In the wake of another swell in the number of foreclosures in California (as conveyed by RealtyTrac, the online foreclosure listing), a recent report declared that the plight of home-buyer defaults has cost the state in excess of $130 billion, with an estimated $78 billion lost in homeowner equity just in Los Angeles.
Provocatively titled “The Wall Street Wrecking Ball,” the report gives an account of lost home and property values, tax revenues, and additional punitive costs at the government level. It lays the blame squarely at the feet of financial institutions overly concerned with profit margins, and the desire to write questionable loans for short-term earnings, with little regard for long-term ramifications. The report was released two weeks ago, on Sept. 15.
Kevin Stein of the California Reinvestment Coalition (sponsors of the report in tandem with the Alliance of Californians for Community Empowerment, also known as ACCE), a contributing writer to the report, said that the data was compiled from a variety of sources, including the U.S. Census, the U.S. Joint Economic Committee, and educational institutions including the Georgia Institute of Technology and Marquette University.
Stein traces the beginnings of the current misfortune to the practice of bad loan writing. More specifically he says, ” … people got stuck with loans they could not afford, did not deserve, and in some cases couldn’t even understand.”
The report concentrated on five major cities (Los Angeles, Oakland, Sacramento, San Jose and San Francisco), but the actual losses in property value across the state may be substantially higher. Among the factors contributing to this calamity, the report states, is the fact that California has been hardest hit, with one in five foreclosed homes located in the Golden State; and a third of mortgage-holders owing more than the actual worth of their homes (also known as negative equity or “underwater” or “upside down” mortgages).
On top of the devastating effect on an individual household, a single foreclosure negatively impacts the property value of other homes in the immediate vicinity, and tears away taxes and revenues for public services. Finally, foreclosed homes lie empty often without proper maintenance, further eroding property values and attracting “squatters,” and potential lawbreakers.
All in all, this inhibits the ability of the economy as a whole to regain solvency and recover from the depression/recession, and perpetuates a vicious cycle. Stein remains skeptical about efforts to rectify the situation.
“Now, banks are supposed to be modifying loans and helping people avoid foreclosure, but we know this isn’t happening as it should,” he said.
At the grassroots level, harsh economic times have served to politicize working-class homeowners who’ve borne the brunt of this real estate turmoil. Peggy Mears is a prime example.
Having worked a variety of vocations, including in the healthcare and financial industries, she began to experience problems meeting financial obligations with her mortgage carrier, One West Bank, in October of 2010, after 20 years of faithfully paying her house notes in a timely manner.
In particular, Mears takes issue with the process of “dual tracking,” in which banks dutifully go through the motions of loan modification while simultaneously filing foreclosure paperwork.
Frustrated by what she and other besieged homeowners felt were the abrasive attitudes of lien holders in general, Mears was compelled to borrow a page from the recent history of civil disobedience, in the tradition of Mahatma Gandhi and Martin Luther King Jr.
By December, she and 21 other individuals, including the Rev. Lewis Logan, pastor of the local Ruach Christian Community Fellowship, took the dramatic initiative of moving furniture into a downtown branch of the Chase banking and financial services conglomerate, where ACCE staged a “sit-in” reminiscent of the protest movements of the 1960s. This nonviolent protest continued until they were arrested.
Mears explained ACCE’s motivation thusly: “Since Chase would not let our members keep their homes, we decided to ‘move’ into theirs.”
Since then, Mears has been active within the fold of ACCE as an activist and organizer to the point where she was granted an economic reprieve in the form of employment as an ACCE staff member in August. Summing up her recent experiences, she states flatly, “Had I not become involved with ACCE, I would not have my home today.”
Recently, Mears was on her way to La Puente to demonstrate support for another ACCE member about to be evicted from her home. The group remains committed to passive resistance and the possibility of incarceration for their beliefs.
As the nation’s financial straits, and arguably its most prominent component–the issue of home foreclosure–dominate the news, Mears and other afflicted victims continue to mobilize in response. On Sept. 22, members of ACCE met in front of the Grape Street Elementary School in Watts to dramatize the situation. They walked several feet from the school to one of the foreclosed houses that has been left unattended and unmaintained, contributing to the overall blight of the neighborhood.
The organization has also designated Monday as the start of an official “week of action.” ACCE will redouble its efforts in tandem with Clean L.A., SEIU Local #721, United Teachers of Los Angeles, and other organizations. They will randomly pick a downtown area bank in which to stage a “teach-in” to instruct patrons about fraudulent bank practices and other related topics.
On Tuesday, they plan to disrupt a banker’s meeting, hold a press conference in front of a bank CEO’s personal residence, and on Thursday gather hundreds for a “Mass Action Day” rally to demand that banks pay a “fair share” of taxes and other forms of repayment to homeowners and other victims of the recession.
More information about these activities may be accessed at the website, www.makebankspaycalifornia.com/. The report, “The Wall Street Wrecking Ball,” can be found at ACCE’s website: www.calorganize.org/.