By all accounts, the Obama Administration’s anti-foreclosure plan is failing.  The Home Affordable Modification Program (HAMP) was supposed to help three to four million homeowners by 2012, but only 389,000 have received permanent mortgage modifications.

The statistics are staggering: one in seven mortgages is now delinquent or in foreclosure and a record one in ten homeowners missed at least one mortgage payment between January and March.  The number of US home foreclosures reached a record for the second consecutive month in May.  Nearly 25 percent of homeowners are underwater, owing more on their mortgages than their homes are worth.

A vicious cycle continues unimpeded: increased foreclosures and blight, brings decreased property values and revenues for local and state government, leading to increased layoffs and even more foreclosures.

It’s no wonder that people are beginning to take matters into their own hands.

Recently I wrote about the letter sent to the Big Banks by seven powerful New York City unions and City Comptroller John Liu, asking what the banks are doing to increase the number of modifications including principal write-downs.  Some of the union presidents made it clear that they would look to move their pension monies if the banks weren’t responsive.

Then on July 22, the Atlanta Fighting Foreclosure Coalition and the AFL-CIO held hearings on the crisis and demonstrated in front of the Wells Fargo downtown Atlanta branch to demand that the bank do a better job on mortgage modifications.

Initially, Wells Fargo claimed that bank officials were unavailable to meet with coalition representatives, but when the hundreds of demonstrators showed up at the bank, the execs were magically free. 

Just hours after meeting with AFL-CIO Executive Vice President Arlene Holt Baker, Atlanta-North Georgia AFL-CIO President Charlie Flemming, Georgia State Senator Vincent Fort, and the Reverend Timothy McDonald, Wells Fargo requested another meeting with the AFL in Washington, DC.

That meeting took place between senior bank and union officials on Monday.  Here is what Ms. Holt Baker said to me about how it went:

Holt Baker: This was a good second step.  We had the first meeting in Atlanta—after hearings and demonstrations there—then the doors of the banks were open to us.

There is no doubt that we are all on the same page as it relates to this crisis.   It’s not in the interest of the bank, the homeowners being foreclosed on, and we certainly know that it’s not in the interest of the community.

We went into detailed discussions about the HAMP program and [Wells’ own] program that they use relative to mortgage modifications.  They did provide us with the information that we requested showing the number of modifications that they’ve made in their portfolio.  We’ve agreed at this point not to publicly talk about those numbers.  I believe we will be able to do so at a later date. 

We were very impressed that they understand clearly that one of the ways you are going to get people who are about to lose their homes to come forth and have the initial conversation is that they have got to feel that they are in is a trusted environment, or they have to have a trusted voice or organizations encouraging them to see if they can be helped.

[Wells says] they are not just doing telephone calls, and sending letters, but they are going out and trying to have face-to-face conversations at the door to encourage people to try to get help once they see that 60-day delinquency kick in.

Wells has a number of centers that they have set up around the country—and they gave us those numbers—where they are servicing people.  This weekend, they had one in Memphis and about 230 people participated.  They were not able to tell us [yet] how many people they were able to assist.

We continue to insist upon—and I’m trusting that they will provide—not just how many people they’ve talked to [at the service centers], but how many people they were able to help through mortgage modifications.

We also continue to be very concerned about this direct deposit advance program they have where individuals who have direct deposit of payroll or other checks—Wells Fargo will give them a line of credit up to $500.  And for every $20 that they draw down they have to pay $2—so, it’s an Annual Percentage Rate of 120 percent.

Immediately upon deposit of the next payroll check whatever was borrowed is deducted from the checking account, along with the interest.  We expressed that this is deeply troubling because it looks as if now the banks are going into what I simply believe is nothing but payday lending.

They clearly heard that this is unacceptable in communities where certainly—if you have to turn to that—you are in such desperate straits as it is.  We’re all open to people being able to borrow money but let’s do it at the lowest rate possible in this environment.

Q: Do you have a sense of a timeline in terms of the next steps you want to see
Wells take—especially with regard to foreclosure prevention?

Holt Baker: We will be following up with a letter and I think we will be clearer on what we may be able to do together in the next two to three weeks.  They know that we are going to be monitoring what they are doing and we’re going to continue to ask them for the statistics to support what they are telling us.

Q: The AFL must have significant pension money with Wells?  And Wells must know that their own business interests are at stake?

Holt Baker: Yes, they absolutely get that our [pension] funds are invested with them.  And there even be some more information in the next week or two that we may be able to provide [showing] just how well they understand that.  

But this is about keeping the pressure on and that’s what we’ve tried to do.  I know that what we started out to do some months ago when we said we had to take it to Wall Street in order to help Main Street–the marching, the not backing down, insisting that the bank officials meet with us–that’s what has helped bring people to the table.  And once you get into the room and have a real conversation you might end up with some real solutions to help folks with their problems. 

[End Interview]

A union friend recently said, “The only things banks understand is their pocketbooks or embarrassment.”  Wells Fargo clearly felt the embarrassment in downtown Atlanta and so it opened its doors.  It looks like the bank is now feeling the pressure on its pocketbook too.  Here’s hoping the AFL-CIO’s work can lead to a new approach to foreclosure prevention with Wells, and then they can take it to the other Big Banks too.