workers. The wobbly economy leaves families struggling to repay their bloated mortgages. (Houses in Oxbow Commons, where the clergy marched, are now worth about $100,000 less than when they were purchased six and seven years ago.)
There’s been plenty of documentation of the pain and cost of foreclosure: displaced families, humiliated children, abandoned houses, deterioration of the properties and consequent lower real estate values for other houses in the neighborhood.
But perhaps the biggest outrage is the Kafkaesque process homeowners endured to try to avoid foreclosure: endless paperwork, ever-changing rules and criteria, and anonymous (and also ever-changing) bureaucrats who gave conflicting advice while legal notices of eviction and foreclosure, court dates and seizures continue unabated. Then too, there was the robo-signing scandal; loan servicers hired third-party firms that engaged in the mass production of false and forged mortgage documents created by clerks who didn’t bother to check any of the facts. There were horrifying stories of homeowners who had kept up with their payments going into foreclosure for no reason at all.
Isaiah’s purpose is to get a fairer deal for those who are in danger. So they have been pushing for a law loosely based on a Homeowners Bill of Rights enacted in California last year. The provisions they’re asking for would:
- Require banks to provide a single point of contact — one human being who is familiar with the homeowner’s loan and is responsible for documents. In the past, homeowners trying to avoid foreclosure had to deal with whoever came on the line. All too often, they would receive conflicting advice and hear that their documents were lost.
- Ban so-called dual-tracking. As things stand now, even while a homeowner was scrambling to negotiate a delay or temporary modification of payments, the bank can relentlessly proceeded to foreclosure.
- Allow homeowners to sue banks that violate the ban on dual tracking.
- Create a mediation program that would force banks and homeowners to have face-to-face conversations about alternatives to foreclosure.
Most of the measures have been incorporated in bills now before the Minnesota Senate and House. The Senate measure languished in the Commerce Committee but survived after members of Isaiah and Occupy MN conducted a sit-in in its offices. Now the bill is awaiting the approval of the Judiciary Committee — minus the mediation provision.
Isaac Russell, legislative assistant to Commerce Committee Chairman Sen. James Metzen, DFL-South Saint Paul, says that there’s little proof that mediation really helps homeowners. “California found that it didn’t stop foreclosures; it just delayed them for a time,” he says.
Unless banks are willing to make concessions on principal or interest rates — and sometimes they are prohibited from doing so by covenants in the securitizations into which most loans were bundled — there isn’t much point to the process.
Meanwhile, the companion bill in the House has come to a dead halt in the Government Operations Committee. “It never came up for a vote,” says Raymond Dehn, DFL-Minneapolis, one of the bill’s co-sponsors.
“It’s resting,” says Pastor Grant Stevensen of St. Paul Reformation Church Paul and former Isaiah president. Other bills now in the House incorporate some of the provisions that Isaiah advocates, and he adds: “In five years, it will get done.” (My hope: we’ll be done with mass foreclosures by then.)
Stevensen would like to see the mediation piece back in, not necessarily because it will stop foreclosures but because it might “humanize the process.” The problem isn’t so much that banks are relentlessly greedy in pursuing foreclosure, he says. “It’s that any individual homeowner isn’t worth that much to them; they’re write-offs.”
Help has come to people facing foreclosure from a number of quarters. A $25 billion settlement with the five major servicing banks last year (Ally/GMAC, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, all accused of robo-signing practices) requires everything but mediation. “But the settlement only applies to people whose mortgages are with those banks,” says Norma Garcia, senior attorney and head of Consumers Union’s financial services program. “And the settlement has a brief shelf-life — only three years.”
The new Consumer Financial Protection Bureau has also adopted mortgage servicing rules intended to prevent unnecessary foreclosures; it limits banks’ rights to proceed with foreclosure after a homeowner has applied for mitigation, for example. But the regulations do not allow a homeowner to go to court to stop a bank from evicting him and selling the house while he’s pursuing an application for some kind of modification or mitigation.
Says Garcia: “These rights really need to be incorporated into state law.”