A storm surge in Detroit

Detroit Eviction Defense held a meeting today. They invited representatives from Fannie Mae and Freddie Mac to tour Detroit and then meet with homeowners to see firsthand what their policies are doing to the city. Late last week those representatives backed out, saying meeting with homeowners would be "awkward." How's that for an understatement! The meeting proceeded with empty chairs representing the mortgage backers and cameramen were there to film the proceedings to be delivered to Fannie Mae officials.

The crowd was a respectable size, perhaps a hundred or two. I didn't count.

The speakers were homeowners, community organizers, and legal defense workers. Each was given 5 minutes to tell a piece of the story. I didn't stay for the whole two hours because I had an evening bell rehearsal. Here is some of what I heard:

Organizer: This battle cannot be won in courts -- most of the time the courts side with the banks. This battle must be waged in the streets.

Homeowner: He told the story of waking up one morning to find a Dumpster outside his house. He's still there and still battling.

Housing counselor: What happens when the eviction goes through? The owner is forbidden to buy it back. It sits empty. It is given to the city for demolition. That has happened to 10,000 homes so far. That costs the city $6-10 million in demolition. That amount could have paid for 3,000 mortgages. The city loses tax base, surrounding owners lose property value. Alternately, the house is sold to an "investor" at a rock-bottom price who works to flip it or find renters.

Homeowner representative: The bank was incompetent, the owner defiant. This was a call to fight and a call to unity.

Attorney: Banks are notorious for asking for documentation many times -- We can't find page six, gosh now page 10 is missing -- sometimes over 20 requests for documents. Why so clumsy with documents? Because every time a bank reviews a mortgage (not when they approve a modification), they collect a fee. Lose a document 20 times you have to review that mortgage 20 times and collect 20 fees. You say this fight doesn't concern you? Check your property value lately?

Homeowner: Lost job and asked for modification. Worked through a HUD counselor. Got the runaround from Bank of America -- got to know every service center across the country and each one told a different story. Was given a preliminary reduction, but because payments were not made "in full" each payment dinged her credit rating, trashing it.

Homeowner: Hit with a devastating illness (now recovered), and asked the bank for a reduction. He got to the point that when he called the bank he would almost immediately ask for the vice president. That still didn't help. He's still fighting.

Legal service counselor: Those "investors" that buy blocks of foreclosed homes -- when they sell the contract is usually fraudulent. If not, the house is rented to people who don't have a stake in its upkeep and the investor becomes an absentee landlord. Fannie Mae is pretty consistent in refusing to help homeowners -- even when they say how much help they are offering. Fannie Mae and the banks would rather spend tens of thousands to evict and demolish than to modify the loan. Fannie claims that they are afraid that people will simply walk away from their homes. This counselor says that everyone she meets is doing all they can to keep their homes.

Legal service counselor: She is puzzled why Fannie thinks their current mode of operation makes financial sense. Fannie spends huge amounts of money to evict -- sometimes using the services of five different legal firms. Then they make zero money on the sale of the house. That means the taxpayer is making up the difference.

Homeowner/organizer: There are a lot of reports that the foreclosure crisis is over. They're false.

Community organizer: There are about 1000 homes in her section of Detroit. It used to be enough well off that when homes sold, which wasn't often, a buyer was usually found before the house officially went on the market. No more. Now 80-100 houses are vacant at a time. Foreclosure shreds the neighborhood. evicted homeowners leave. That's one less customer for area businesses, and many of those soon close. Banks don't maintain the homes, so community organizations try to do that but that takes money and effort. It becomes impossible when it is 10% of the neighborhood. The whole community loses value.

Homeowner: I refuse to be faceless. Help me to stand up to bullies.

I was given a 12 page booklet titled A Hurricane Without Water. It describes the situation in a way that is easily understood. A few tidbits:

Fannie May and Freddie Mac are responsible for 16,000 foreclosures in Wayne County since 2008 with thousands more in Oakland and Macomb counties. Foreclosure rate in Detroit is triple the national average. Of the 70,000 foreclosed homes in Detroit, 45,000 are still vacant.

Fannie and Freddie offered foreclosure moratoriums to victims of Hurricane Sandy. Detroit has been hit even harder. We should also have a moratorium.