Response to the Federal Foreclosure Settlement

Today’s $8.5 billion settlement between the federal government and 10 of the nation’s largest mortgage servicers shows that banks and the government are feeling pressure from a growing national housing justice movement. But the settlement absolves the banks of their crimes in exchange for little compensation for a minority of those thrown out of their homes because of the banks’ fraud and greed.

The settlement offers a pittance to affected homeowners who lost their homes in 2009 and 2010, but does nothing to stop the banks to profit from continuing to fraudulently foreclose on families. They're stealing our homes, receiving a slap on the wrist from the federal government, and then continuing to systematically ravage our neighborhoods one home at a time.

While millions of families still face foreclosure or are hopelessly underwater on their mortgages, the big banks are making record profits--thanks in large part to the trillions of taxpayer-funded welfare they received in the TARP bailouts. This most recent settlement is just another event in a series of deals which have quite literally allowed the bailout barons “get out of jail free” cards in exchange for comparatively small sums, which have often been diverted away from their stated purpose of helping foreclosed homeowners. In this case, the sum to be distributed to affected homeowners is based on math done by the banks’ own consultants. $3.3 billion distributed among millions of homeowners won’t amount to much per family. And it certainly won’t do anything to compensate for the emotional and physical consequences of being uprooted from their communities.

This settlement also stops an aggressive, sweeping review of more than four million loan files, intended to discover the depth and extent of banks’ crimes against their customers. Meanwhile, 18 million homes sit vacant in this country every night, while 3.5 million people experience homelessness.

If we want a true solution to the housing crisis, there are a few things we must do immediately.

First and foremost, we must turn off the machine that is mincing our communities. We need a moratorium because these fraudulent foreclosures and evictions are still happening. We must stop all foreclosures immediately so there can be time for an honest conversation about solutions to the economic crisis. 

Secondly, all mortgages should be rewritten to reflect today’s housing values. Working people should not be forced to pay for the banks’ gambling debts. At the moment, millions of homeowners owe Wall Street more than their homes are worth. We need that money back. Large-scale principal reduction would put trillions in the pockets of working people and help rejuvenate the economy.

Finally, banks should be required to turn over their vacant homes to nonprofits to provide for affordable housing in our communities. Homelessness is at a six-year high in Hennepin County--a crisis situation. There is no reason families should be spending Minnesota winters on the streets when there are five vacant homes for every homeless person.

We will not be placated by a settlement that provides nominal damages without addressing the roots of the crisis or preventing further financial crimes against working people. We believe that safe, equitable, and affordable housing is a human right. We will continue fighting for true housing justice. We shall not be moved.

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