New Yorkers to Wall Street: Help with Foreclosures Or We'll Move Our Money to Banks That Will

This is part of my What Happened to ACORN series.

Last week a group called New York Communities for Change (NYCC) joined with New York City Comptroller John Liu and seven of New York's largest unions to demand that Wall Street's biggest banks reform their loan modification policies so families facing foreclosure will not lose their homes. If other groups follow that lead, we might make a big dent in the foreclosure crisis.

NYCC and its sister organization, Mutual Housing Association of New York, have been working with foreclosure victims neighborhoods like St. Albans in Queens, or Bed-Stuy in Brooklyn not far from Wall Street, where homeowners have been forced to make impossible choices: keep up their skyrocketing mortgage payments or provide their families with food and clothing.

Members of the group are angry at banks, who have been painfully slow to offer loan modifications, or simply refuse to lift a finger to help vulnerable families and neighborhoods to avoid foreclosure. Some banks often screw homeowners by sending numerous requests for already-submitted documents, and then foreclose on the hapless homeowner because the banks falsely claim that they never got those same documents!

The federal government's attempt to solve the foreclosure crisis has failed. In 2009, 50,000 foreclosures swept New York state, with nearly half in NYC. Across the country the crisis is getting worse, not better. Katrina vanden Heuvel on July 15, in the Nation, reported that New York City foreclosures rose 16 percent in the first quarter of 2010 compared to the same period last year, with "...over 265,000 mortgages -- 13 percent of the mortgages in New York State-are now past due or in the foreclosure process. Meanwhile, banks have made less than 12,000 permanent modifications in the state since May 2009."

After several community meetings it became clear that many NYCC and union members need their mortgages modified because they are underwater or delinquent. The community and labor groups put together an action plan with Comptroller Liu, SEIU 32BJ & 1199, United Federation of Teachers, TWU, DC37, RWDSU, and the NY Hotel and Motel Trades Council.

To start they will send a letter to Citigroup, JPMorgan Chase, Bank of America and Wells Fargo, criticizing them for dragging their feet and demanding they do "everything possible" to avert foreclosures, including mortgage modifications.

At a July 13th, press conference, Michael Mulgrew, President, UFT, said he has brought the issue to the pension funds and they will consider all options. John Samuelsen, President, TWU Local 100 said that "since he was on the board of the city pension fund, he would ask that the bank's response be one of the ways in which they evaluate where they put their money." NYCC member, Jean-Andre Sassine, caught in the mortgage bind, said, "if the big banks won't listen to homeowners, we thought that they should hear from some of their biggest investors -- the city, the unions and their pension funds."

If the banks fail to act, all parties involved could move their pension funds and bank deposits to other institutions. That is why the groups call their plan the Move Your Money campaign.
They claim it will not only modify foreclosures and save homes, it will hold big banks accountable to the community where they take deposits and profit from government supported loans. After foreclosures, neighbors who remain behind suffer from declining property values, and local and state revenues plummet, contributing to a stagnant economy and high unemployment. The coalition is demanding answers by September 1.

Thus far the Obama administration plan -- which relies on a voluntary mortgage modification program -- has not worked, forcing New Yorkers to take matters into their own hands.
The groups put Wall Street on notice that unless the banks increase the number of modifications, including principal write-downs, expedite the modification process and stop foreclosure proceedings while applications are being reviewed, the group will increase the pressure. "This is just the first step in a campaign to win loan modifications that stop preventable foreclosures. We're saying it loud and clear - if the banks won't listen, it's time to move our money," Jon Kest, NYCC's executive director.

What happened to ACORN?
It is a rare showing of both money and people power, with the unions representing over 500,000 working families. NYCC is a coalition of low- and moderate-income working families fighting for social and economic justice throughout New York State and includes some of the leaders and organizers from the now defunct ACORN. The group also uses many of the same tactics and strategies. NYCC's members and leaders hope the action taken by New York City's Comptroller and labor leaders will lead to a dramatic shift in how the banks deal with borrowers.

Civic leaders across the country should follow the coalition's lead. Either big banks become part of the solution or the rest of us will have to Move the Money.

You can buy a copy of John Atlas's new book about ACORN, which tells the whole Acorn story at Amazon or Vanderbilt University Press or in most local book stores.