Summary of Presentation:
The legal issues surrounding foreclosure process occur at the County level, for example: title recording, liens filing, filing for eviction with Sheriff’s office, and the court system( only for judicial states – states which require a judges order to foreclose on a property and obtain title). So the solutions can be focused on taking actions at the County level.
Counties can implement 3 simple steps;
1. Counties can declare a moratorium on foreclosures on the grounds that they are economically harmful to all residents of the county, individual home owners, neighboring property values, reduced revenues to county government and other governmental entities that depend on property taxes. Reducing or stopping foreclosures is clearly in the public interest.
2. Counties can order Sheriffs not to evict any property owner as a result of foreclosures already granted, or as a result of other parties who have moved into foreclosed properties(like Occupy our Homes movement). This will prevent homeowners being made homeless, and provide homes for those already evicted.
3. County can begin to separate under threat of foreclosure to distinguish:
a) mortgages that are held by local financial institutions and
b) re-sold mortgages and held by MERS(Mortgage Electronic Registration System) MERS is a private mortgage registry which was set up by Fannie Mae and Freddie Mac and major banks to facilitate the creation of mortgage-backed securities. MERS holds about half of all mortgages in the country. This broke down the normal public title transfer and recording of deeds, In order to perfect a foreclosure claim, a mortgage holder is supposed to have clear title. Judges should not grant foreclosure in those cases, but many people have been improperly forced out of their homes.
4. County can invoke its power of eminent domain to resolve the clear title issue. Eminent Domain allows governmental bodies to seize not only physical property but also intangible property( contract rights patents,etc) provided that it is in the public interest and the owner(either bank or property owner) is compensated at fair market value. County needs to provide adequate public notice that the property is subject to eminent domain, but if the institution cannot provide clear title, then there is no one to compensate and the County gets the property free. County can re-establish clear title for a later transfer or sale (similar example where clear title is re-established is when property is seized for failure to pay property taxes in “sheriff’s sales”). County can negotiate with homeowner a reduced payment, give a temporary moratorium on payments until owners financial situation improves, or transfer ownership to a Land Bank(non-profit) and rent the property to the (former) homeowner.
Net Results of 1-4
1) Foreclosure and negative ripple effects on local economy reduced
2) Homeowners remain in their homes, help preserve neighborhoods
3) County receives new revenue.
Other Legal action at the County level;
Require Mortgage Holders to provide 30 days notice of foreclosure action and to homeowner and the County Sheriff’s office. Also require 30 days for homeowner to provide a legal response to defend against f/c. Community groups would have more time to slow down the process.
5) Form a Public Bank at the County Level to facilitate eminent domain and provide credit at the county level. The reason why county level is recommended, is because politically it has a smaller number of players – Commissioners/Board Members, and doesn’t need legislation at the state level. Can apply to Dept. of Financial Regulation at the state to form a state chartered bank DBA(Doing Business As) See Main Street Matters website for details on Bank of North Dakota.
Questions and Answers:
1) Q. Jon Lax, Compass Research Company pointed out that the above solutions will not work in non-judicial states – where mortgage holder does not need a court to approve foreclosure action, affects 2/3 of the country. Jon suggests using Divestment Campaigns for banks and mortgage servicers, particularly by public pension funds(teachers and public employees)
A. Michael suggested contacting him to work out other potential solutions for non-judicial states.
2) Q. Matt Smucker, OWS, asked how these tactics would affect Occupy Our Homes – eviction Defence Mechanism to force banks to renegotiate the mortgages. He noted December 6 Day of Action was successful and upcoming February 13 – Week of Action for Occupy our Homes. Need to get the story out in a coordinated way.
A. Michael agreed these grassroots actions go hand in hand and amplify the other efforts. Eminent Domain can be used post fore-closure, post homeowner leaving the home, and used in conjunction with Land Bank efforts to transfer property to non-profits, also enhance job creation in the county and is a more systematic approach to solving the problem.
3) Q.George Sorkin, Occupy Oxnard suggested developing a Template for going through the process – Public Bank set up, starting negotiating, set up a Lease to Own arrangement,etc.
A.Michael – if you can set up a bank, it can create credit, leverage the assets it owns, can develop any kind of program to serve the needs of local residents – like housing, jobs etc.
We advocate the Public Bank have representation on its Board of Directors by groups of citizens to develop its policies, loan programs, approve loans and ensure no cronyism or special interests.
4) Q. Lora Chamberlain – asked for an explanation of a Land Bank.
A. Michael – is a mechanism for a government to give title to a not-for-profit for property it owns. Check out Bob Leonard in Flint, Michigan at landbank.org website established a land bank several years ago to pick up abandoned property. Statistics show the beneficial effects on the whole community involved in the land bank community. Eminent Domain was included by Alexander Hamilton at every governmental level in the15th Amendment. It established legitimate title in the Homestead Act to original stakeholders who had occupied territories in the United States.
Announcements
1. John Lax – check out creative solutions in the Dudley Street Initiative in the Roxbury section in Boston, established 20 years ago. City and State put a large part of the community into a Land Trust in Common and facilitated selling buildings at one-third of their value to first time home-buyers.
Michael – Public Bank can assign property over to a similar trust and the county gets out of holding a mortgage. Add on Dudley Street Initiative to Main Street Matters website.
2. Susan Harman – Actions for Friday January 20 in San Francisco.
- 100 actions in Federal Courts on 1st Anniversary of Citizens United.
- Attempt to shut down Financial District and 4 major banks involved in foreclosure crisis – Wells Fargo, Citibank, Chase and Bank of America.
3. John Lax- Occupy Rhode Island – organizing a comprehensive campaign, offensive strategy based on Ray Rodgers – going after corporations through divestment actions and occupations, auctions etc.
4. Dr. Lora, Chicago – Meeting on Why we Need a State Bank Sat. January 14 8 pm at Lincoln Restaurant, 4008 N. Lincoln Ave., Chicago.
5. Ellen Brown, Public Banking Institute – suggest sharing emails with people who are willing. Select #2 if you don’t want email shared.
6. Matt – Occupyourhomes.org – has quick training videos, sharing best practices, reaching out to faith community, media and community.
7. Susan, San Franciso – reaching out to Oakland and San Francisco to get them to act on these plans.
8. Ellen Brown – new article posted on blog – Webofdebt.com and Truthout on broken foreclosure process.
9. John Lax – tried to research how many illegal foreclosures.
Conclusion – Marc Armstrong Thanks for listening to ideas and sharing ways to fix things at local and national levels. Trainings Wed. 6 p.m. Pacific Time. Send suggestions to improve process to info@occupy.org. or email marctarmstrong@gmail.com.
Informal discussion on problems with and size of foreclosure problem. Mortgage holders tried to clean up title after they had foreclosed – illegal- need title before foreclosure is legal. Judge in New York invalidated thousands of foreclosures – f/c law firms were scared by the liability and law suits faced. Invalid f/c can cost $10,000-25,000 to clear in court.
Attorney Generals making deals with banks to deal with mess. Morgan Stanley did a study 2 years ago on estimating mathematically how many mortgages registered on MERS and invalid foreclosures – frightening number – 9 million since 2005. If half have bad titles – would cost Title Insurance industry $45 billion to clear up. Problem of conflict of interests with mortgage servicers being both title holders(thru MERS) and agents for mortgage holders – cannot represent both in foreclosure.
U. of Cincinnati Law Review – Vol.79 #4. Foreclosure, Sub-Prime Mortgage Lending and the Mortgage Electronic Registration System(MERS). By Christopher L. Peterson.
http://scholarship.law.uc.edu/uclr/vol78/iss4/4/
Note: It appears this link does not work. Will email U.of Cinn. Law Review to fix.
Homestead Act precedent for government seizing the property and transferring ownership to squatters who already had staked the property.
97% of all money circulating in the economy originates as loans. When bank credit dries up, banks are sitting on money and not making loans.
Solution to concern that Counties do not have banking experience or expertise – team up with Community Bankers Association to provide a Non-profit Service Association to provide assistance to Board of Governance of Public Bank. Also need to establish models of Citizen Oversight Board, to provide transparency and oversight.
Difficult to pass a bill at State level free from the corrupting influence. Supervisor of State Financial Institution has the authority to grant a charter to a County.
