Has America's Foreclosure Crisis Immigrated to China?

It appears so:

Foreclosures are starting to be reported in China, home to the most talked about housing market on earth.   According to the 21st Century Business Herald, three cities have reported increases in the number of bank repos of Chinese properties.  Has a foreclosure crisis begun in China? If so, the China housing bears would have been vindicated. (link)

NYC City Council Members: Use Eminent Domain to Buy Back Underwater Mortgages

An idea that makes a lot of sense, in a lot of different ways, for a lot of different reasons:

"New York City Council members and housing advocacy groups called on Mayor Bill de Blasio on Wednesday to join them and help homeowners at risk of foreclosure, proposing the use of eminent domain to buy back underwater mortgages.
At a news conference, council members Donovan Richards, Mark Levine and I. Daneek Miller said eminent domain could be used to buy back mortgages from homeowners who owe more than their houses are worth. (continue reading)."

Here is a full-throated defense of the idea from Robert Hockett, a Professor of Law at Cornell Law School, published in the Daily News:

"The last time the U.S. experienced economic calamity and slow-motion recovery — from 1929 into the 1930s — the policy responses it adopted were profoundly innovative yet quintessentially American. This was largely because the President who took office in 1933, Franklin Roosevelt, had led New York — the nation’s center of creative dynamism in business, the arts and governance alike.
New York City should take inspiration from FDR’s ingenuity today by employing a home-foreclosure prevention tool that he pioneered."
* * *

The plan is necessary because the state of the city’s housing market — especially for its African-American and Latino communities — remains dire.

Manhattan fares reasonably well, but the other four boroughs do not. And as a new report issued by the City Council and the Mutual Housing Association of New York demonstrates, some 60,000 New York City homeowner families, disproportionately families of color, are in crisis.

Only the city’s power of eminent domain will help . . ."

The ending is perfect:

"There is what I like to call poetic justice in this plan.  In the recent past, eminent domain has been used to remove communities of color from their homes and their neighborhoods.  By “taking the loans, not the homes,” New York will be flipping that sordid history on its head — and benefitting itself and investors as well in the bargain." (link)

Mandatory Foreclosure Conference Extension Bill Passes NY Legislature

The New York legislature has passed legislation extending important protections for New York homeowners in foreclosure for an additional five years past their February 2015 expiration date.  Many advocates (as covered here) had argued stridently for passage of this bill, which now awaits the signature or veto of Governor Cuomo.

As explained in an email blast from the the Empire Justice Center:

Dear Friends,
Empire Justice Center is thrilled to share the news that the  State Legislature has passed critical legislation that will ensure that New York homeowners have access to settlement conferences for another five years.  The conferences have been invaluable and have prevented thousands of New Yorkers from losing their homes once a foreclosure case is filed against them, as had previously been happening prior to the institution of the settlement conferences.

Since 2010, lenders and homeowners in all residential home loan cases have been required to meet to see if the parties can reach a mutually agreeable resolution, such as a loan modification or other workout, to avoid loss of the home.  Unfortunately, the numbers project record high foreclosures still to come in New York.  The continuation of the settlement conferences, as well as continuation of an early warning notice to homeowners in default and a notice to tenants in buildings being foreclosed upon, are vital consumer protections that will remain in place.  We especially want to thank Senator Jeff Klein and Assemblymember Helene Weinstein, for sponsoring and championing these vital consumer protections five years ago and ensuring their continuation this year.

Kudos to them, to the NYS legislature, and to the many consumer advocacy groups that worked to support the passage of this bill.

In solidarity,
Kirsten E. Keefe, Senior Attorney

Additional coverage by the Daily News here:

"Senate Co-Leader Jeffrey Klein (D-Bronx/Westchester) announced Wednesday that the State Senate voted 56 - 1 in favor of his legislation that would extend vital foreclosure prevention measures and homeowner protections for an additional five years beyond the February 2015 expiration date. These protections include extending the requirement for lenders to provide 90 notice of foreclosure and mandatory settlement conferences for all home loans. An expiration of these protections would have meant that tens of thousands of New York homeowners in pre-foreclosure were in serious danger of losing their homes. The State Assembly passed the legislation on June 2nd. The legislation now awaits New York Governor Andrew Cuomo’s signature to become law."


Banks Allegedly Overcharged U.S. Government When Foreclosing on Homeowners

You think you understand the truly depressing extent of conduct of some banks before, during, and after the foreclosure crisis, and then you read this:

"(Reuters) - The U.S. Attorney's office in Manhattan is investigating at least five banks over whether they overcharged the government for expenses incurred during foreclosures on federally backed home loans, filings and interviews show.

PNC Financial Services Group Inc, PHH Corp, MetLife Inc, Santander Holdings USA Inc and Citizens Financial Group Inc, the U.S. unit of Royal Bank of Scotland, have all disclosed in filings with the Securities and Exchange Commission that they've received subpoenas. U.S. Attorney Preet Bharara's office is seeking information on claims on foreclosed loans insured by the Federal Housing Administration or guaranteed by Fannie Mae and Freddie Mac, according to records reviewed by Reuters." (link)

First banks caused the foreclosure crisis, then got bailed out, then lobbied against the bankruptcy bill that would have helped halt the crisis, then agreed to the Home Affordable Modification Program ("HAMP") but initially refused to actually properly modify mortgages under the program -- all the while foreclosing on homes without the legal right to do so because of improper paperwork and robosigning.

That was not enough?

"The subpoenas, coming years after the height of the foreclosure crisis, seek information about banks' foreclosure-related expenses, which generally include court filings and posting or mailing legal notices.

"You've got a lot of people trying to clean up the servicing industry, but the truth is we are seeing the same servicing problems over and over," said Ira Rheingold, director of the National Association of Consumer Advocates in Washington. "It was built into the model to charge as many fees as they could." (link)

You think you've seen it all . . . and then you see more.

Several Cities Take Foreclosure Litigation Back to the Banks

Last Friday Los Angeles filed a federal lawsuit against Chase for both redlining and reverse redlining in mortgage lending to minority borrowers.  In short, the city alleges claims for violation of the Fair Housing Act and  restitution, and seeks damages for tax revenue lost to the city as a result of these practices. 

"The lawsuit on Friday is part of the second most populous U.S. city's effort to hold mortgage lenders liable for lost property tax revenue caused by falling home values, and the cost to maintain vacant foreclosed properties.

"LA continues to suffer from the foreclosure crisis - from blight in our neighborhoods to diminished revenue for basic city services," City Attorney Mike Feuer said in a statement. "We're fighting to hold those we allege are responsible to account."

It said the New York-based bank's practices included redlining, where minority borrowers are denied credit on the same terms as other borrowers, and reverse redlining, where borrowers in minority neighborhoods are flooded with subprime loans they cannot afford despite qualifying for better terms." (link)

Los Angeles, and several other cities, previously filed similar lawsuits against other large banks:

"Los Angeles in December filed similar lawsuits against Bank of America Corp , Citigroup Inc and Wells Fargo & Co , the next three largest U.S. banks. Wells Fargo on Wednesday lost its bid to dismiss its lawsuit.

Cook County, Illinois, which encompasses Chicago, has filed similar lawsuits against Bank of America and HSBC Holdings Plc , while Providence, Rhode Island on Thursday sued a unit of Spain's Banco Santander SA .

Baltimore, Cleveland and Memphis, Tennessee are among other cities to bring similar cases against banks. Atlanta-area counties have also sued HSBC.

Los Angeles said JPMorgan loans made from 2004 to 2011 in predominantly black or Latino neighborhoods were 2.19 times more likely to go into foreclosure than loans in mainly white areas. It said loans to minority borrowers went into foreclosure faster."  (link)

Could this approach be the solution to holding banks accountable for the foreclosure crises?

Maybe . . .

Los Angeles' lawsuit against Wells Fargo recently survived a motion to dismiss:

"Law360, New York (May 29, 2014, 2:43 PM ET) -- A California district judge on Wednesday kept alive a lawsuit filed by the city of Los Angeles alleging that Wells Fargo & Co. directed predatory mortgage lending practices at minority borrowers before the financial crisis that led to a wave of foreclosures, costing the city millions of dollars in tax revenue.

U.S. District Judge Otis D. Wright II denied the bank's motion to dismiss the case, ruling that the city had provided enough detailed evidence that predatory lending practices . . . ." (link)

The most recent Los Angeles case is City of Los Angeles v. JPMorgan Chase & Co et al, U.S. District Court, Central District of California, No. 14-04168. 

The press release and complaint are available here.

Studies: Foreclosures Literally Bad for Your Health?

A little bit grizzlier than I would have wanted for a Sunday morning, but here it is anyways. 

A recent study, described below, by a Dartmouth professor found that state foreclosure rates may have been linked to suicide rates at the state level.  Previously, a different study had potentially linked foreclosures to increased blood pressure for the neighborhood - not just for those people actually in foreclosure. 

As if there weren't reason enough to get a handle on foreclosures - economic stabilization and economic justice and the like - now it looks like there may be another - public health.

The Dartmouth professor's study:

"Appearing in the June issue of the American Journal of Public Health, is the first to show a correlation between foreclosure and suicide rates.

The authors analyzed state-level foreclosure and suicide rates from 2005 to 2010. During that period, the U.S. suicide rate increased by nearly 13 percent, and the number of annual home foreclosures hit a record 2.9 million (in 2010).

'It seems that foreclosures affect suicide rates in two ways,' says co-author Jason Houle, an assistant professor of sociology at Dartmouth. 'The loss of a home clearly impacts individuals and families, and can arouse feelings of loss, shame or regret. At the same time, rising foreclosure rates affect entire communities because they’re associated with a number of community-level resources and stresses, including an increase in crime, abandoned homes, and a sense of insecurity.'

The impact of foreclosures on the incidence of suicides was strongest among adults 46 to 64 years old; those in this age group also experienced the highest increase in suicide rates during the recessionary period.

. . .

'Foreclosures are a unique suicide risk among the middle-aged,' Houle says. 'Middle-aged adults are more likely to own homes and have a higher risk of home foreclosure. They’re also nearing retirement age, so losing assets at that stage in life is likely to have a profound effect on mental health and well-being.'" (link)