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Mike hopes to see the world turned upside down through local communities banding together for social change, especially churches which have recognized the radical calling to be good news to the poor, to set free the prisoners and oppressed, and to become the social embodiment of the reign of God on earth as it is in heaven. He lives with the blessed memory of his wife, in Durham, NC, and has three adult children living in three different states. He also shares his life with the Mt. Level Missionary Baptist Church in Durham, the faculty and students of Shaw University Divinity School in Raleigh, NC, and the faithful fans of Duke and Baylor Basketball in his neighborhood.

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Tuesday, February 07, 2012

The Long, Drawn Out Fight Against Foreclosure Fraud

In December 2010, I was part of a national gathering of citizens' groups who met with Iowa Attorney General Tom Miller in Des Moines.  We announced and discussed with him our agenda to push for a just and broad-ranging settlement between the fifty states' Attorneys General, various key federal agencies, and the large banks who had committed fraud in their dealings with homeowners on mortgages and foreclosures.  Miller was the lead AG in the negotiations, and he was talking tough at our gathering.  At that time, we were hopeful for a settlement in the next six months.

During the ensuing months, NC leaders met twice with NC Attorney General and his staff to discuss progress and emphasize the need for justice for homeowners.  We continued to hope there would be a resolution in the near future.

That six months passed.  Then in July 2011, I joined another group of leaders in Chicago at the meeting of the National Association of Attorneys General, where outgoing president of the group, NC AG Roy Cooper, presided.  We had conversations with various AGs and their staff, capping off our visit with a face-to-face meeting with four of the state AGs:  Cooper of NC, Miller of Iowa, Lisa Madigan of Illinois, and George Jepsen of Connecticut.  We came away from the meeting encouraged that our allies were continuing to fight, but discouraged that the final agreement remained elusive.  Hopes for a large fine to create a fund to assist homeowners were diminishing, with the figure $20 billion circulating widely (compared to the $700 billion bailout received by the banks).

Some state AGs threatened to pull out of the negotiations, frustrated over the compromises being forced by other state AGs, who were taking sides with the banks.  These compromises would gut their efforts for justice and leave citizens, municipalities, pension funds, and homeowners high and dry with no recourse.  Soon the California and New York AGs did withdraw from the negotiations.  Miller's reports to the public seemed to predict limited settlements that would let the banks off the hook.  The delays favored the banks, who continued to make large profits, pay out large bonuses, and foreclose on the little people, homeowners and the unemployed, who have no cash reserves to endure a prolonged battle.  News in the fall and winter showed little progress.

The Occupy Wall Street movement and its many sibling Occupy movements raised hopes.  Their agenda, as a mass movement, was less focused than our organizing had been.  However, they had similar concerns about big banks, the failed bailouts, people losing their homes, and an economy that serves only the elite 1%.  "We are the 99%" is a powerful cry of defiance.  I suspect that this movement played a part in building pressure on the state AGs to stand more firmly with the people suffering rather than with the banks stonewalling.

In part because of some organizing around foreclosure fraud in January, President Obama responded in the State of the Union Address that he had directed AG Holder to intensify his efforts on the foreclosure fraud issue, creating an office focused on bringing these negotiations to completion.  He then announced revisions in the HAMP program which would make unspent funds available to a larger range of homeowners.  He further changed the existing programs to bring Fannie Mae and Freddy Mac mortgages into eligibility for assistance.  So the end of January offered portents that change might be coming.

So I rejoiced to read the news this week that there are signs of progress toward a better settlement than had previously been intimated.  The fine paid by the banks will likely be larger than expected, even if still only around $25 billion.  The question of whether banks will be immune to further lawsuits seems to be shifting toward allowing homeowners, mortgage-based security buyers, and other interested parties the right to sue for damages.  This means that city, state, and private pension funds who were enticed into purchasing investments that were hiding toxic assets will have recourse to recover losses.  This could mean good news for so many people whose retirement savings were set back dramatically by the recent crash.

Keep watching for news that this drawn-out battle will end soon.  It's about time for justice.

1 comment:

Roosevelt Ethridge said...

It takes these type of initiatives to help people escape the poverty line. Many foreclosures are been enforced upon people by wild cow ring that legislature and AG's often get trampled in; Certainly, we need the AG's to fight for their states. It is a great announcement to hear of pre-settlement figures that cross into the billions of dollars. Homeowners need a new message other than, "get out."

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