Fending Off the Mortgage Industry: Savvy Activists Are Winning in Court and on the Streets, Keeping People in Their Homes

Before she was evicted from her own home, Kendra Washington took a walk around her Detroit neighborhood. She found an empty home and decided to squat with her two children. “I refused to get my kids put out on the street,” said the single mother who moved into a vacant Housing and Urban Development house.

After government officials came knocking at Washington’s door, attorney Jerry Goldberg, a long-time civil rights activist, persuaded them in court that it was in the government’s interest to let Washington and her children stay. He argued that Washington had made improvements to the house and so maintained its value. Without her efforts, he explained, the house would have been vandalized.

Washington got to stay.

In the last year, Goldberg and his staff at Moratorium NOW!, a coalition of activists and union and religious leaders, have brought at least 50 cases to courts in Detroit on behalf of homeowners. They have been fighting to save homes literally one house at a time through picketing at the banks and legal action. Some of the people impacted are senior citizens with fixed incomes and also with medical conditions that have drained their savings. The houses have belonged to them for more than 20 years.

“We believe they have a right to a home and we defend their right to stay,” Goldberg said.

Some politicians agree. A new bill introduced in Michigan’s state legislature would create a two-year moratorium -- making it the lengthiest moratorium in the nation.

According to Goldberg, in many of his cases, people have been able to stay in their homes because he showed that the foreclosure was violating federal law like the Housing and Economic Recovery Act of 2008 (HERA), which was approved last July. The law requires financial institutions to modify default mortgages when this will result in a greater recovery of their value than a foreclosure.

“We argued that the loan modification would add a greater value to the property than the foreclosure will,” he said.

In the cases of low-income homes insured by the Federal Housing Administration, Goldberg and his team have shown in court that the government hasn’t played by its own rules.

Homeowners in danger of being evicted are supposed to get the chance to stay in the house through a lease agreement. But many homeowners are finding their requests to stay in the home denied, said Goldberg. Instead, the Federal Housing Administration has been paying the mortgage companies the full value of the house after it foreclosed, he added.

They don’t always win in court though.

“When we don’t have good luck through the courts, we have good luck through the streets,” said Goldberg.

On at least six occasions, the coalition has picketed outside homes or banks just before people were about to be evicted. This is often the last resource when the actions can’t be fought in court because there’s no legal basis, Goldberg said.

On one occasion, a 78-year-old woman was able to get a new loan to stay in her home after the group picketed outside the bank Countrywide. The new loan allows her to stay in her home of 42 years.

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Washington made payments on her home of a decade for as long as she could after a foot surgery caused her to lose her $40,000 a year job. The lender wasn’t willing to lower her payment on the $150,000 mortgage. As her savings ran out, Washington watched homes in the neighborhood being sold for as little as $500.

Michigan has been hit by a severe economic downturn for the last decade. It has lost half a million, mostly union, industrial jobs in the last five years. The crisis struck Detroit before it did the rest of the nation, and the sub-prime market of predatory lending completed the job. In Detroit, the average medium sales price for a home these days is $6,237, according to data from Multiple Listing Services. One in every 137 homes in Michigan is facing foreclosure.