The Village of Hempstead, a relatively low-income, minority-heavy municipality on Long Island, pulled its money out of JP Morgan Chase bank on Tuesday as part of a statewide campaign protesting the bank's dismal mortgage modification record.
"It's important that Chase and all the big corporate banks start to heed the minority communities," Hempstead Mayor Wayne Hall said in an interview. "There's a lot of power in the minority communities. If we all stick together and start withdrawing our money out of these big banks and start putting it into more favorable banks, Chase will review its procedures for modifications."
Nearly one in every four U.S. homeowners with mortgages -- or 10.8 million people -- currently owe more on their home than it's worth. In Hempstead, almost 4 percent of homes are in the foreclosure process, according to Dealbook, a rate four times Nassau County average. While data on Chase loans in Hempstead are hard to come by, in nearby New York City, only six percent of the 1,027 borrowers with Chase mortgages who asked for help in the past year were granted a permanent modification, according to a report released recently by the Center for New York City Neighborhoods. Moreover, a full 80 percent of these homeowners have not even received an offer for a loan modification.
Chase's national modification record is not much better. Of 233,653 trial modifications started by Chase under the Obama administration's Home Affordable Modification Program (HAMP) launched in 2009, the bank now has just 71,657 active permanent modifications, according to the latest data from the Treasury Department.
One Hempstead homeowner, Maribel Toure, said she has been trying and failing to modify her mortgage loan with Chase bank for two and a half years.
"It has been an unhealthy experience, with bad communication and no response," she told NY Communities for Change, a coalition of working families in low- and moderate-income communities. "I have to work 16-hour shifts in the hospital to make extra money, and I've asked for a modification three times, but have gotten no straight answer -- I'm stuck in limbo."
A Chase spokesperson said the bank has "served the financial needs of the Village of Hempstead well" for more than 30 years.
"In New York, Chase has offered 50,000 modifications to struggling borrowers and has prevented seven foreclosures for every one foreclosure here," he said. "This past weekend, we met face-to-face with 2,200 borrowers in Brooklyn to help them stay in their homes."
The Village of Hempstead is the first municipality in the country to close a bank account due to foreclosure policies. But a spokesperson for NY Communities for Change said many local governments throughout the state are planning to close their Chase accounts in the coming months. New York City Councilman Jumaane Williams marched into a Park Avenue Chase bank in February to close his account, and major unions have also announced their intention to pull their pension-fund money out of JP Morgan Chase.
"Banks like Chase should be ashamed of themselves," Hempstead Deputy Mayor Henry Conyers said in a press release. "They were bailed out with taxpayer money - now look what they are doing to the taxpayer: foreclosing instead of modifying."