Held underwater

San Franciscans brace for another round of home foreclosures as the banking lobby kills mortgage reform proposals



Since the recession began four years ago, 2,000 homes have been lost to foreclosure in San Francisco. These numbers sound insignificant compared to other counties in the Bay Area, but they primarily have hit communities of color already struggling to remain in this expensive city.

As panelists at a recent seminar on foreclosures noted, the first wave hit the Bayview and the Excelsior, while the second hit the Richmond and the Sunset. And as the recession drags on and more borrowers go underwater, another 2,000 foreclosures are on the local horizon.

Although foreclosures continue to destabilize communities and drain resources from local governments, the banking lobby continues to oppose legislative reforms that would allow more people to remain in their homes. And this deep-pocketed resistance has labor, religious, and educational organizations forming the New Bottom Line coalition in an effort to find grassroots solutions to the crisis.

"Foreclosures are the new f-word," said Regina Davis, CEO of Bayview's San Francisco Housing Development Corporation, at SFHDC's April 29 foreclosure seminar.

Sups. John Avalos and Malia Cohen illustrated that there is no shortage of horror stories about predatory lending and dual tracking, in which borrowers apply for loan modifications while the bank continues to pursue foreclosure. Representatives for Sup. Ross Mirkarimi and Assessor-Recorder Phil Ting noted that the banking lobby has blocked even the most modest reforms, even as uncertainty continues to devastate the housing market.

Avalos said his family underwent a housing crisis in 2009, when his wife left her job to home school their special-needs daughter. "We tried to get a loan modification and were told we could only get it by going into default," he said, recalling how Mission Economic Development Agency (MEDA) helped them navigate the process. "If this could happen to an elected official, it could happen to anyone."

Cohen, who lost her condo in the Bayview to foreclosure earlier this year, described foreclosure as "an incredible beast that has ravaged and wrecked the finances of many Latino, African American, and Asian communities who were sold the American dream of homeownership but then had the rug pulled away."

Mirkarimi aide Robert Selna, a former San Francisco Chronicle reporter, said the banking industry spent $70 million last year to kill legislation by state Sen. Mark Leno (D-SF) and Senate President Darrell Steinberg (D-Sacramento) to end dual tracking. This year, the industry has been opposing SB729, Leno and Steinberg's latest attempt to require banks to give people a definitive answer on loan modification, identify who owns the loan, and give borrowers legal recourse if banks don't take these steps.

"SB729 gets to the heart of helping to keep people in their homes, but it's difficult to combat the spending power of the banking industry," Selna said.

Ben Weber, an analyst in the Assessor-Recorder's Office, said approximately 277,000 homes in California are going through the foreclosure process; an estimated 1.8 million California residents are underwater on their mortgage; and California is sixth in "negative equity" nationwide. "Negative equity is one of the best indicators of foreclosures — so can we expect another 1.5 million to 1.6 million foreclosures statewide?" he asked.

Weber noted that Ting is supporting AB 1321 by Assemblymember Bob Wieckowski (D-Fremont), which would require that all mortgage assignments be recorded within 30 days of their execution; prevent notices of default from being recorded until 45 days after any deed of trust has been recorded; and provide consumers with better transparency about who owns their debt. Yet Ting's office reports that the banking industry has lobbied against this and other foreclosure-related legislation