Pillars of the Home Mortgage Business: Fraud, Lies, Theft, and Greed

I know everyone in the home mortgage business is not a thief and liar.  Let me make that plain.

Yet it is clearly the case that the ongoing foreclosure explosion has become a money-and-power-grab by banking executives and major shareholders who will stop at nothing to make sure they don't lose a dime on their crappy mortgages, no matter how many families they have to put out on the street.  First it seemed they were simply unprepared for such a large number of mortgages going underwater.  Then it seemed they were disorganized and careless about people's paperwork.  Of course there was the disingenuous worry about "moral hazard," as if the real moral hazard had not been perpetrated by the financial system that speculated and cast away all standards in order to create more and more billions of mortgage backed securities.  Eventually it became clear that even the mortgage foreclosure cases that were progressing were not undergoing due diligence.  Then cases of "mistaken" foreclosures began to pop up more and more.  Finally, banks began to admit the ways they have been breaking the law in order to prevent loan modifications and recourse against foreclosure proceedings.  What is emerging is a coordinated and willful theft of homes from average homeowners.

So this week organizers from all over the country have converged in Des Moines, Iowa, for a summit on ending the ongoing bank misconduct and lawlessness in home foreclosures.  Gerald Taylor and I represent North Carolina United Power at this meeting, along with people from coast to coast who are fed up with the impunity of banks in the current financial crisis.  Like me, you may wonder, "Why Iowa?"

There are two reasons to meet in Des Moines.  First, Iowa Citizens for Community Improvement have a long history of making a difference for working people who are being abused by the powerful.  They are hosting our gathering.  Second, Iowa Attorney General Tom Miller is the lead lawyer for the national investigation into illegal banking activity in the foreclosure crisis.  He will meet with our group to discuss the ongoing investigation and the possibilities for working together toward a just resolution of this crisis for all parties.

We want three major elements for a just solution. 

1. Hold banks accountable for real, transparent loan modifications with borrowers before any foreclosure proceedings, including lowering rates, to keep families in their homes.
2. Mandate principal reduction for owner-occupied homes as a first-line modification tool.
3. Include remedies for homeowners who have lost their homes to be reinstated as homeowners or financially compensated for the effects of this unlawful, corrupt system.

 We will not solve it with one meeting, but we hope to see another vital step this week.

Bailout 14: Thinking About Jubilee

Last Monday I was in an interesting meeting at Wake Forest Divinity School. The Wake Forest folks and some of their ecclesial friends from Winston-Salem CHANGE showed up in force. I was there as a faculty member of Shaw Divinity and as a leader in Durham CAN. No one from the other invited divinity school was able to attend.

There were two purposes for the meeting. The one I was most aware of was an effort to bring together divinity faculty to discuss ways for community organizing to be taught to their students. The second purpose, which turned out to dominate the meeting, was the idea that North Carolina United Power (NCUP) should consider a campaign relating to the economic situation.

Gerald Taylor, who called the meeting, is the regional organizer for IAF, the oldest of the national institutions which promote Alinsky-rooted community organizing. Gerald discussed the current economic situation and what he sees as the wrong-headed direction of the governmental responses. In that context, he brought up the biblical concept of Jubilee.

The most significant thing said at that meeting was that biblical Jubilee is not merely about solving the economic problems of the wealthy. Forgiving debts of the poor and setting the oppressed free are its central concepts. Thus, a bailout which attempts to benefit everyone by clearing out the debts of the banks and financial instututions contradicts the wisdom of the Jubilee tradition.

Taylor argued that the way to help the economy, including the banks and other financial institutions, would be to help the average person who is deep in debt. Provide debt relief to everyday people, and they will pay off credit cards, pay and restructure mortgages, pay for higher education, and purchase goods. For those persons who are not in debt, the same financial stimulus would provide economic opportunities that would strengthen economic activity, bolster retirement funds, and stabilize families and businesses.

Taylor also went on to discuss the ways that credit card companies and other lenders are sticking it to common people at the same time that they are able to borrow at the lowest rates in history. This is what the Bible condemns as usury, and the state of usury laws in the U. S. is such that the credit companies can locate in one or two of the fifty states which give them the greatest freedom to charge whatever they want in interest. The situation calls for a national policy.

What kind of bailout would a jubilee call for? It is about fifty years since the Civil Rights Movement. It is about fifty years since the Nixon government began to institutionalize the backlash against progressive reforms. It may be time to proclaim a Jubilee.