During a recent protest in posh Garden City, where the main street offers a Who’s Who of America’s major banks, the face of foreclosure on Long Island was nothing like the stereotype. In fact, there was nothing similar about the three women who stood to tell their stories, or their circumstances which led them to face this terrible crisis of losing their home.
Claudia’s predicament was triggered by a divorce, in which she charges her ex-husband has failed to pay the court-ordered support; suffering a medical disability and raising a son, she has been forced into bankruptcy. This woman is asserting that the bank has no right to foreclose because her mortgage had been reassigned three times because of bankruptcies and failures of the company and successor company that had the mortgage.
She also is a victim of a notorious attorney Steven J. Baum, one of New York’s largest default services law firms and the subject of a recent federal investigation into its foreclosure processes until the practice was shut down recently.
Her difficulties with the way the foreclosure notice was served, or the fact that her mortgage has gone through a succession of “owners” because of their own financial collapse, though, do not erase the fact she has not been able to pay her mortgage.
With all the scandal over robo-signing, desperate homeowners are clinging to the idea that the bank does not have the authority to foreclose since it cannot establish its lien, what with all the slicing and dicing of mortgage obligations that were repackaged and sold and resold
But I checked with Nassau County Clerk Maureen O’Connell’s office and the trail of lien holders on Claudia’s home is accurate and the claim that the bank does not have title is not correct: the bank that holds the mortgage does not have title, it has a lien on the property. Her fight does not seem to be with the lien holder – and the situation with the attorney is only a stopgap. Rather, the question here is why this woman has not been able to obtain relief through Family Court.
A second case seems to have been embroiled because of failures on the part of CitiBank to accurately assess the homeowner’s monthly payment. Lidia claims that she had paid off her mortgage – in 2001 – and then, 10 days later, received a foreclosure notice and she has been fighting ever since. I read through a March 2010 court proceeding that reviewed the convoluted and confused history. Nowhere does it say that her mortgage was paid off but it acknowledges that CitiMortgage accepted payment of $101,230 “without a written settlement agreement.”
Then there was some sort of fight over an increase in the monthly payment by $1,500 to fund the escrow account to cover taxes, which resulted in her payment being short. The bank initiated foreclosure proceedings (not clear why), but later, was forced to revise the monthly payment down again for May and June 2002.
The increase in monthly payment seems to be what put the homeowner into what CitiMortgage claims is arrears, triggering the foreclosure process. In May 2002, CitiMortgage initiated foreclosure.
The fight with CitiMortgage went on for years in the courts. Then, in September 30, 2009, “this Court found that Citibank had failed to meet its burden of proof, upheld Swiatkoski’s Objection and reduced CitiMortgage’s Proof of Claim.”
You would think this would end the matter – with big apologies from CitiMortgage – but the next month, the homeowners sued the bank “alleging that creditors committed bankruptcy fraud through deficiencies of service of process, and offers only speculation as to the conduct of creditors, which she alleges may have constituted said fraud.”
She wanted the case reopened “in order to have responsible parties for criminal activity held responsible. This includes dismissing claims of the creditor for its 12 years of constant vicious attacks on their homestead which were based on liable [sic], frivolous and criminal claims that led the mortgators [sic] to sustain severe physical and mental anguish throughout this ordeal.”
The court threw it out.
So how does this family still face foreclosure when this never seems to be about the failure to pay the mortgage, but rather, a disagreement over the escrow?
Not clear, but Lidia says, “Occupy Wall Street was God-given. Without it, people would be in the street.”
‘Banks got Bailed Out; We Got Sold Out’
Occupy Wall Street Movement protesters in Garden City intoned, “Banks got bailed out; we got sold out.”
Indeed, Mimi became the poster child for NY Communities for Change crusade against Chase, which resulted in the Town of Hempstead moving millions in its deposits out of the bank.
But a closer examination of Mimi’s case also defies the image of rapacious subprime lender on one side and on the other, the manipulative purchaser who hides their true financial worth in order to purchase a property they can ill afford, anticipating a rise in the market value.
Mimi, who worked in real estate, and her husband, a construction worker, bought their home in Elmont in 2005 for $413,000 with a mortgage from Washington Mutual, and then a series of bad things happened to her family.
In 2007, when the housing market crashed, both lost their jobs. They sought a loan modification to try and stay above water. They ended up getting a temporary modification, for three months.
Right before the third month’s payment was due, her mother died. She was eight weeks late with the payment. Chase stopped her modification and reopened her foreclosure proceeding. She has been fighting them for four years now.
Meanwhile, housing values in her neighborhood have fallen more than 25 percent to $300,000 – she can’t even sell the home to pay off the debt. Washington Mutual collapsed and was taken over by Chase, and now she had to start all over again.
Here’s the curious thing: she claims that Chase agreed to modify her loan – reducing her interest rate from 5 percent to 2 1/2 percent, which would mean a whopping $1,860 less a month from the $4,080 she currently pays, but extending the terms from 30 years to 40 years. Her husband, fortunately, has since found a job as a private pilot.
But every month, she says, Chase fails to finalize the paperwork and, she says, tells her to hold off on her payment – now amounting to $100,000 in arrears which is attached to the principle – until the modification is finalized, and every month she starts over with a new loan officer who asks for new financials. Her husband, fortunately, has since found a job as a private pilot.
This casts the banks as heartless, unreasonable.
Why wouldn’t the bank lock in the new rate, especially since they are not exactly giving her anything off the mortgage, they are simply extending the terms?
The big banks are in an image-building mode to counter the negative publicity of throwing families out onto the street by the thousands.
Bank America, which has been cited for egregious behavior like robo-signing and foreclosing on homes that are either not in arrears or that they do not actually have the right to foreclose, is running feel-good commercials about the hot dog stand guy the bank gave a business loan to 75 years ago to open a restaurant (except that was the Bank of America of 75 years ago, it says nothing about the callous, greed-driven policies today).
For its part, Chase is running a marvelous feel-good campaign about how it plans to hire 100,000 returning veterans.
So I spoke to Chase about foreclosure policies and procedures and this family’s particular circumstance, since they have been used as the cause celebre for Long Island families facing foreclosure.
In fact, the notoriety Chase has received about its foreclosure policies encouraged the Town of Hempstead to withdraw millions of dollars it had on deposit at Chase, and Chase was targeted for a “Move Your Money” campaign to have depositors move their money to community banks.
Chase counters the image of being one of the major bad actors in the foreclosure epidemic, claiming that the bank has helped 724,000 homeowners across the country avoid foreclosure; including 27,000 in New York State, a number which it claims translates into averting 11 foreclosures for every home that is foreclosed.
Of the 724,000 foreclosures averted, 420,000 involved loan modifications, 153,000 were short sales, and 151,000 involved other foreclosure prevention measures including “forbearance” (which means that you are given a moratorium on paying, and the amount owed added to the principal) and “deed in lieu.”
The bank contacts a debtor after 60 days delinquency but the foreclosure process is a long drawn-out one that typically taking over two years. New York State, which put a moratorium on foreclosures in the wake of the robo-signing scandal, now requires the lender to hold a settlement conference with the debtor.
“Once we see you are in the process, we will either proactively reach out to you, the homeowner to see if we can help,” a spokesman for Chase tells me. “We want to do everything we possibly can to keep families in their home. It is good for everyone, good for individual, the investor, and the community.”
The bank asserts that in the first instance, there are some hard-and-fast rules for loan modification – the payment cannot be more than 31 percent of income, and the loan modification has to be acceptable to the investor, which is not necessarily the bank which may only be “servicing” the loan.
If there is a loan modification, the rule is that the homeowner has to make three payments in a timely way before the modification is final (which is why Mimi’s modification failed to be completed).
Some families have qualified for the Obama Administration’s Making Home Affordable programs. One-third of Chase’s 425,000 mortgage modifications have come under this program.
Obama’s initiative to help troubled homeowners keep their homes comes in two parts – the home affordable refinance program and the home modification program – both the programs aim to help 3 million to 4 million American homeowners avoid foreclosures, and prevent bankruptcies from taking place by making the monthly payments more affordable. (To learn more, see www.obama-loanmodifications.com/making-home-affordable-program.php).
If the homeowner does not qualify for the federal program, Chase has own modification program, taking advantage of other options such as forbearance.
Mimi, apparently, failed at least one of these two criteria, which is why she did not get her loan modification, but did have a period of “forbearance,” which is why she owes an additional $100,000 on her loan.
One of the biggest frustrations Mimi has had, though, is that each month she has to go through a toll-free number and start all over with a new loan officer. Chase says it has now addressed such problems and has opened 82 “home ownership centers” across the country where the homeowner can get “face to face assistance” with someone specifically assigned who will follow their case through. One center recently opened for Long Island at 360 Motor Parkway, Hauppauge, Suite 950 (631-231-0448).
What has come out of this national tragedy is that there seems (at this moment, anyway) a lot more scrutiny of what lenders are doing, more focus on homeowners facing foreclosure, and more programs aimed at helping them.
These include the court-mandated settlement conference between the lender and property-owner.
The Nassau County Bar Association can provide an attorney to represent you in court the day of your appearance (the service is not free), and are available to answer your questions; call 516-747-4070, or visit www.nassaubar.org.
Also, the Nassau County Bar Association hosts free clinics for homeowners facing foreclosure on a monthly basis (the next are 3-6 p.m., Jan. 9 and Feb. 6); call Free clinic, reservations are required, call 516-747-4070; 15th and West Streets, Mineola).
State Comptroller Tom DiNapoli’s office has produced a Your Money New York brochure, “Help for Homeowners Facing Foreclosure.” To access, visit: www.yourmoneynewyork.com/e-pubs/tips/helpforhomeowners.pdf.
Reshaping the Face of Long Island?
Just how significant is foreclosure on Long Island, and what does it mean for the suburban lifestyle that Long Island emblematizes?
While New York State has not had the epidemic of foreclosures of places like Florida and Nevada, Long Island has some of the highest rates of foreclosure in the state, and certain neighborhoods are getting socked.
In Nassau, there were 15,145 foreclosure filings between 2008-2010, or 32.8 per 1,000 households (the rate dropped between 2009-2010, after spiking in 2009), but certain areas have been devastated.
The greatest number occurred in Roosevelt, 635 foreclosures or 148.2 per 1,000; Uniondale, with 614 (96.9), Hempstead, 1,290 (78.6), Freeport, 1047 (75.4), and Elmont with 841 (66.4 per 1,000 households).
In Great Neck, during this period, there were 265 foreclosure filings, or 16.8 per 1000 households.
I listened to a panel on financing during the Smart Growth Long Island Summit organized by Vision Long Island, as bankers and real estate developers said that there is no real market on Long Island now for our traditional, suburban single-family homes. The only kind of real estate projects getting financing now, they pronounced, are condos and rentals.
In the 1950s when Long Island became the first suburb, there was what amounted to a propaganda campaign to establish American “values” of a single-family home, three children, a dog, stay-at-home Mom, and many, many appliances. Now the culture-creation machine is at work to refashion the American Dream not as one involving home ownership, but that true contentment comes from paying rent to a landlord.
Could the wave of foreclosures on Long Island be connected to this new vision? After all, why would a bank prefer to evict a family and take over real estate which would be sold at auction at a fraction of value?
Why wouldn’t a bank, which is essentially getting money from the Federal Reserve at zero interest, not be happy to renegotiate mortgage terms down from say, 5 or 6 percent to 3 percent, a win-win-win for the family, the neighborhood and the bank? Could it be that banks see the possibility of amassing vast swaths of land that can be redeveloped?
Chase argues against this notion, saying that no bank has amassed that many properties in a section to enable such a redevelopment. Still..
In very real and dramatic ways, the shift from home ownership to a renter society also is changing the landscape and turning settled communities into transitory ones. And looking ahead, you can also imagine the impact on people’s engagement in political issues, ranging from school boards to their ability to vote in national elections.
Foreclosure – displacement – becomes a tool to empower the Power Elite by disenfranchising those who are financially struggling.
Those are the “macro” issues of foreclosure that exist on the level of cold, anonymous numbers. But behind these numbers are the faces of Long Islanders facing imminent foreclosure, and they may not look as you would imagine.
