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Community groups cheer DeMarco replacement

Last week Chicagoans joined a national protest action at the home of Federal Housing Finance Agency director Edward DeMarco, demanding his resignation.

On Wednesday, President Obama responded to growing demands to replace DeMarco, naming U.S. Representative Mel Watt (D-NC) as his replacement.

“It’s long overdue,” commented Katie Buitrago of the Woodstock Institute.

“This is a good day for homeowners and families across the state of Illinois and a big step in the right direction for our economy,” said Rev. Marilyn Pagán-Banks of IIRON, a Chicago-area organizing network.

“We now encourage Congressman Watt to implement common-sense policies like principal reduction to bring relief to tens of millions of homeowners and to jumpstart the economic progress our country needs.”

Community groups and housing advocates have called for DeMarco’s replacement for over a year, faulting him for blocking principal reductions on mortgages owned or guaranteed by Fannie Mae and Freddie Mac, which the FHFA oversees.

They argue that reducing mortgage principal to reflect the fair market value of homes that since the housing crash are worth less than what homeowners owe would prevent foreclosures, stabilize the housing market, and boost the economy.

DeMarco has been “the biggest roadblock to our country’s economic recovery,” said Tracy Van Slyke of the New Bottom Line coalition, which has spearheaded a “Dump DeMarco” campaign.

At last week’s action, as 500 people from National Peoples Action gathered at DeMarco’s Washington D.C. home,  Reverend Cliff Parks of Illinois Peoples Action noted that Fannie and Freddie control over half the mortgages in the nation, including those of nearly 14 million  underwater homeowners.  (See video below.)

Elizabeth Scrafford, a DePaul student and leader with IIRON Student Network, read a resignation letter drafted for DeMarco, holding him responsible for 1,800 families facing unnecessary new foreclosures every day that he has delayed approval of principal reduction.

Watt is known as an early advocate for action against predatory lending, Buitrago said.

Noting that he faces an uphill battle to win confirmation from the Senate, Buitrago said Obama should consider installing Watt with a recess appointment.  The administration’s previous nominee for the post withdrew in 2011 after Senate Republicans refused to act on his nomination.

Republicans say they want a plan from the administration for eliminating Fannie and Freddie before they consider an FHFA appointment.  But IIRON and other groups are calling on Watt to “support the vital role [the agencies] play in ensuring housing opportunities.”

Check out “NPA knocks on Ed DeMarco’s door,” from April 22:

Second term: immigration, climate, foreclosures

Immigration reform, climate change, the foreclosure crisis: with some disappointment over limited progress on these issues over the past four years, local activists hope more will be done in President Obama’s second term.

While support for comprehensive immigration reform has broadened noticeably since the November election, immigrant rights groups are concerned over dramatically stepped-up deportations under Obama, which reached 409,000 last year.

They’ll march on Inauguration Day (Monday, January 21, starting at 11 a.m. at the Daley Plaza and rallying at 12 noon at the Federal Plaza) calling on Obama to declare a moratorium on deporations.

A moratorium would be a first step toward comprehensive reform, said Eric Rodriguez, executive director of the Latino Union of Chicago.

“We want the president to be on the right side of history,” he said.  “His second term will define his legacy.  Will he be the president who deported more people than any other in history, or the president responsible for championing inclusion and equality?”

Immigration raids are a constant threat in Chicago communities today, said Tania Unzueta of the Immigant Youth Justice League; just last week scores of local residents were picked up in raids on a factory and two gathering places for day laborers.  IYJL is working to support several families who have members in detention, she said.

“Obama says he wants to do the right thing and keep families together, but we aren’t seeing it in our communities,” she said.

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Robo-signing settlement called ‘good step,’ ‘sell-out’

Responses from community groups and advocates to the robo-signing settlement announced Thursday ranged from “good first step” to “sell-out to Wall Street.”

The Woodstock Institute emphasized the significant precedent of requiring banks to write down principals for homeowners who owe more than their homes are worth – an approach lenders have generally avoided taking until now.

The settlement “won’t end the troubles of homeowners” but is a “significant step in the right direction,” said Dory Rand.  She said resources need to be targeted to the hardest-hit communities. She called it “a real victory for homeowners.”

The $1 billion in homeowner relief expected for Illinois “will not suffice to restore all of homeowners’ lost wealth” but “it can potentially turn back the tides of default in hard-hit communities,” she said.

Woodstock estimates that 400,000 Chicago-area homeowners are underwater on their mortgages, together owing nearly $25 billion more than their homes are worth.

Rand reiterated Woodstock’s call on the Federal Home Finance Authority to stop blocking Fannie Mae and Freddie Mac from writing down principals in mortgage modifications.

Paltry restitution

In contrast, a coalition of community groups said the settlement “let banks off the hook.”

“Our elected officials completely sold out the people again to their Wall Street friends,” said IIRON, a regional network including Northside POWER and Southsiders Organized for Unity and Liberation.

IIRON emphasized the paltry sums given in restitution to homeowners who lost their homes due to fraudulent foreclosure practices.  They stand to receive up to $2,000 each.

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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.

Occupying foreclosures

Abandoned homes being occupied in Belmont Cragin and Auburn Gresham on Tuesday – part of a national day of action called by Occupy Our Homes – underscore the failure of banks to deal with the foreclosure crisis.

In Belmont Cragin, Communities United Against Foreclosure and Eviction are moving two homeless sisters and their children into a single family home that was abandoned sometime after foreclosure was filed in 2009.  The group couldn’t determine whether a final disposition has been made on the property.

They think it could be one of the thousands of “red flag” properties, where banks and loan servicers “may choose to reduce the costs associated with a long-term vacant home by walking away from the foreclosure process instead of completing it” in order to evade the costs and legal reponsibilities of ownership, according to a Woodstock Institute report (see earlier post).

In Auburn-Gresham, kicking off its “Homes for the Holidays” drive, the Chicago Anti-Eviction Campaign is moving a family which lost its home to foreclosure into a home that was abandoned by a longtime resident after JP Morgan Chase refused to consider a loan modification.  The owner gave the keys to AEC, which like CAUFE has done signficant repairs on the building.

Foreclosures have continued to climb over the past two years, since the Obama administration promised to help millions of troubled homeowners.  But because their program allowed for voluntary participation by banks – instead of requiring institutions that had been bailed out to give affordable modifications to qualifying homeowners – it has helped only a small portion of those initially targeted.

Meanwhile lenders widely noted for being unresponsive to homeowners have now acknowledged extensive fraud in foreclosure filings.

In Austin, South Austin Coalition is taking over and boarding up an abandoned building that’s hosted extensive criminal activity less than a block from May Elementary School.  The building was foreclosed on by Citibank, said Elce Redmond of SAC.

“We’re going to go after the bank to pay for the boardup,” Redmond said.  “Longterm we want to pressure the banks to turn these homes over to community organizations and churches so we can rehab them and put families in them.”

“We have so many unemployed people and so many vacant properties,” said Willie JR Fleming of AEC.  “It’s obvious we need to put people to work rehabbing them so we can put families back in them.”

Fleming emphasizes that “we are enforcing the human right to housing.  We are not asking for human rights.  We are enforcing them.”

Occupy Our Homes reports similar actions “to stop and reverse foreclosures” in 25 cities on Tuesday, as “the Occupy movement joins with homeowners and people fighting for a place to live.”

Lawbreaking bank calls the cops

A Lawndale activist who was arrested Tuesday while calling on Bank of America to follow the law – and fix code violations in foreclosed properties – has posted her comments at Action Now’s blog.

“I was in shock,” says Marsha Godard, 52, a mother and a Bank of America account holder.  “How can my own bank arrest me for trying to speak to them about vacant properties that are in my neighborhood and all over the city of Chicago?

“Bank of America is not only ruining the lives of homeowners, the safety of communities and America’s economy, they are now arresting people like me that question their destructive actions.”

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People’s City Council: community perspectives on fiscal crisis

Fifteen hundred community activists from neighborhoods across the city will gather tomorrow evening for a People’s City Council to make sure that the needs of Chicago residents – jobs, housing, education, services and safety – aren’t sacrificed for an agenda driven by corporate greed.

Twenty or more aldermen are expected to attend.

Sponsored by the Grassroots Collaborative and twenty community, labor, and civic groups, the event takes place at 6:30 p.m., Thursday, July 7 at the UIC Forum, 725 W. Roosevelt.

“With all the talk about ‘shared sacrifice,’ we want to make sure that it’s not just community residents sacrificing in terms of service cuts and job losses and their ripple effects,” said Eric Tellez of Grassroots Collaborative.  “We want to make sure the banks and corporations are sharing in the sacrifices and not taking more resources than they need.”

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Building credit in low-income communities

A few years ago, Ricki Lowitz noticed a problem with individual development accounts offered by Centers for Working Families and similar groups: the savings generated by low-income people in IDAs could be completely eaten up by high interest rates when they purchased a home or another major asset.

CWF clients were getting high interest rates because they had low – or no — credit scores.

In response, CWF developed a new credit-building loan program which the group says has shown “tremendous results” in its first year.

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