Foreclosures aren't going away. By now, the abuses that brought us to this point and continue to sink us further into the crisis -- predatory lending practices, hastily securitized loans and mortgage servicing errors -- are well known. Accountability for these abuses, however, remains an open question.
As we await the outcomes of the 50-state attorneys general settlement and the Obama administration's new federal Financial Crimes Unit led by New York Attorney General Eric Schneiderman, we must not lose sight of the homeowners and communities who suffer the collateral damages of foreclosure.
The Brennan Center for Justice at NYU School of Law teamed up with the National Coalition for the Civil Right to Counsel and independent producer Sarah Reynolds to create a multimedia video series entitled Fighting Foreclosure: Why Legal Assistance Matters that tells the stories of homeowners around the country. The series focuses on the perspectives of people who have seen or experienced firsthand what happens when homeowners go up against banks and mortgage servicers without an advocate at their side. Time and again, with counseling and legal representation, homeowners are able to catch documentation fraud, lending violations and other unlawful practices, and negotiate a fair settlement to stay in their homes.
Community groups, legal aid lawyers, and housing counselors continue to act as first responders in a slow-moving foreclosure disaster that, according to the Center for Responsible Lending, is not even half-way over.
Dispatch #1: Sarah Ludwig and Josh Zinner, Co-Directors, Neighborhood Economic Development Advocacy Project (NEDAP) in New York City
NEDAP -- a financial justice resource and advocacy center based in New York City -- recently released a report showing that 345,435 mortgages were at risk of foreclosure in New York State in 2011. NEDAP's analysis confirms that the state has a long way to go before the foreclosure crisis is over. The report shows that neighborhoods of color continue to be disproportionately affected.
From where you're sitting, what, in your view, is one of the main challenges facing homeowners in foreclosure?
Servicers, servicers, servicers. We are years into the foreclosure crisis, and banks, through their mortgage servicers, continue to present serious obstacles to homeowners, resulting in millions of foreclosures that could and should have been averted. The problem should perhaps come as no surprise, since servicers generally continue to make more money from foreclosing on homes than from modifying mortgages, and public policy response has been slow at best in terms of requiring meaningful accountability by the industry. People who seek to negotiate effective loan modifications with servicers continue to get the major runaround, experiencing maddening delays and unreasonable denials of their loan modification applications. Meanwhile, the financial industry has spent millions upon millions of dollars lobbying against even the most basic reforms -- to the profound detriment of families, communities, and the country.
What is one aspect of the foreclosure crisis that has been overlooked by the media?
The media, in general, have failed to address the fact that so little has been done to hold banks accountable -- notwithstanding general consensus that banks and Wall Street caused the foreclosure crisis (enabled in no small measure by their regulators), and notwithstanding what we now know was a multi-trillion dollar bank bailout. Similarly, most media have categorically avoided core questions regarding the restructuring of our financial system to ensure fairness and equity going forward. Another glaring gap is coverage of the millions of people who've unfairly lost their homes to foreclosure. What's happened to them? Where are they now? Where's the redress?
By some estimates, we are only halfway through our nation's foreclosure crisis. What is the biggest change we need to make in addressing this problem going forward?
Broadly speaking, we need to forge a coherent, comprehensive federal housing policy that is grounded in principles of fairness and equity, and that emphasizes non-speculative housing models, such as community land trusts, mutual housing, and limited equity cooperatives. It is also vital that we address pervasive unemployment, underemployment, and the lack of a living wage. In terms of the mortgage industry, servicers should be held to strict rules and legal standards, such as a fundamental duty to work in good faith with distressed homeowners. The rules should require servicers to reduce principal for people underwater on their loans, for example, and include meaningful enforcement mechanisms and strong penalties for non-compliance.