A Foreclosure Holiday

This past Monday (Dec. 17) a total of 18 organizations (comprised of community, housing, civil rights and justice) gathered at the home of Tina Williams, a homeowner facing foreclosure on East 112th Street, to call for a 60-day “Foreclosure Holiday.” The coalition of community advocates called on Sheriff Gerald McFaul and lending institutions to observe the holiday to allow vulnerable borrowers time to get the help they need in order to stay in their homes. The ad-hoc group delivered an open letter to Sheriff McFaul calling for his leadership “in stemming the tide of foreclosures that threatens to overwhelm many neighborhoods in Cuyahoga County.”

The fact is, other communities around the country have put together plans that are stemming the foreclosure tide in their neighborhoods, and County Treasurer Jim Rokakis had been working diligently to put a similar plan in place here. The problem is, in Cuyahoga County, as long as foreclosure is viewed as mainly a problem of minorities and the poor the requisite political will, unfortunately, will remain virtually nonexistent. Too many government officials here are only roused to take action when Whites or the middleclass are being negatively affected. Sad, but true... that’s power politics.

However, the Ohio Finance Agency (on the Web at http://www.ohiohome.org) is offering a program called the “Opportunity Loan.” It’s s a refinance program that “provides an affordable 30-year, fixed-rate financing alternative to borrowers who have a current mortgage that is no longer suitable for their financial situation.” It clearly is something homeowners facing foreclosure might want to look at. HUD and FHA are also — finally — in the process of rolling out programs to help distressed homeowners.

According to the ad-hoc group, the moratorium on foreclosures of occupied houses would allow many of the affected homeowners valuable time to work with housing counselors and lenders to find ways to stay in their homes, something everyone — including the lenders — should want to happen. The question that comes to my mind is... why on earth would a lender want to foreclose on a home in Cleveland? What the hell are they going to do with the homes... besides board them up? At least with the current homeowners staying in the property they stand a good chance of eventually getting their money; additionally, an occupied home insures that the property won’t be decimated by vandals stripping them of everything of value, including the aluminum siding. How hard is this to figure out?

"Many of our friends and neighbors will be spending this holiday season wondering how much longer they will be able to stay in their homes, said Williams. “Whether they have adjustable rate mortgages that are about to reset, or payments that they simply can't afford, they need relief. We are calling on Sheriff McFaul to do everything in his power to give these borrowers the extra time that will allow them to contact their lenders and stay in their homes."

Part of the problem is that half of the people facing foreclosure — either out of shame, embarrassment, or both— have never tried to make contact with their lenders to work something out. No one likes to be in financial straights, and dealing with lenders when one is behind in payments can be akin to crawling across broken glass — been there, done that, wouldn’t want to do it again.

To solve the problem in the short term maybe we need to take the advice of the Bard of Stratford-on-Avon. "The first thing we do, let's kill all the lawyers," wrote Shakespeare. And, while I have many good friends that are attorneys (one of them took the time to explain the following to me, in fact), sometimes they are more a part of the problem than they are a part of the solution.

Here’s why: Most of the lenders who are rushing to foreclose are located out of town (or represent investors located out of the country) and have never laid eyes on the properties; they are placing their trust in local attorneys to handle their business. And those attorneys, in essence, are telling their clients to foreclose knowing full well there is no market for the houses in most cases. Why do they do it? For the fees they collect. Period. Never mind the fact they are literally destroying neighborhoods.

In the cases where a foreclosed house can be put back on the market (even if some rehabbing is involved) and has a chance of selling, it’s understandable to move forward, but in the majority of cases the foreclosure only causes three losers: The homeowner, the lender, and the community. The only “winners” -- if, indeed destroying communities can ever be called that -- are the lawyers.

An old joke goes: “It was so cold in downtown Cleveland over the weekend ... I saw a lawyer who had his hand in his OWN pocket!” While that may be funny, the situation many Americans are facing isn’t funny at all.

My lawyer friend, who is one of the nation’s foremost experts on housing, predicted this current calamity years ago, right at the beginning. And he was not alone. He has colleagues all over the country that were raising the same hue and cry ... but to no avail. They explained to anyone who would listen exactly what was going to happen, why, and how to avoid it. Now those same people, those same government officials, who neglected those warnings, are acting surprised by the outcomes... and that’s downright criminal.

An old aphorism goes “We get the kind of government we think we deserve.” But what pundit H.L. Mencken, who coined the phrase was really asking was, “Should we get the government we deserve?” He wrote: "Democracy is the theory that the common people know what they want and deserve to get it good and hard." And, man, have we been getting it good and hard under this current administration.

Once the housing bubble burst, once the house of cards began to crumble, the feds — in effect — sat on their hands and did nothing as long as the crisis only affected Main Street. However, once it began to affect Wall Street, the cry went out “Houston, we have a problem.” Disaster, preventable disaster, was imminent and it was (and still is) being caused by unmitigated, untrammeled, ungodly greed — there just are no other words for it. Have we no national sense of shame?

From Cool Cleveland contributor Mansfield B. Frazier mansfieldfATgmail.com

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