Held underwater - Page 3

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


Cohen observed that the federal Homeowners Affordable Modification Program (HAMP), which President Obama unveiled in March 2009, "hasn't worked" and that most of the important reform proposals are "happening at the state level." She encouraged people to show support for SB729, but wasn't ready to declare support for Avalos' housing bond.

"I want to make sure the climate is ripe, that Sups. Carmen Chu and Eric Mar are included, because their districts will be impacted by foreclosures, and that the support is broad-based," she said. "But folks can divest from banks that have not treated us right."

Noting that divestment was the most effective way to end apartheid in South Africa, SFHDC's Davis invited seminar participants to a free screening of Charles Ferguson's documentary Inside Job, which shows how subprime loans, dual tracking, and mortgage bundling triggered the 2008 financial meltdown — and how many of the main players are still calling the shots.

But despite SFHDC's informative seminar and the New Bottom Line campaign's May 3 protest at Wells Fargo's annual shareholder meetings in San Francisco, SB729 failed to make it out of committee May 4, when Sen. Alex Padilla (D-Van Nuys) announced he would introduce an alternative dual tracking bill. In addition, Wieckowski turned his MERS reform into a two-year bill, suggesting the votes weren't there to approve it.

Paul Leonard, California director of the Center for Responsible Lending, observed that SB729 supporters include a broad array of consumer, civil rights, labor, faith-based groups, and homeowners, but the only groups in opposition were the California Bankers Association, the Mortgage Bankers Association, and the Chamber of Commerce.

"I find it remarkable that after the exposure of deep-seeded scandals about robo-signing and the systematic shortcomings of mortgage loan service operators, none of the bills intended to address these issues got out of their first committee hearing," Leonard said.

In an April 20 letter, the banking lobby claimed that SB729 was "unnecessarily complex," could overlap and contradict actions by federal regulators and state attorneys general, and promote strategic defaults that would negatively affect communities and cloud title for a year following a foreclosure, leaving properties vacant.

Dustin Hobbs of the California Mortgage Bankers Association claims the average time for a foreclosure is more than 300 days. "This would have dragged it out further, and the last thing we need is more vacant homes and more homes in foreclosure," he said.

Ting noted that Wieckowski made the call to turn AB1321 into a two-year bill. "But you would have thought we were offering the end of home ownership," Ting said, noting that the banking industry was shocked when advocates produced a MERS memo that encourages banks to record documents and pay fees. "It basically recommended our legislation," Ting observed.

"Assignments out of MERS name should be recorded in the county land records, even if the state law does not require such a recording," a Feb. 16 MERS memo said.

Ting describes MERS as "a Wall Street set-up, the ultimate in smoke and mirrors."

"We did a little poking around in MERS and found that it would help if the name of the loan owner was recorded," Ting said, noting that the confusion MERS created is bad for consumers, the real estate industry, and homeowners.

"Part of the problem is computer systems doing what banks used to do," Ting said. "It ended up with robo-signing and foreclosures being sent to the wrong people. I thought AB1321 was a no-brainer, but we had to take it to five or six legislators before anyone would pick it up. This is a prime example of how a particular industry has made a huge amount of money and is unwilling to bend any rules to give consumers any recourse."