First the Banks, Now the Rest of Us
Federal Reserve officials hear victims of housing crisis
By Dave Scharfenberger
Last year, in a plan designed by the Department of Treasury and the Federal Reserve, the federal government, bailed out major banks in this country. Yet home foreclosures are still rising and communities are reporting more vacant properties
Federal Reserve officials came to Cincinnati July 21 for a meeting sponsored by Working in Neighborhoods (WIN) and Communities United for Action. Community leaders and homeowners packed the room to get answers about their mortgages and the vacant houses that blight their neighborhoods.
Mary Bridges of Kennedy Heights was one of the residents who went to the hearing looking for answers. When she and her husband refinanced their home several years ago, they ended up with an adjustable-rate mortgage. Her mortgage payment has jumped from $824 to $1,500 a month. Last year her husband died, and Bridges lost her job. She is now facing foreclosure and is asking for a plan to help her keep the home where she has lived for 19 years
“I think that my mortgage company can do better,” she said at the hearing. “I like my home and my neighborhood. There has to be some hope out there. I cannot get my mortgage company to work with me.”
Bridges was one of many who packed the meeting with Fed officials to tell their stories of the horrors of lending practices and the effects of foreclosures.
Others complained about the number of foreclosed, vacant properties in their neighborhood.
“The house next door to me is vacant,” said Pat Hendricks of North College Hill. “Behind me is a vacant house. Two doors up from me is vacant, the corner house is vacant and the house around the corner is vacant. These vacant properties are in a constant state of deterioration and I feel like no one cares how my neighborhood is affected.”
“We told the Federal Reserve that they needed to hear from homeowners and community leaders who were feeling the effects of foreclosures,” said Marilyn Evans, executive director of Communities United For Action (CUFA) “We know that they are hearing from the banks, but they also need to hear from us. We told them they needed to expand and modernize the Community Reinvestment Act and the Home Mortgage Disclosure Act.”
The meeting in Cincinnati was one of 10 meetings that Federal Reserve Chair Ben Bernanke agreed to hold around the country. Representing the Fed were Joseph Firschein, assistant director and community affairs officer, and Anna Alvarez Boyd, associate director of analysis and communications.
If Federal Reserve officials wanted stories, they heard plenty in Cincinnati.
“Your stories really put a face on what this crisis is about,” Boyd said.
She and Firschein promised to take the stories and issues raised by WIN and CUFA back to the Federal Reserve Board of Governors.
“When you’re talking to us, you’re really talking to them,” Boyd said.
Other public officials who attended were State Rep. Denise Driehaus, Hamilton County Commissioner David Pepper and Cincinnati City Council members Roxanne Qualls and Cecil Thomas. Also in attendance were representatives from U.S. Bank, Fifth Third Bank, PNC Bank and Spirit of America.
The recommendations that community leaders presented were:
· updating the Community Reinvestment Act and the Home Mortgage Disclosure Act to include all mortgage institutions;
· access to good mortgage loan products, including 30 year fixed rates, without prepayment penalties, yield-spread premiums and high closing costs;
· requiring lenders to make affordability modifications to loans or to prove why they can’t;
· maintaining vacant properties and encouraging lenders to give or sell them at reduced prices to neighborhood development corporations;
· and developing banking fees and small loan products to provide an alternative to predatory lending.
WIN and CUFA representatives along with National Peoples’ Action plan to meet with Bernanke at the conclusion of the 10 meetings to discuss the results of the hearings and possible action to address issues raised.
CUFA President Roger Davis is looking for results.
“They saw and heard what is going on because of foreclosures and how people are hurting,” he said. “Now we will see what the Federal Reserve will do.”