The victory marked a turning point in City Life’s fledgling work on the foreclosure crisis, and led to a rash of eviction blockades in the months that followed. Griffiths even began volunteering at City Life and attending rallies at other homes. All the while, though, Ocwen kept up its efforts to evict Griffiths. Despite another successful blockade at her house, she and City Life were unable to convince the bank to modify her loan. Griffiths eventually decided that the fight was putting too much strain on her children. There was no end in sight. So she ceased fighting the eviction, left her home behind, and took a full-time job at City Life.
Standing now at the front of the room during the City Life meeting, Griffiths asks Juan whether he’s still living in his home despite the bank’s efforts to sell it.
“Yes, I am,” Juan replies.
“Stay there!” the crowd shouts.
Someone asks which bank holds the mortgage. “Bank of America,” Juan says.
The crowd erupts in a chorus of boos, howling, “Bad for America.”
A City Life employee passes Juan a cardboard sword.
“You said you wanted to do what?” he asks Juan.
Juan lifts the sword. “Fight for my home!”
“Then we’ll fight with you!” the crowd shouts.
IT’S NO SURPRISE THAT the sketchiest lending behavior during the real estate boom occurred in the areas that today have the highest foreclosure rates. It was in these neighborhoods that the financial institutions aggressively marketed a series of exotic mortgages — adjustable interest rates; no money down; no income documentation required — to consumers with poor credit scores. The lenders no longer cared about the possibility of a default because, rather than hold the mortgages and collect the monthly payments, they sold them to Wall Street, which combined them for sale as securities. The lenders, in other words, simply passed along the risk. With property values magically rising without end, thereby boosting the value of the mortgage-backed securities that were flooding the market, writing new mortgages was a guaranteed source of profit, so the lenders just kept pushing the product.
Unfortunately, most home prices stopped rising in 2006, just as lots of those adjustable mortgages were resetting at higher rates. Many homeowners were unable to afford the new, higher payments, and since the market had begun dropping, they couldn’t refinance or sell their house. Hordes of borrowers went into foreclosure, crushing the banks and leaving the American and global financial systems teetering on the verge of collapse. The federal government bailed out financial institutions to the tune of $700 billion, but the few programs launched to help homeowners have for the most part failed. This past September, for example, the $1 billion Emergency Homeowners’ Loan Program, which was supposed to assist the unemployed with their mortgages, shut down after aiding fewer than 15,000 households and spending only about half of its funding. Meanwhile, the Home Affordable Modification Program (HAMP) — designed to help borrowers rework their loans and avoid foreclosure — turned out to be a good idea without any teeth: Mortgage companies kept right on foreclosing over the wishes of the feds. According to federal statistics, only 2.4 percent of the roughly 3 million loans that were either seriously delinquent or moving toward foreclosure in the second quarter of 2011 got a HAMP modification.