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Two actions target Fannie Mae

Four years after Fannie Mae and Freddie Mac were put under federal conservatorship, actions tomorrow and next Monday are targeting the agencies for blocking principal reduction in mortgage refinances.

On Wednesday, September 5, Occupy Chicago will rally at 5 p.m. at Fannie Mae’s office at 1 S. Wacker, where families facing eviction will speak out, and then march to President Obama’s campaign headquarters, 130 E. Randolph, where protestors will be chained together with balls representing mortgage debt.

It’s part of three days of actions targeting “Obama’s failures as president” and “how both Obama and Romney fail to represent the interests of the 99 Percent,” according to a Facebook announcement.

On Monday, September 10, local community groups joined by Occupy Our Homes groups from Minneapolis and Detroit will march from Daley Plaza at noon and rally in front of Fannie Mae (1 S. Wacker) at 1 p.m. and Freddie Mac (333 W. Wacker) at 2.

That protest is part of a national day of action against Fannie and Freddie by community groups working to stop foreclosures in several cities, said Stuart Schussler of Centro Autonomo of Albany ParkChicago Anti-Eviction Campaign is also participating.

Centro Autonomo protests at bank branches to support families in foreclosure who are seeking loan modifications. Principal reduction is a vital component of affordable loan mods, Schussler said.

“Sometimes we get a favorable response from the bank” that’s servicing the mortgage, but but if Fannie or Freddie holds the morgage – as they do in a large proportion of cases – “they’ll say it’s out of our hands,” he said.

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AG Madigan to back ‘maximum’ homeowner relief

At a rally with community organizations on Sunday, Illinois Attorney General Lisa Madigan is expected to commit to pressing for “maximum” mortgage relief for underwater homeowners as part of the federal-state investigation into bank fraud.

She’ll appear with the regional organizing network IIRON on Sunday, June 10 at 3 p.m. at St. Mark’s United Methodist Church, 8441 S. St. Lawrence.  IIRON will also be unveiling a new Covenant for Economic Justice.

It’s a significant step for Madigan, who’s a member of an Obama administration task force investigating securitization fraud in the foreclosure crisis, organizers say.

Last year IIRON pressed Madigan to hold out for more money to help homeowners wrongfully foreclosed on in the robo-signing settlement by state attorney generals. Though the monetary settlement in that case was disappointing, grassroots pressure did result in limiting banks’ immunity from liability in the deal, said David Hatch of IIRON.

He said IIRON and groups including National People’s Action are calling for $350 billion worth of principal reduction for underwater homeowners.  An NPA report last year estimated underwater homeowners in the U.S. owe a total of $700 billion more than their homes are worth.

Stealth bailout

That’s a serious drag on the economy, these groups argue, taking hundreds of billions of dollars out of the consumer economy – and a “stealth bailout” of banks, which caused the housing crash through reckless and predatory lending practices, and which have received trillions of dollars in bailouts and backstops, most of which will never be repaid.

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Bank fraud investigation hailed

President Obama’s State of the Union announcement of a new investigation into bank fraud represents a victory for community groups, said National Peoples Action on Wednesday.

“We’ve been calling for a full investigation for over a year,” said Liz Ryan Murphy of NPA.  “This is a big win, but we still need to see results.

“We need a complete investigation to get to the bottom  of what they’ve done, with penalties and restitution that are commensurate with the crimes.”

The Woodstock Institute also hailed the announcement.  “Making it clear that criminal activity in the financial sector will not be tolerated is necessary to restore confidence in the mortgage market and the broader financial system,” said Tom Feltner.

Obama announced that New York Attorney General Eric Schneiderman will head a new task force looking into abuses in the mortgage origination and securitization sector.

Schneiderman’s appointment came as NPA and other groups (including IIRON in Chicago) expressed concern that the administration was pressing for a settlement in the robo-signing scandal that would release banks from legal claims covering a sweeping range of misconduct.  Schneiderman was among state attorney generals said to be raising similar concerns

Principal reduction

If it is narrowly focused on relieving claims arising from fraudulent foreclosure filings, a settlement could begin to bring relief to hard-hit communities in the form of loan modifications which reduce principal to reflect depressed home values, Feltner said.

Principal reduction is “a critical missing piece in the response to the foreclosure crisis,” he said.

NPA has argued that homeowners have lost billions of dollars of equity since the housing market collapsed due to the malfeasance of big banks, and that wholesale principal reduction would constitute a massive economic stimulus.

Both groups have called on the Federal Home Finance Authority to direct Fannie Mae and Freddie Mac, which own 70 percent of home mortgages, to allow principal reduction.

Murray said Obama should replace Edward DeMarco, acting director of the FHFA, who has ruled out principal reduction.

The president “should consider a change in leadership” at FHFA, Feltner said.

Outrage over federal lawsuit on vacant properties ordinance

A federal agency’s legal challenge to the city’s vacant properties ordinance is “astounding,” said Braden Listmann of Action Now.

The group is one of several community organizations making up the Foreclosure Convening, the coalition that earlier this year won a new provision holding lenders and servicers responsible for maintaining vacant homes following foreclosure.

The Federal Housing Finance Authority filed a lawsuit Tuesday arguing that Fannie Mae and Freddie Mac are exempt from local supervision or regulation.  The two corporations, which are supervised by FHFA, hold mortgages on over 250,000 Chicago homes and use over 200 banks and mortgage companies to service the loans.

Listmann said that Fannie and Freddie’s contracts require servicers to abide by state and local laws and ordinances.

He points out that Fannie and Freddie have refused to modify troubled mortgages with principal reductions.  “Instead of writing down $20,000 on the principal and getting the rest back over 30 years, they’re foreclosing on homes,” he said.  “After the buildings become vacant and fall apart, they’re selling them for $10,000 or $20,000 – enough to cover the servicers’ fees.”

“And now with this lawsuit, the FHFA is admitting that they don’t even want to take care of the vacant properties that result from their policies,” he said.

Mayor Emanuel has vowed to defend the ordinance – and Wednesday morning, Cook County commissioners unanimously passed a similiar measure.

“These abandoned vacant properties are left to deteriorate and attract drug and gang activity, violence, graffiti, garbage and debris,” according to a statement from the Foreclosure Convening.

“They threaten the safety of children, neighbors, police and firefighters, lower the property values of surrounding homes and drain the city’s budget. Taxpayers shouldn’t be forced to pick up the bill for Fannie Mae and Freddie Mac’s negligence.”



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