Record JPMorgan settlement provides principal reduction, but not enough for struggling homeowners

The record $13 billion JPMorgan Chase settlement announced today aims to provide some relief to struggling homeowners, but the settlement does not go nearly far enough to compensate for the devastation JPMorgan Chase has wreaked on our economy and our homes. It is still unclear whether this settlement will help Jaymie Kelly and Sergio Ceballos, who are fighting JPMorgan Chase for their foreclosed homes in south Minneapolis. 

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Jaymie is now facing eviction by JPMorgan Chase and Freddie Mac, which received an additional $3.2 billion in the settlement--but it’s not clear whether the settlement will help her. “JPMorgan Chase and Freddie Mac have consistently said they can’t work with me,” said Jaymie Kelly, who fended off the sheriff’s eviction attempt at her home two weeks ago with 50 community members. “Now, to get out of legal troubles, they say they have plenty of resources for principal reduction for homeowners like me. I am hopeful they will work quickly to keep homeowners facing unjust eviction, like me, in their homes. Until then I will continue fighting for my right to stay in my home.”

While previous foreclosure settlements have focused on providing paltry compensation checks averaging around $300 to homeowners who were wrongly foreclosed, this settlement will focus on direct aid to struggling homeowners. Of the total $13 billion settlement, $1.5 billion will go to principal reduction for underwater homeowners. Other credits will go to reducing interest rates and writing new loans to low-income homeowners.

Principal reduction has long been a demand of Occupy Homes MN, which has organized marches and protests demanding a strong settlement all year. In May Occupy Homes MN helped lead a foreclosed homeowner encampment at the Department of Justice in D.C. demanding a prosecution of the bankers who caused the housing crisis. The focus on principal reduction in this settlement is a direct result of grassroots pressure from Occupy Homes MN and allies across the country.

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But the $1.5 billion JPMorgan Chase will provide in principal reduction amounts to less than 1% of the $192.6 billion in wealth lost nationwide from the foreclosure crisis in 2012 alone. Nationwide, 12.2 million homeowners are underwater on their mortgages, owing a total of $913 billion more than their homes are worth. JPMorgan Chase’s principal reduction will total about a tenth of one percent of that amount.

 

Under the settlement, JPMorgan Chase will receive credit for demolishing vacant homes, a concern to advocates in Occupy Homes MN who have called for those homes to be turned into affordable housing. They will also hire their own “independent” monitor to oversee the enforcement of the settlement.

After fraudulent foreclosures, Jaymie Kelly and Sergio Ceballos have been fighting public campaigns demanding JPMorgan Chase negotiate with them, but JPMorgan Chase has yet to agree to a solution to keep either in their home. After Sergio was illegally dual tracked and 100 community members defended his home from eviction, JPMorgan Chase agreed to negotiate--but as Minnesota winter sets in, they’ve backed out of negotiation and shut off his utilities. “JPMorgan Chase fraudulently foreclosed on me, promised to work with me, and then backed out of negotiations,” said Sergio. “Now it’s winter in Minnesota, and they’ve shut off my utilities. I can afford to buy my home back, but they won’t sell it to me. I hope this settlement finally brings them to the negotiating table.”

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Over the thirty years she’s lived in her home, Jaymie Kelly has paid for its value of her home five times after falling victim to a predatory loan. But when she fell into foreclosure, JPMorgan Chase refused to negotiate, claiming she still owed $255,000 on the home. Her home is now owned by Freddie Mac, which is aggressively pushing to remove Jaymie from the home. After an illegal 5am raid by the sheriff’s department, Freddie Mac is now pursuing eviction with the Minneapolis Police Department.

“It’s clear that our public pressure helped win greater relief for homeowners, but this settlement is a drop in the bucket next to the devastation JPMorgan Chase and the other big banks have wreaked on our communities,” said Nick Espinosa, an organizer with Occupy Homes MN who successfully fought off his family’s foreclosure last year. "If Chase wants to fix the damage they can start by giving Sergio and Jaymie's families their homes with a fair mortgage. We will keep fighting until safe, quality, and affordable housing is a right for everyone.”


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