The foreclosure crisis has pounded cities across America and New York City is certainly no exception. In 2009, there were 50,000 foreclosures in the entire state—nearly half were in the Big Apple. And just as we are seeing in communities everywhere, the crisis is getting worse, not better. New York City foreclosures were up 16 percent in the first quarter of 2010 compared to the same period last year. According to the Mortgage Bankers Association, over 265,000 mortgages—13 percent of the mortgages in New York State—are now past due or in the foreclosure process. Meanwhile, banks have made less than 12,000 permanent modifications in the state since May 2009.
On Wednesday, at a press conference at the Manhattan Municipal Building, the most powerful local union presidents and the city's chief financial officer told the Big Banks enough is enough. Rather than wait on the Obama Administration to finally put some teeth into its voluntary mortgage modification program (that the banks are voluntarily taking a pass on), these leaders are taking matters into their own hands.
Call it the Move Your BIG Money campaign.
City Comptroller John Liu and the union leaders described a letter they sent to the Banksters laying out specific concerns and demanding answers by September 1. They want to know what the banks are doing to increase the number of modifications including principal write-downs? What's being done to expedite the modification process and stop foreclosure proceedings while applications are being reviewed? What's being done to improve performance so that homeowners stop receiving multiple requests for already-submitted documents, and then are foreclosed on because banks erroneously say that they never got those same documents?
In short, what are the banks doing to address the various stages of hell homeowners find themselves in due to the banks' unwillingness to strike a fair deal?
The threat made implicitly in the letter—and explicitly by some of the union leaders—is that these institutional investors will move their pensions and other monies to alternative financial institutions if the Big Banks don't improve their responsiveness to this crisis in a hurry. If money talks, this is a message that packs a wallop—we're talking BIG unions representing over 500,000 working families—with BIG resources: 1199 SEIU is the largest of all union locals in the US; DC 37 is the largest public employees local in the US; the United Federation of Teachers is the largest teachers local in the US; Transport Workers Union Local 100; the New York Hotel and Motel Trades Council; the Retail, Wholesale and Department Store Union; and 32BJ SEIU is the largest property service workers union in the US.
Joining the signatories of the letter at the press conference was New York Communities for Change (NYCC), a coalition of low- and moderate-income working families fighting for social and economic justice throughout New York State.
"Our banking institutions are employing the same practices that led to the foreclosure crisis while ignoring borrowers stuck with troubled mortgages and the imminent threat of being thrown out of their homes," said Jon Kest, executive director of NYCC. "Banks continue to take advantage of our most vulnerable communities by refusing to modify mortgages or even respond to loan modification proposals. The action taken by New York City's Comptroller and labor leaders signifies the need across the country for a dramatic shift in how the banks deal with borrowers. These institutions have the ability to use their offices and resources to finally force the banks to get right and we are encouraged to see this significant first-step."
Kest is absolutely right, this is indeed a significant first step. Banks are permitting a vicious cycle to continue which is harmful to all of us: families are losing homes, neighbors who remain behind see declining property values, local and state revenues plummet, and the economy continues to drag with 15 million Americans out of work and Depression levels of unemployment in minority communities.
Here's hoping other civic and labor leaders follow the New York City lead—it's time to Move the BIG Money.