Elected officials appeared equally blind to the extent of the problem. Countrywide's stock had plummeted, but the influence of the nation's largest mortgage lender still ran deep. Mozilo's so-called Friends of Angelo program had cut favorable deals on loans to his highly placed acquaintances, including Christopher Dodd and Kent Conrad, chairs of the Senate banking and budget committees, respectively. And Countrywide, along with other top mortgage lenders and industry associations, spent tens of millions of dollars lobbying Congress and gave millions more in campaign contributions. By mid-October 2007, the government's only response to the foreclosure crisis had been the creation of the Hope Now alliance, a voluntary mortgage-industry coalition that established a telephone hot line to aid homeowners in altering the terms of their mortgages. But, critics say, the program has done little more than design repayment plans that in many cases actually increased borrowers' monthly payments. "I call it Hope Not," quips Bautista.
At the state level, things weren't much better. Governor Arnold Schwarzenegger brokered a nonbinding agreement in which Countrywide and other lenders volunteered to extend the introductory low interest rates on some adjustable-rate mortgages. It only deferred disaster and did nothing for those who were already in default. Meanwhile, new foreclosure records were being broken every month.
The day before Thanksgiving, the Mabuhay Alliance, joined by the Mexican-American Political Alliance, staged a protest in front of Countrywide's San Diego office. They attempted to hand-deliver a turkey to Mozilo, who, not counting stock options, would be paid $22 million in 2007, down from $42 million in 2006. Once again, the doors were locked. Only about fifty people showed up that day, but the protest got enough press to have a powerful symbolic effect. "No one was willing to take on Mozilo in California," says Greenlining's Robert Gnaizda. "He held enormous power. And [Bautista] took him on. She forced the financial industry to pay attention."
The next week, Bautista and Gnaizda went to Washington and met with Federal Reserve chief Ben Bernanke and FDIC chair Sheila Bair, asking for a freeze on foreclosures and wholesale relief for mortgage holders. Bair was receptive, Bautista says. Bernanke was not. Eight months later, when the FDIC took over IndyMac, Bair immediately suspended foreclosures. "Now they're willing to do it," Bautista shrugs. If they'd acted earlier, she says, "all those people who were foreclosed wouldn't have been foreclosed."
In December, a few weeks after the Countrywide protest, she and Gnaizda wangled a meeting with California Attorney General Jerry Brown, asking him to sue Countrywide for defrauding borrowers. He wasn't interested, Bautista says. The following June, a few days before Bank of America bought out the crippled lender, Brown finally filed suit against Mozilo and Countrywide. Gnaizda explains the delay: "Countrywide was not weak in December."
In the meantime, all the major loan providers in the country have agreed to work with Mabuhay to modify individual loans. This means, Bautista says, that Mabuhay can help about twenty people a week. She is far from satisfied. Despite the hundreds of billions of dollars given to the financial industry, no federal or state government has provided any substantive relief to the people hit the hardest by the mortgage crisis--the ones who are losing their homes. "You gotta start from the bottom and go up," Bautista says. "If you start at the top, then at the bottom you get crumbs. You get nothing."
In December Mabuhay sponsored a "foreclosure clinic" at a community college in the San Francisco Bay Area city of Vallejo, which despite its small size--its population is about 112,000--boasted the tenth-highest foreclosure rate in the country at the time. About 150 anxious homeowners showed up, clutching thick folders of financial documents, waiting to speak with mortgage counselors. Their stories were painfully similar: one couple was struggling to pay an interest rate of 16 percent; another was unable to make $4,300 monthly payments and owed $630,000 on a home worth $370,000; another, in their mid-60s, had resigned themselves to losing the home in which they'd lived for twenty-three years and spending their retirement in a motor home.
Standing beside Bautista at the front of the auditorium, Gnaizda did his best to channel the crowd's frustration into action. "Ten million families are facing foreclosure right now," he said. "Change is not going to come about because President Obama wants it to. He is not going to act unless you hold his feet to the fire."