Federal regulators cut a deal with 10 major banks to “speed up housing relief ,” major news outlets reported earlier this week – but to exactly no one’s surprise , the amount promised to struggling homeowners is a pittance compared with the overwhelming losses sustained during the foreclosure crisis. National consumer advocates criticized the deal  as a lost opportunity to demand some accountability from Wall Street. In San Francisco, neighborhood activists with Occupy Bernal  dismissed the agreement as falling short and vowed to continue campaigning against Wells Fargo, a primary mortgage lender based in San Francisco and one of the 10 financial institutions to sign on.
The bank settlement replaced a mandatory, independent foreclosure review process that financial institutions were required to take on following revelations of widespread abuses, like robo-signing . Created to benefit homeowners who faced foreclosure in the wake of these shady lending practices, the program was ultimately chalked up as a failure for being too slow, costly and ineffective. Not only did it reach just a tiny fraction of those eligible to file claims, said Bruce Mirken of the Greenlining Institute , but “as of the end of the year, nobody had actually gotten any money.”
Instead of continuing down that fraught path, big lenders such as Bank of America, Wells Fargo, JPMorgan Chase and others agreed to shell out $8.5 billion to settle the claims. Under a process that remains far from clear, payments are supposed to be distributed among 3.8 million struggling households nationwide – some of whom went through foreclosure in 2009 and 2010, and others currently in danger of losing their homes.
Local housing activists were cynical. “Wells Fargo and the other big banks have agreed to paying principal reductions and affordable permanent loan modifications about 20 times. They haven’t done it yet, and they’re not going to do it unless we make 'em,” said Buck Bagot, a neighborhood activist who has been organizing around foreclosure issues with Occupy Bernal. In San Francisco alone, more than 1,200 foreclosed properties turned up in a quick search on Trulia.com  – many listed at prices exceeding $500,000.
The situation is far worse in the East Bay. From 2006 to 2011, one out of every 14 Oakland households faced foreclosure and had their property reverted back to the bank, according to data compiled by the Urban Strategies Council , an Oakland-based nonprofit working on anti-poverty issues. East Oakland was hit hardest, with data visualizations showing between 165 and 409 properties per census tract that had reverted back to lenders in 2008. (You can view detailed geographic foreclosure data compiled by the Council here .)
“The amount of wealth that has been sucked out of communities is astonishing,” said Mirken, of the Greenlining Institute, a Berkeley-based research advocacy organization focused on economic justice. “It’s not at all clear that the $8.5 billion is at all in relation to the trillions in wealth that was drained from communities in the foreclosure crisis.” In California there are currently 208,435 foreclosed homes up for sale, according to data  recently accessed on housing tracking site RealtyTrac, with average price listings of around $273,000. The amount that stands to be gained by selling off bank-owned properties exceeds the total settlement payout by many orders of magnitude.
Mirken said he was glad the banks are promising at least some form of relief to struggling homeowners, even if it's small potatoes. “I’m not dismissing this as nothing,” he said. “But it feels like the response has never matched the scale of the problem.”
Meanwhile, some nationwide consumer advocates blasted the deal. “The capped pool of cash payments is wholly inadequate in light of the scale of the harm,” said Alys Cohen, staff attorney for the National Consumer Law Center. “If the reviews had been done right the first time, banks would have been on the hook to pay far more to homeowners, even though the planned scheme fell far short of full compensation.”
Occupy Bernal staged a protest at the Bayview branch of Wells Fargo several weeks ago in an effort to draw attention to abusive lending practices that disproportionately affected African American, Asian and Latino homeowners. Bagot told the Guardian there are more to come. As for the bank settlement deal, he scoffed: “These governmental chickens live in the chicken coop that’s run by the fox.”