- DIXIE MITCHELL The city council hasn't done anything to help homeowners like her.
Last Thursday morning at the Seattle City Council chambers, 73 year old Dixie Mitchell sat in one of the front rows and patiently watched the proceedings. She had asked her grandson to stay with her husband, Luster Mitchell, who suffered a stroke in 2008. The stroke confined him to a wheelchair, rendering the family unable to keep up with payments on what she said was a predatory home loan. They survive on income from social security and meals drawn from food banks.
The word predatory is used deliberately by Dixie because, she says, she and Luster had long since paid off their mortgage, but then a bank offered them an adjustable-rate loan for home improvements anyway. Their initial low interest rate on the loan skyrocketed the same year as Luster's stroke, Mitchell says. You can watch her explaining all of this to MSNBC's Chris Hayes here.
Banks have routinely denied, misled, and otherwise toyed with the lives of lots of people like Mitchell. You can read about Phyllis Walsh, who committed suicide on her front lawn last year because of what she said, in her suicide note, were "foreclosure vultures" from US Bank.
- Courtesy of the Walsh family
- PHYLLIS WALSH The city council has not learned from her suicide.
And you can read (or watch) about Dana Ventura, whose home was demolished before her eyes last month while she watched from a police car in handcuffs, arrested for protesting her foreclosure and eviction. She says Chase Bank told her to miss mortgage payments in order to qualify for a loan modification, then foreclosed on her anyway. (Chase denies this.)
- DANA VENTURA It is too late for the city council to keep this woman in her home: it's been demolished.
You can read about construction worker Jeremy Griffin and Wells Fargo, which I watched close down its downtown Seattle branch when Griffin tried to deliver a check to show that he was gainfully employed and could pay to stay in his home. He was ultimately evicted.
- Kelly O
- JEREMY GRIFFIN The city council failed this guy last year.
And you can read KING 5's report on Byron Barton, a disabled veteran living in Delridge, who held a press conference Wednesday at his home objecting to his foreclosure by JP Morgan, which he says has refused to negotiate a loan modification with him.
- Chris Genese
- BYRON BARTON Unless the city council acts swiftly, it will do nothing to help this disabled veteran stay in his home.
Here's a photo of a document that Beacon Hill homeowner Pina Belgrano brought to the city council:
- DENIED Here are the kinds of documents all of these people say they have received from the banks. Notice there's a hotline that you can call. Hotlines don't change bank policies, however.
For Mitchell, it was only after she went on national television that the bank finally offered her a loan modification that decreased her monthly payments, she told me in the city council chambers. She had come to the halls of power to see what our elected representatives are doing about foreclosures. When the council meeting ended, she went up to Kelsey Beck, a staffer for Housing and Economic Resiliency Committee Chair Sally Clark.
"I think they [the banks] put people in a big bind, and then they punish you for even getting a sick or losing your job," she said. As Mitchell recounted her experience to Beck, her eyes watered. There had been no cathartic joy that day from witnessing public officials stand up for homeowners like her. There was no talk of compelling any of the aforementioned banks into doing better by the people of Seattle.
Instead, during the committee meeting, three city hall bureaucrats—Dan Eder and Traci Ratzliff from Council Central Staff and Laurie Olson from the Office of Housing—presented a report they've been working on for the past four months to the council. It's called, simply, Principal Reduction/Foreclosure Prevention. It is 33 pages long.
You can read the report here (PDF). But the bureaucrats assigned to study this issue did not come up with a way for the council do anything about banks that refuse to modify loans, that refuse to treat their customers like human beings. Maybe this is because they are bureaucrats, not activists or visionaries. They put the onus on homeowners to solve their own problems. They only recommend a paltry $150,000 in funding for a strategy that has already failed homeowners facing foreclosure: outreach to connect them with existing counseling services.
In another city-commissioned report from last year, Cornell economist Robert Hockett recommended the city use its eminent domain authority to write down the principal owed by Seattle homeowners who are underwater on their mortgage (meaning they owe more on the home than it is worth). Roughly 20,000 households fall into that category. This is called principal reduction.
Several banks quickly wrote to the city council, however, to express their displeasure with Hockett's proposal.
The banks got their way. The city hall bureaucrats rejected eminent domain early on as possibility—even though the cities of Richmond, California and Irvington, New Jersey are pursuing that exact strategy.
In March, during a presentation of their draft report, the bureaucrats went further and didn't recommend any route whatsoever towards principal reduction, even though that was supposed to be their task. Instead, they repeatedly emphasized that the housing market is on the upswing.
The implication seemed to be that the foreclosure crisis is resolving itself on its own. Nick Licata grew visibly upset. He told them to go back and investigate how the city can pursue principal reduction.
And, what do you know: The final report released last week includes "principal reduction" in the recommendations section. But they don't actually recommend it: "The City Council could explore the development of a Principal Reduction/Buyback Program," is all the authors say.
Council Member Licata, who once again cut a frustrated figure and rubbed his eyes when the bureaucrats could not tell him anything about the racial makeup of foreclosure victims in Seattle, does not seem willing to otherwise stand up to the city council's risk-averse bureaucrats. In an interview the next day, he acknowledged: "The staff do wield a lot of influence. And the electeds don't want to be seen as going against the advice of staff." He said he would have to make do with the report they presented. "It took me like seven years just to get rental inspections in this town," he said. "You have to keep at it, you have to keep pounding at it."
Confidential to Nick: Socialist Alternative and local unions made $15 happen in one-seventh that amount of time. Eventually the mayor and business got on board. It required public campaigning, rousing grassroots support to force the establishment to reckon with a radical policy change for which there was no precedent, and vilifying the enemies of the public good. In this case, your enemies—the banks—are universally hated by anyone who is not wealthy. We still hate them because of the 2008 bailouts. There is righteous, populist fury out there. Harness it.
You're a goddamn politician. Do a thing: announce a press conference, give a speech, create a frickin' Twitter page since you have none, and get arrested—like Kshama Sawant did last year at Jeremy Griffin's home. You're a longtime incumbent. You say you're leading the council towards a solution on this issue. When I ask your colleagues about foreclosures, they refer me to you. So do it: show some leadership. Sawant has given you a template for turning the impossible into possible: follow it and protect the people you say you want to protect.
Even though Sawant and Licata have virtually the same position on this issue, the contrast in approach could not be more stark. "In this game, you're trying to coax people on the council into making decisions that they haven't made," Licata told me. Meanwhile, Sawant said: "I don’t believe that our strength lies in trying to get people in government on our side."
As for Sally Clark, she acted more irritated by loud, furious housing activists from Standing Against Foreclosure and Eviction than the dithering bureaucrats and their "you could do principal reduction, but we're not going to tell you how" report. She had an excuse at every turn for why the council can't do anything more ambitious. Eminent domain and a moratorium on evictions? "Those are big exciting ideas for some people. [But] they get us into court quickly." (Los Angeles and Miami are both presently suing large banks for racially discriminatory lending practices.) Principal reduction? "Cities on their own really struggle to make the banks pay for what [has] happened."
Clark's own words, upon the passage of the $15 minimum wage, contradict her. "Am I worried about what we're doing in Seattle? You bet I am," she wrote for CNN. "No other large city has committed to this kind of minimum wage increase." And the minimum wage should be tackled at the state or national level, she said. "However, gridlock at those levels pushes the fight into cities all over the country."
So: take up the fight against foreclosures and the banks.
Activist Bryce Phillips from SAFE summed it up best: "The real numbers are that the 70 houses will be auctioned this month. One hundred sixty three houses will be auctioned off in the month of July. It’s a good thing our city council aren't paramedics or doctors. Because they way they triage is, they wait for everyone to die and they say, 'Oh good, there are no more sick people.'"