Fighting Foreclosure in Boston
Twenty-four-year-old Harvard Law School student Sam Levine parks the silver Nissan hybrid he has driven into Boston’s working-class Mattapan neighborhood. The wind hits him in the face as he steps onto Thetford Avenue. He is wearing black jeans, his dark hair slightly mussed and gelled into place. With him are two fellow students, third-year Marielle Macher and second-year Avis Bohlen. Marielle is wearing a coat under which is a red T-shirt with the words Project No One Leaves written on the front. Avis is power-dressed in a skirt and svelte sweater. The trio could pass for actors in a Gap ad.
It had taken about an hour to reach Mattapan from the Harvard Legal Aid Bureau, with Sam navigating Boston’s notorious traffic. During the ride, the group passed the time talking about jobs they were lining up for the summer and musing on the female voice commands of Marielle’s GPS gadget. The students believe “she” is moody today.
As the lawyers-in-training approached their target neighborhood—cruising the back streets past Harambee Park, where a gaggle of long-necked geese spotted the grass, into a landscape of ramshackle, untended homes—they read off a list of twenty-four recently foreclosed properties published in a local realty journal. They are stopping at each house on the list, scouting to see if the property seems abandoned (broken or boarded-up windows, weeks of uncollected mail, trash strewn in the yard and so on). If it does, they move on. But if there is even a glimmer of a chance that the house is still inhabited, they park and approach the front door. When a resident answers, they quickly go into their patter about foreclosure rights and the danger of scam artists—who may be (or may already have been) in contact, promising the moon in exchange for a few thousand dollars—and they explain that Harvard’s law students are willing to work gratis on the case.
When no one’s home, they hang a red plastic bag on the door knob or slip it through the mail slot. Inside is literature about the foreclosure process; the Legal Aid Bureau, which has been working with several other regional law schools to offer legal services to owners and tenants facing foreclosure; and Project No One Leaves (PNOL), a consortium made up of lawyers, activists and a community development financial institution that is pursuing an innovative strategy to keep local residents in their homes.
Since the housing market collapsed, more than 3,500 homes in Boston have gone into foreclosure; some weeks, more than 100 properties are repossessed. In this city, as elsewhere in the country, a disproportionate number of shoddy subprime loans were issued to African-Americans—their terms deliberately obfuscated, their punitive provisions setting up borrowers to fail. As a result, from 2006 onward a huge number of the foreclosures in Boston have claimed properties owned by African-Americans. The scale of the dispossession is threatening to wreck not just individual aspirations but entire neighborhoods.
Boston Community Capital (BCC), the literature explains, has been buying distressed properties from banks and then selling them back to the original owners at just above the current market value, thus allowing the owners to stay in their homes with a more affordable monthly payment on a new, fixed-rate mortgage. It’s a good deal for everyone involved: the banks sell the foreclosed properties for more than they would typically expect, the owners get to keep their homes, neighborhoods that would otherwise end up increasingly abandoned and dilapidated get a shot at staying afloat, and BCC captures funds by selling the property at 25 percent more than what it paid. BCC also locks in a chance at bringing in more money by having each owner sign an agreement stipulating that BCC will receive a share of the profit if the owner flips the home, a move that encourages residents to stay put.
Since May 2010, BCC has purchased fifty-five properties, containing a total of 125 units. “More than $15 million in lending,” BCC head Elyse Cherry avers—and an impressively low default rate of 2 percent. Over the coming years, BCC hopes to buy back hundreds more homes, mostly in Boston’s impoverished working-class communities.
Not surprisingly, the model is attracting national attention. In a speech in April, Federal Reserve chair Ben Bernanke cited BCC’s efforts as a welcome example of how “local communities are meeting the challenges of tough times.” Lawyers and law students from Miami, Baltimore, Chicago, New York, Detroit, California and Washington recently attended a conference at Harvard about replicating the methods of Project No One Leaves. And other financial institutions and credit unions have expressed interest in providing the sorts of services BCC offers.
It’s telling, too, that advocates across the country are looking to Boston rather than Washington for guidance on how to push for mortgage modifications. As the housing slump drags on, the Obama administration is proving increasingly unable to turn it around. Large banks, facing state and federal investigations into their handling of the foreclosure tsunami and bracing for big financial penalties, have dodged and weaved in their attempt to avoid culpability. In such a sluggish environment, the PNOL approach stands out for its creativity and effectiveness in helping ordinary homeowners the government has signally let down.
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“On the foreclosure work, we’re really the last line of defense,” notes Harvard Law professor David Grossman, who directs the school’s Legal Aid Bureau. “We’re the army fighting Wall Street.”
Grossman, a longtime housing attorney who has worked on the antiforeclosure campaign for the past couple of years, has three Harvard degrees: a bachelor’s in biology, a master’s from the Divinity School and a law degree. (He graduated from Harvard Law in the same class as Michelle Obama, a noted Legal Aid Bureau alum.)
Grossman clerked for the Israeli Supreme Court in the late 1980s. Since 1995 he has been teaching at Harvard Law School, where he focuses his efforts on promoting social justice lawyering. His interest comes, he says, from his understanding of the ethical core of Judaism—what he refers to as tikkun olam, the obligation to “repair the world.” With the housing crisis, he has found a scandal large enough to match his sense of duty.
“I see the fallout from the way our political system and economic system work,” he says. “This is a product of Wall Street greed, a lot of it. For the first couple years of this, every foreclosure we were seeing was the result of a predatory loan.” Homeowners, he insists, got duped into signing awful deals. “The rates they got were horrendous. And it was race-based, no question about it.”
Grossman, who is in his early 50s, sports a brown-going-on-ginger goatee. In casual settings, he wears sunglasses pushed up on his forehead, even when there’s no sun outside, and he drinks a lot of Coke. A street map of Boston is tacked up on a wall in his office. Opposite it hangs a sepia photo of four Red Sox players from a distant era.
Although Grossman is an out-of-towner, he’s been in the Boston area long enough that he almost sounds like a local. He speaks fast, his vowels drawn out like those of a native son. He knows he can’t stop foreclosures. But he can, he says with a touch of pride, alter the cost-benefit analysis for banks when it comes to evicting delinquent owners and their tenants. On most weekends, and some weeknights, groups of his students canvass Boston’s geography of despair, trying to inform owners and tenants of their rights in the face of aggressive bank actions to evict them. He and his students regularly represent residents from neighborhoods like Mattapan during hearings at the downtown Boston Housing Court, making enough of a pain of themselves that the banks’ attorneys—none of whom would talk to The Nation for this article—frequently decide that it is in their clients’ best interests to work out a deal. Sometimes the attorneys will back off their eviction proceedings; other times they’ll agree to pay the occupants a pretty large sum to move out. (Such payments are labeled “cash for keys.”) Absent legal intervention, residents usually settle for a few thousand dollars. With the backing of good lawyers who know how to string cases out for months or even years, the payment can increase several-fold.
The program, says Housing Court judge Jeffrey Winik, helps to balance the scales of justice, providing representation to those who otherwise would have none. At the same time, it forces these students, who are slated to enter society’s most elite strata, to remain grounded. “It’s an opportunity to make sure their eyes stay open,” Winik explains during a brief lunch break between cases. “These are the folks who are going to be making the laws in the next twenty-five to thirty years. I want them to understand there’s a world out there that lives week to week, paycheck to paycheck.” Winik, who also teaches law at Boston University, pushes the students when they argue before him—asking them challenging questions, forcing them to think on their feet and develop complex legal arguments around the issue. Afterward, Grossman huddles in the hallway with the students and critiques their performance. He’s as rigorous as any moot court judge, and his students seem to thrive on the criticism.