By Tommy Purvis
Growing tired of Bank of America not doing enough to help homeowners facing foreclosure, activists from Inland Congregations United for Change have started to pressure the City of Riverside.
The group wants the city to create a responsible lending ordinance that rewards banks that invest in the community with tax breaks and incentives to encourage permanent home mortgage modifications.
“We have watched too long as families have lost their homes,” says Bob Bishop, a leader with the grassroots organizing coalition spread across the IE. “So we are asking local government, businesses, unions, congregations and persons to hold banks accountable and do business with lenders that treat homeowners correctly and invest in the local economy.”
A report released last September from the office of the Special Inspector General for the Troubled Asset Relief Program found that a homeowner’s chances of negotiating an alternative to foreclosure primarily depends on which financial institution services their mortgage. The Home Affordable Modification Program, or HAMP, was designed by the Obama administration to help eligible troubled borrowers reduce their monthly mortgage payments to 31 percent of their pre-tax income. As part of the process, homeowners are put into trial loan modifications to determine whether they can keep up with the lowered payments and to give banks time to verify income and hardship.
Bank of America was awarded $1.5 billion through the program but has only been able to extend a permanent modification to 26 percent of the applicants in their HAMP pipeline. Not only is the success rate far below the 50 percent wash out rate set by the federal government for participation in the program, but more than half of the banks’ paperwork takes longer than six months to process or twice as long as the limit.
The Obama administration set an early goal for 3 million to 4 million borrowers to receive aid under HAMP. But after 17 months, banks had only helped 500,000 homeowners and critics argue that not enough has been with the $75 billion bailout banks received from taxpayers.
Instead of helping homeowners, the report found HAMP was harming them and generating public anger and mistrust.
Jackie Brazil, a member of ICUC, had her home foreclosed in the middle of modification proceedings with Bank of America. She says that she came home from work one day to find a note pinned to her door telling her to vacate her home within three days after it sold at auction. She had just been told that she was a good candidate for HAMP and that her application was being processed. The report found a Bank of America applicant was more likely to be kicked out of the program due to lost paperwork than missing a payment in a three-month trial phase of the modification process.
Similar ordinances like the one being offered by ICUC in Riverside have passed or are being considered in Los Angeles and San Jose. To measure the success of the modifications in those cities, the safety of the investment holdings and the competitiveness of interest rate are being used as measuring sticks.
If the demands of the activists in Riverside fall on deaf ears, there are other options to consider.
“It’s time that our money reflects our values. Financial institutions such as Bank of America must change their ways or we should change our bank,” says Bishop.