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Rochester hotel owner files for bankruptcy – Post

Visit our other local news sites: — Kankakee, IL — Moline, IL — Ottawa, IL

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Shaky alliances form to fight zombie foreclosures

Many advocates caution that RealtyTrac data underestimates the number of zombie foreclosures, which are hard to count.

Nearly a decade after the subprime crisis, many neighborhoods are still plagued by undead leftovers from the crash. “Zombie foreclosures” are those that have been begun — but not finished — by lenders. As homes sit empty, they invite vandalism, drag down property values, and erode municipal tax bases.

Now, in an attempt to exterminate zombies, some unlikely alliances are being formed by groups that traditionally work against each other. One of the most coordinated efforts has become known as “fast track,” so called because it would shorten the amount of time a court-enforced foreclosure process takes.

Fast-track efforts have drawn a diverse group of supporters to an effort that seems like it should be a win-win for municipalities, mortgage bankers and other lenders, and even homeowners. But the alliances between different groups who don’t normally share the same goals or views have been uneasy and the progress murky, and some players say they’ve yielded as many setbacks as steps forward.

Gregg Hagopian, an assistant city attorney in Milwaukee, watched a zombie foreclosure settle in next door to him. His neighbors had trouble paying the mortgage, and the bank foreclosed.

Hagopian, a 54-year-old lifelong Milwaukee resident who’s made zombies and blight a personal crusade, sees a cruel irony in the way foreclosures play out.

Gregg Hagopian

When homeowners who’ve fallen behind on their mortgage payments learn that a foreclosure has been started, most assume they’ve lost the home. At that point, many walk away from the property, as his neighbors did.

But that’s just the initial step in what can be a multi-year process, especially in “judicial” foreclosures. Twenty-six states and the District of Columbia require that foreclosures must go through a court-enforced process. Many consumer advocates believe a court process offers more protection to borrowers, but in reality very few borrowers mount any kind of defense against foreclosure action.

Even when a court finds in favor of the lender and orders that a foreclosure be finalized, it doesn’t end there. Foreclosure is not final until the lender has received a judgment from the court and then sold the property in what’s usually known as a sheriff’s sale.

Until that time, the homeowner is responsible for keeping up the home and paying taxes, but many have no idea that’s the case. And most lenders drag their feet rather than take on those costs, plus the expense of paying to renovate a home that’s been abandoned for months, then have to sell a property into a depressed real estate market.

So homes sit empty. As Hagopian said, “The gutters were hanging off the house, the shingles were peeling up, the lawn got to be past my knees. I went out and mowed the lawn because I just couldn’t bear to watch it any more. Good luck finding anyone to address the problem: the owners didn’t have any money. The lender wouldn’t deal with it because they didn’t own it yet. The house was stuck in limbo.”

Fast-track efforts attempt to limit the amount of time a lender has from the time the foreclosure judgment is made until the sheriff’s sale can be completed.

Consumer advocate groups like the Center for Community Progress, a national organization that tries to combat what it calls “problem properties” support that idea.

But Dekonti Mends-Cole, the organization’s policy director, told MarketWatch that too often legislative efforts go in a different direction when groups like hers try to partner with lenders and bankers. In some states, the legislation has been repurposed to cover occupied, not vacant, properties, she said.

“In my opinion the partnership has broken down. It’s less about serving the community and more about serving the servicer,” Mends-Cole said.

In Ohio, legislation allowed lenders to proceed with foreclosure even when they can’t prove they own the note — a step backward in terms of establishing that all mortgage paperwork has been completed thoroughly and accurately, said Julia Gordon, executive vice president of the National Community Stabilization Trust.

“The bills have turned into Christmas trees” for lenders and servicers, Gordon said.

In Wisconsin, earlier legislation that shortened the “redemption period,” the period of time between the foreclosure decision and the sheriff’s sale, was neutered by a new bill that tacked on an additional twelve-month period in which a lender can do nothing, and after which it has no obligation to take possession of the foreclosed property.

Advocates like Center for Community Progress and the National Community Stabilization Trust partnered with Hagopian and others in Wisconsin to fight the bill, which passed the legislature, and then lobbied the governor to veto it. But it became law in April.

“Wisconsin sticks out like a sore thumb from a national trend,” Hagopian said.

The extra time provision was lobbied for by the Wisconsin Mortgage Bankers Association. The group responded to requests for comment with a statement:

“The intent of the bill is to bring a property through a foreclosure action and redemption process as expeditiously as possible. Financial institutions derive no benefit nor does the community having a property sit for prolonged periods of time.”

As fast track efforts wend on, other interested parties have joined in.

Robert Klein founded Ohio-based Safeguard Industries in 1990 to provide what he calls “boots on the ground” services for far-away servicers of delinquent mortgages: ensuring local codes are enforced, maintaining the property, and so on. Klein was an enthusiastic supporter of legislation in Ohio because, as he says, “a vacant property is not a bottle of wine. It does not get better with age.”

Servicers would have less need for Safeguard’s services if vacancy periods were shortened, but Klein said that’s okay since fast track efforts are “the right thing to do.”

Even as Klein advocates changes to the judicial process, he’s also is also lobbying for more widespread use of a product he manufactures, polycarbonate coverings for windows and doors on abandoned homes. Plywood boards, the normal means of securing empty homes, “invite vandalism,” he said. “It’s an absolute crime in my opinion to advertise to the world, I’m vacant, come and vandalize me.”

The Mortgage Bankers Association is a Washington-based lobby group unaffiliated with the local group in Wisconsin. The national MBA has developed a series of “best practices” meant to “responsibly expedite the foreclosure process for vacant and abandoned properties.”

The MBA “gets it,” Mends-Cole told MarketWatch. Still, the Center for Community Progress is working on similar efforts, either to create guidance documents or draft legislation for local groups. There’s some disagreement within the advocacy world about whether to tailor efforts to individual state situations, which may be more “responsive,” she said, but it’s also more reactive than proactive.

In Milwaukee, where there are currently about 300 zombie foreclosures, Hagopian hasn’t given up hope.

“It takes so much time and patience to get it done that most people give up, but we owe it to our neighborhoods and our fellow citizens to make it better,” he said.

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‘RHONJ’ star Jacqueline Laurita saves Franklin Lakes home from foreclosure

“Real Housewives of New Jersey” star Jacqueline Laurita has dug herself out of foreclosure as fellow “RHONJ” star Teresa Giudice did before her. 

Court records obtained by show the foreclosure on the Lauritas’ Franklin Lakes home was dismissed earlier this month. Their lender had initiated foreclosure proceedings last year, saying Jacqueline and Chris Laurita had not made their monthly payment of $10,846 since October 2014.

The custom-built six-bedroom home, with its hand-painted murals, custom woodwork and a 4-car heated garage, had been on the market since January 2014. It was first listed at $2.85 million, but the couple later dropped the price to $2.78 million before taking it off the market. 

Laurita, an original cast member, had not been invited back to the show for its sixth season, which aired in 2014, though she was brought back for the season’s later episodes, primarily to comment on Giudice’s unfolding legal drama.

In one episode, she and Chris also discussed on camera their money woes, mostly citing the cost of treatments for their son Nicholas, who has autism. They did not discuss Chris Laurita’s ongoing business bankruptcy in which the couple had been accused of draining his company’s bank accounts to finance their high-flying lifestyle.

Laurita has since been invited back as a full-time cast member for the show’s seventh season, which debuts July 10 on Bravo. 

Last year Giudice escaped foreclosure on her Montville Township mansion, making the loan current in October, right around the time Bravo aired a 3-part special called “Teresa Checks In,” about how her family was handling Guidice’s incarceration for bankruptcy fraud and conspiracy to commit wire and mail fraud.

But Giudice and husband Joe did lose two other homes to foreclosure: a Manahawkin vacation home sold back to the bank for $100 in August 2015, and a rental home in Lincoln Park, also sold back to her lender for $100 in March. Joe is currently serving a 41-month prison sentence at the Federal Correction Institution in Fort Dix

Vicki Hyman may be reached at Follow her on Twitter @vickihy or like her on Facebook. Find on Facebook, and check out TV Hangover, the podcast from Vicki Hyman and co-host Erin Medley on iTunesStitcher or listen here.

TV HANGOVER SHOW: Ep. 40: New Jersey is coming back to TV

Subscribe to the podcast on iTunes, Stitcher, TuneIn, SoundCloud or Spreaker.

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APNewsBreak: To Fight Foreclosure, NYC Buying Mortgages

New York City is taking a novel approach to addressing enduring pockets of the home foreclosure crisis by buying long-unpaid mortgages, with plans to help owners stay in their homes if possible or use the properties as affordable housing if not, officials say.

It’s among the first cities to pursue buying such loans directly from the federal Department of Housing and Urban Development, officials say. Housing advocates and some lawmakers have pressed HUD to make it easier for cities and nonprofit groups, as opposed to investors, to buy troubled mortgages.

New York is announcing the $13 million program Thursday. Details of the program were provided to The Associated Press ahead of a planned afternoon announcement.

So far, the program involves just 24 properties, containing a total of 41 homes and apartments. Officials say the cost includes millions in reserve for repairs that may not be required, and they cast the program as an experiment they hope to expand.

“It puts government squarely on the side of struggling families, so they can keep their homes,” Democratic Mayor Bill de Blasio said in a statement.

The national wave of foreclosures that accompanied the 2008 mortgage meltdown peaked several years ago, but some neighborhoods still have concentrations of homes in trouble, city officials say. Nearly 34,000 residential and commercial properties citywide were in some stage of the foreclosure process or were bank-owned as of last month, according to statistics provided to The Associated Press by RealtyTrac, a real estate data firm.

The borrowers in the city’s new “Community Restoration Program” are years behind in paying federally-insured mortgages they took out from banks as far back as 2002.

The city wouldn’t identify the properties or owners, who don’t yet know they’re in the program. The city was able to do some research but hasn’t yet been legally allowed to contact the homeowners, officials said.

Soon, nonprofit groups will try to talk with the borrowers to see whether changing loan terms could enable them to pay. If not, options could include giving up ownership in exchange for being able to stay as renters or being moved to affordable housing elsewhere.

If the homes have absentee owners, the city may face a laborious process of foreclosing on them in order to resell or rent the homes at affordable rates to be determined.

The money is coming from the City Council, a loan from investment bank Goldman Sachs, and settlements various banks have made with state Attorney General Eric Schneiderman over lending practices.

Schneiderman, a Democrat, said in a statement the program is keeping delinquent mortgages from being auctioned to entities “whose goal is to profit off other people’s losses.”

Nationwide, HUD has sold about 100,000 soured mortgages at discounts in the last several years, often to private equity firms and hedge funds.

Housing advocates complain the firms have been too eager to foreclose on borrowers; the firms counter that many of the homes are abandoned. HUD has said the sales can give borrowers a last chance to save their homes, but the agency also has made some changes. Among them: extending a foreclosure moratorium from six months to a year after a sale, and offering some mortgages in smaller batches, since nonprofits often can’t afford bigger chunks.


Reach Jennifer Peltz on Twitter @jennpeltz.

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No BackSpace: How the Left Turns Off the Public and Turns On Itself

Day 14 of Occupy Wall Street: September 30, 2011

David Shankbone

Day 14 of Occupy Wall Street: September 30, 2011

* * * *
This column is an excerpt from Joel Berg’s forthcoming book “America, We Need to Talk: a Self Help Book for the Nation,” to be published by Seven Stories Press in early 2017. City Limits will publish two additional sections of the book later this week.
* * * *

Did the Occupy Wall Street movement and the Bernie Sanders campaign change everything, as some progressives claim?

Did they take any power or money away from Wall Street or the one percent? No, they did not. The plutocrats only got richer and more powerful.

Did they force regulatory improvements or taxes on large corporations? No, Congress and many state legislatures only accelerated their tax-cutting and regulation-nullifying zealotry.

Did they elect candidates that have stood up for the 99 percent or, alternatively, boot out of office anyone that coddled the plutocrats? Not really. (1)

Did they unite people of all races, truly bring together the working class and students, empower the masses, and build long-lasting organizational structures that could effectively take on the status quo? Hardly.

Did they at least leave a handful of autonomous communities, taking care of their own needs, without help from the corporate power structure? No, they didn’t even do that.

Don’t get me wrong – I’m thrilled that activists in the Occupy and Sanders movements rose up to fight against inequality, but if we ever want to achieve their goals, then we simply must unflinchingly examine why they mostly failed.

In contrast, the Tea Party movement radically influenced federal and state policies (almost always for the worse) and elected significant numbers of supporters at all levels of government, while defeating key opponents (including right-wingers who weren’t quite far right enough), forcing mainstream Republicans to bend to their will, and fundamentally remaking U.S. politics from coast-to-coast. The Tea Party overhauled America, but the Occupy movement and the Sanders campaigns were barely blips.

Having spent much of my career excoriating the extreme conservative Republicans and spineless Democrats, this piece, dear reader, is the one in which I piss off some of the only people remaining: the hard left. Well, at least my cat still loves me … I think.

Uncivil Disobedience

Many wishful-thinking liberals noted Occupy ‘s success in raising the profile of the issue of inequality. Robert Borosage, president of the Campaign for America’s Future, a leading progressive advocacy organization, wrote:

Occupy was scorned for not having a platform; its organizers were dismissed as idealistic anarchists; and its time in the sun was brief. But its message—’We are the 99 percent’—and its indictment of Wall Street and the greed of the 1 percent were electric. Occupy transformed the national debate and gave Americans a new way of looking at things… The limits of the old debate were shattered. (2)

While many progressives were writing about—and organizing around—the issue of inequality for decades before protesters camped out in Zuccotti Park, it was certainly helpful that the Occupy movement briefly generated intense, worldwide media coverage. Problematically though, the media and public debate soon devolved into a distracting side issue: whether protesters in New York and elsewhere had a right to indefinitely stay in public spaces, which, by their own admission, was breaking the law in order to “occupy.”

Many of the Occupy protesters and others on the Left, who still practice what they call “civil disobedience,” misunderstand the history and true meaning of the term. In 1846, Henry David Thoreau was jailed after he refused to pay his poll tax which he argued supported slavery and the Mexican-American War, both of which he opposed. He later penned the essay, “On Civil Disobedience,” in which he called on citizens to violate “unjust laws.” In the century or so that followed, civil disobedience almost always involved breaking specific laws that were, in the eyes of the protesters, inherently immoral. It was illegal for women to vote, so suffragettes illegally voted. It was illegal for Indians living under British rule to make their own salt, so Gandhi led his followers to break the law by making salt. It was illegal for black people in the South to sit at segregated lunch counters, so they sat at lunch counters in order to integrate them. Vietnam War protesters blocked military recruiting stations to try to stop people from enlisting. In these examples, the entities and people being challenged by the protests were institutions and officials directly responsible for enforcing specific laws resulting in oppression or injustice.

But in recent times, protesters have sought to violate a law (usually a trespassing law)—no matter how unrelated to the cause at hand—simply to register their objection to a broader societal or worldwide ill. Such unfocused actions dilute the moral and practical impact of civil disobedience.

Today’s diffuse left-wing demonstrations rarely effectively target the power structure; instead they mostly piss off working people who should be allies. Sometimes marchers block public streets or bridges, choking traffic, chanting, “Whose streets? Our Streets!” The taxi and truck drivers who use those streets to earn their livings and pay for those streets with their taxes “own” the streets just as much as the protesters do. Usually it’s as dumb for the Left to block a bridge as when Chris Christie blocked a bridge.

A central tenet of true civil disobedience is that those doing it take responsibility for breaking a law, albeit an unjust law, and are willing to suffer the consequences for doing so. Gandhi and King actually chose jail over capitulation to reinforce their resistance to unjust systems. (Thus it was silly when some Occupy protesters actually complained that they were arrested for breaking the law. (3)) Getting arrested for trespassing, just to advance a broader cause, provides the demonstrators with a feeling of cheap virtue, and the false sense of thinking they are doing something radical and powerful.

When I was in college at Columbia University in the 1980s, I joined the blockade of a key academic building to protest university investments in the apartheid government of South Africa. (4) I’m still proud I did that. But when fellow protesters and I weren’t arrested, we upped the ante by sitting in the lobby of the Park Avenue building that housed the executive offices of Rolls Royce, which provided equipment to South Africa’s military and whose CEO, Samuel L. Higginbottom, was also the chairman of Columbia’s board of trustees, which had refused to divest the parts of the university’s $864 million endowment that were propping up apartheid. In a piece of theater that the activists pre-arranged with the police, we were arrested without violence, detained at a police station for an hour or so, and then sent on our way. A bunch of us then went to VT’s Pizzeria, a Columbia hangout, to celebrate our own courage and radicalness. A few months later, those of us who were arrested—all of whom students at an elite university, and most of whom white and from upper-middle-class or wealthy families—participated in a court hearing which lasted about 15 seconds, at which the judge dismissed our arrests on First Amendment grounds. Walking out of the courtroom, I was pretty proud of my courage and radicalism, until I noticed benches full of young African American men literally in chains, guarded by heavily armed police, waiting for their hearings—the “real” criminal justice system.

No Backspace is City Limits' blog featuring a recurring cast of opinion writers passionate about New York people, policies and politics. Click here to read more..

No Backspace is City Limits’ blog featuring a recurring cast of opinion writers passionate about New York people, policies and politics. Click here to read more..

Certainly there are times when the offense you are protesting is so grievous, or the system you are trying to change is so un-democratic, civil disobedience is still in order. But in most situations in America today, so-called civil disobedience is usually a self-indulgent distraction from the much harder, long-term work of trying to effectively convince the population to take your side on an issue. Sometimes, it’s a tacit admission that you are on the losing end of a public argument. Moreover, while many people mistakenly believe “any media attention is good media attention,” that’s just not true—media coverage that reinforces negative perceptions about your cause is counterproductive. If you lead people to think you care more about shutting down a bridge than the broader issue you are trying to advance, you lose.

The day Occupy became more about holding onto patches of ground—and about whether those sites were sanitary or safe—rather than about inequality, was the day that Occupy lost the hearts and minds of the American people and the movement’s ability to enact meaningful, change.

It Takes a Village—and a Coherent Message—to Build a Movement

Zuccotti Park, a one-block-long concrete plaza that was home to Occupy Wall Street’s main New York City encampment, was just a few blocks away from my office at Hunger Free America (then called the New York City Coalition Against Hunger), so I visited a few times over the weeks that the protesters were there. They were mostly white, even though New York is more than half nonwhite. Judging from the high-priced Apple products many employed to condemn world capitalism, I’d say many of them were from upper-middle-class or upper-class backgrounds. Rarely were there more than a few hundred campers at a time. It was impossible to find anyone who would claim to be a leader—since the working ideology of the movement was that it was “leaderless.” Many of the demonstrators claimed to be anarchists. The open general assemblies – at which consensus on key issues was theoretically intended to be reached – were chaotic. The system they came up with to ensure that the crowd could hear the speaker-participants (who didn’t have microphones)—where successive rows of protesters repeated what the person in front of them said, like a nursery school game of “Gossip”—made more noise than sense, and became just a silly affectation. Millionaire celebrities, including Kanye West and Alec Baldwin, dropped by to express their solidarity. When actual homeless people started hanging around, looking for food, and camping out in the park too, at least some activists seemed threatened.

The Occupiers in New York and elsewhere seemed to spend an inordinate amount of time discussing the process for governing the encampment (such as whether using hand signs were a less repressive way of expressing an opinion than clapping) but spent far less energy considering concrete strategies for reducing world inequality. In the assembles I listened to, there was little discussion on the most harmful impacts of inequality: poverty, hunger, and homelessness; rather, their complaints were more generic, focusing on how everyone, except the one percent, was screwed out of power and money by those elite few at the top. A mix of idealism, resentment, and Starbucks fueled the crowd.

All too often, members of the movement were tone deaf to the existence of their own class and racial privileges. Progressive writer Kenyon Farrow commented: “One of the first photos I saw from the Occupy Wall Street protests was of a white person carrying a flag that read ‘Debt = Slavery.’ White progressive media venues often compare corporate greed or exploitation to some form of modern-day slavery… Arguing that white working- and middle-class people are slaves to debt or corporations undermines not only the centrality of the African slave trade to the birth of the modern corporation but the distinct ways in which debt prevents many blacks from achieving middle-class status.” (5) Incredibly, at an Occupy rally in Atlanta, after a ten-minute debate on the matter, the crowd voted against having civil rights icon and Congressman John Lewis (who was beaten almost to death at Selma) speak to the gathering. (6)

Given that fighting inequality has been a central component of my work for a few decades, I was initially happy that so many people had taken up the cause with altruism and passion. But when I went to Zuccotti Park to try to recruit protesters to go knock on doors with me in low-income neighborhoods to organize the people most affected by inequality, none offered to join me. Annoyed by the agitators’ lack of both organization and focus, I concluded, sadly, that too many of the Occupiers were posers. (7)

There were no public bathrooms in or near the park; many of the protesters relied on local private businesses for their bathrooms. All the food was brought to the site, either by the campers themselves or by outside supporters. Once the protest received global attention, some faraway supporters bought the dissenters pizza remotely via internet or by phone, and then the pizza was delivered to the park. (Ironically, many were likely purchased with credit cards from big banks, and the pizzas were probably made and delivered by low-wage, possibly undocumented immigrants, demonstrating how even the protestors benefitted from privilege.) An Occupy supporter called me to find out if our organization could help provide extra meals to the demonstrators; I politely explained that since half the soup kitchens and emergency food pantries in New York City at that time lacked sufficient supplies to meet the needs of truly hungry New Yorkers, we could not use our meager resources to help feed mostly non-poor people who had chosen to camp out, no matter their cause. In the smallest—and perhaps most self-serving—gesture I could muster, I did donate my first book (on U.S. hunger) to the Zuccotti Park Occupy library. (8)

Sure, the mainstream media mischaracterized the movement, but it was easy to do so because Occupy failed to fully define itself. One Occupy website (there were a number of them, but none dared to call themselves the “official” website) included this self-description: “Occupy Wall Street is a leaderless resistance movement with people of many colors, genders and political persuasions. The one thing we all have in common is that We Are The 99% that will no longer tolerate the greed and corruption of the 1%. We are using the revolutionary Arab Spring tactic to achieve our ends and encourage the use of nonviolence to maximize the safety of all participants.” (9)

Even after the New York General Assembly of Occupy agreed, by consensus, to a very vague “State of Solidarity,” the statement still included this disclaimer: “This is an official document crafted by the Working Group on Principles of Consolidation. The New York City General Assembly came to consensus on September 23rd to accept this working draft and post it online for public consumption. The Working Group on Principles of Consolidation continues to work through the other proposed principles to be incorporated as soon as possible into this living document.” (10) In other words, they hadn’t truly “decided” anything, and their hemming and hawing with buzzwords was so lame that the disclaimer could have been issued by the very type of corporate lawyers they derided.

“The Declaration of the Occupation of New York City,” also “accepted by the NYC General Assembly,” failed to propose a plan for reducing inequality, and instead issued a detailed list of 23 grievances, including:

  • They have taken our houses through an illegal foreclosure process.
  • They have taken bailouts from taxpayers with impunity, and continue to give executives exorbitant bonuses.
  • They have poisoned the food supply through negligence, and undermined the farming system through monopolization.
  • They have profited off of the torture, confinement, and cruel treatment of countless animals, and actively hide these practices.
  • They have continuously sought to strip employees of the right to negotiate for better pay and safer working conditions.
  • They have held students hostage with tens of thousands of dollars of debt on education, which is itself a human right.
  • They have used the military and police force to prevent freedom of the press.
  • They have donated large sums of money to politicians, who are responsible for regulating them.
  • They have purposely covered up oil spills, accidents, faulty bookkeeping, and inactive ingredients in pursuit of profit.
  • They have perpetuated colonialism at home and abroad.
  • They continue to create weapons of mass destruction in order to receive government contracts.(11)

Their claim that freedom of the press has been destroyed was disproven by the fact that they could print and distribute these very grievances freely. I’d also quibble with their assumption that all corporations—no matter their size and their mission—are equally, intrinsically evil; I don’t agree that the original Ben and Jerry’s is exactly the same as DuPont. Plus some of their language—such as claiming that students are “held hostage” by student debt—was a bit self-serving and over-the-top. But other than that, their list was so broad and vague that most progressives, including me, could readily agree with them on most of the points. At the end of their laundry list of grievances, they included an asterisk leading to a footnote that read: “These grievances are not all-inclusive.” They surely weren’t. So why don’t we come up with some additional grievances? “They forced us to recognize ‘hump-day’ on Wednesdays, when it should be on Mondays.” “They convinced Caitlyn Jenner to be a Republican.” “They conned the populace into frequently using the phrase, ‘It’s all good’ when it’s never all good. Now those are grievances. And, oh yeah, the stuff about the corporations crushing the workers and despoiling the environment was pretty important too.

Plain vanilla liberals and progressives heatedly denied that Occupy Wall Street was an anarchist movement, and asserted that any such suggestion was merely an invention of the right-wing media. Yet many of the demonstrators themselves happily admitted to being anarchists. The liberal establishment desperately wanted the protests to be considered mainstream by the public, but they weren’t; much of Occupy’s rhetoric was about replacing, not improving, capitalism. The movement called itself “revolutionary”—a phrase sure to turn off most mainstream Americans—although, in practice, the “revolution” for some of the Occupiers equated to doing little more than hanging out in that park indefinitely. When one Occupy activist, interviewed on live TV, (12) was asked what promise the country could make to get them to agree to leave the park, the protester essentially said that they didn’t want any promises and they didn’t want to ever leave the park because living collectively in a public space was their idea of a perfect society.(13)

Some more thoughtful progressives, including Occupy cheerleaders such as Robert Borosage, did acknowledge deep problems within the movement:

Occupy’s tactical means—asserting a grassroots control of public space—spread like wildfire across the country, but it couldn’t be sustained. For a short time, Occupy did galvanize attention—and inspired millions. But the central challenge of a movement—an independent institution that can attract large numbers of people and broadly educate them—remains unfulfilled. … Movements must do more than merely shatter the cultural acceptance of a particular injustice as ‘normal’ or ‘natural’; they must also propose bold alternatives that offer a way out. And they must engage their activists and the broader public in a battle of ideas with the defenders of the status quo..… As awareness grows, movements must offer a real hope that things can change. … Movements must offer more than solidarity; they must offer the hope that the time for change has come. … This requires a vehicle, an organizational form that sustains change. (14)

Given that many of the Occupiers were upper-middle-class whites, detached from the people they claimed to represent, and unwilling to propose specific solutions, it’s no wonder that their actions did not lead to a long-term movement that could achieve concrete victories. (The same was true of the Sanders presidential campaign.)

Every effective movement needs to include all segments of the village—or the city, state or country. Every effective movement needs a coherent message that not only explains what’s wrong, but exactly how those things can be fixed. And every effective movement needs a long-term plan and a structure to carry it out. Occupy had none of those things.

What troubled me most about the Occupy movement is how many of the protesters refused to accept the possibility of any serious role for government—either the US government or international governments—in redressing inequality. Many identified with anarchism and had a knee-jerk anti-establishment stance, but that placed them—unintentionally, no doubt—close to the Tea Party in terms of anti-government fervor.

Contrast this to 40 years prior, when most progressive demonstrators made it their top priority to push the federal government to do more to reduce racial discrimination and fight poverty. Those protesters helped force the government to enact anti-discrimination and anti-poverty laws, which did succeed spectacularly in ending legalized segregation and were highly effective in slashing poverty. For much of the 20th century, from the Progressive Era through the seventies, government power was seen as a critical tool to solve major problems. But then conservatives who didn’t believe in government took it over, ran it horribly (see Katrina, Iraq, corporate de-regulation etc.), and then said, “See, we told you so—government is crap.”

It’s not shocking to me that the Right did that—it’s shocking to me that they suckered the Left into believing it. To me, conservatives’ single greatest success has been to convince the country—including self-proclaimed progressives—that government is not a big part of the answer. Many Occupy activists seemed blind to the reality that government was the only entity with enough power to check the vast powers of corporations they so despised.

True, government can be repressive, ineffective, and murderous, so it’s never the only answer. But throughout the centuries, in instances when starvation, warfare, and poverty were reduced, government was usually the driving force. I challenge self-described anarchists (or libertarians, for that matter) to provide a specific example in all of human history when people have voluntarily, on their own, with no help from government, solved a major societal problem. It’s never happened. Government is an inconsistent and flawed partner for progressive change, but only governments have the size, scope—and yes, legitimacy, at least in democracies—to solve big problems. As Chris Hayes has written, “When people come to view all authority as fraudulent, good governance becomes impossible, and a vicious cycle of official misconduct and low expectations kick in.” (15)

After Hurricane Sandy hit New York, and some government and private relief efforts moved too slowly (including established charities like the Red Cross), some Occupy Wall Street veterans founded Occupy Sandy, which they defined as “a grassroots disaster relief network that emerged to provide mutual aid to communities affected by Super Storm Sandy.” This effort focused mostly on volunteer-driven direct community service to redress the results of the storm, not on the political advocacy necessary to reduce poverty and stop climate change, which together caused the storm and ensured low-income neighborhoods in New York (and, previously, New Orleans) would suffer most from it. The original Occupy Sandy volunteer events were fairly effective, but they—again unintentionally, I’m sure—communicated the Reagan-esque message that volunteer work within the community, not big government action, was a better solution to community problems.

But Occupy Sandy eventually faded away, as did many of its volunteers. As of June 2016, the most recent posting on the website was from October 2014. (16) Meanwhile, key New York neighborhoods had still not fully recovered from Sandy, and it was city, state, and federal agencies and programs that were still working on long-term rehabilitation.

The Left must once again learn how to make peace with government, or its doomed to failure.

* * * *
This column is an excerpt from Joel Berg’s forthcoming book “America, We Need to Talk: a Self Help Book for the Nation,” to be published by Seven Stories Press in early 2017. City Limits will publish two additional sections of the book later this week.
* * * *


1. While some Sanders supporters still may think he actually won the 2016 Democratic nomination (just as a few ancient Japanese soldiers on some deserted islands may still think Japan won World War II, Sanders actually received
3.7 million fewer popular votes than Hillary Clinton in the primaries and caucuses. In 2013, socialist Kshama Sawant, affiliated with the Occupy movement, did win a seat on the Seattle City Council; yet this one city council victory was dwarfed by massive Tea Party electoral victories at the federal, state, and local levels.

2. Robert L. Borosage, “The Populist Moment Has Finally Arrived: Occupy Wall Street put inequality at the center of our politics. Only an independent movement will keep it there.””The Nation (from The Nation’s 150th Anniversary Special Edition), March 23, 2015 (accessed March 5, 2016).

3. I should be clear that the police were often in the wrong for using violence against Occupy activists, destroying their lawful property, and arresting people who were merely innocent bystanders. But the police who nonviolently arrested those who were actually breaking the law were mostly working-class folks just doing their jobs.

4. At the time, U.S. conservatives, including the Reagan Administration, implied that Nelson Mandela was a dangerous communist and that black South Africans could never be trusted to govern their own nation. We claimed that Mandela was a man of peace and that blacks were perfectly capable of governing their own affairs. They alleged that any change in the South African government would result in massive bloodshed. We insisted that change could happen peacefully. We were right. They were wrong.

5. Kenyon Farrow, “Occupy Wall Street’s Race Problem.” American Prospect, October 24, 2011 (accessed March 11, 2016).

6. Nina Mandell, “Occupy Atlanta offshoot of Wall Street protest denies Rep. John Lewis chance to speak at gathering,” New York Daily News, October 10, 2011 (accessed March 12, 2016).

7. (accessed March 10, 2016).

8. In a legal settlement, the City of New York agreed to pay Occupy Wall Street protesters and lawyers over $230,000 for the destruction of books during a police raid. The city was forced to state: “Defendants acknowledge and believe it is unfortunate that, during the course of clearing Zuccotti Park on November 15, 2011, books were damaged so as to render them unusable, and additional books are unaccounted for.” I never got the nickel due to me for the book I donated which was destroyed. Maybe I should get a lawyer.

9. Bernie Sanders and his supporters keep using the word “revolution” as well. While that pumped up his crowds, his use of the term also turned off most swing voters.

10. “Principles of Solidarity,“ #Occupy Wall Street NYC General Assembly, September 17, 2011 (accessed March 10, 2016).

11. “Declaration of the Occupation of New York City,” #Occupy Wall Street NYC General Assembly, September 29, 2011 (accessed March 10, 2016).

12. Protesters, who slept in tents made and distributed by giant corporations, used computers and smartphones made and distributed by giant corporations, used bathrooms in local small businesses, and then ate food that someone else grew, cooked, and delivered to them (and even sometimes purchased for them), and then patted themselves on the backs for being a self-sufficient autonomous, anarchist community, were pretty self-deluded.

13. I watched this live, but I don’t have a link or site.

14. Robert L. Borosage, “The Populist Moment Has Finally Arrived: Occupy Wall Street put inequality at the center of our politics. Only an independent movement will keep it there,” The Nation (from The Nation’s 150th Anniversary Special Edition), March 23, 2015,  accessed March 5, 2016.

15. Christopher Hayes, The Twilight of The Elites, 2012, Crown Publishers, New York.

16. “The Story Continues, Make Your Voice Heard,” Occupy Sandy Recovery (accessed June 14, 2016).

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The Incredible Leaning Flip of West Oakland

“Modern, open floor plan with charming colors,” the Zillow listing ad claims. “A lot of the work was done with permits.”

Another listing: “New dining room, new living room, new kitchen, new bedrooms, new bathrooms. New windows, new roof.”

But in one of the hottest real estate markets in the country, in a neighborhood where homes sell for more than 10 percent above list on average—and fast—2523 has sat empty on the market for months.

“If I didn’t know that house so well I’d feel sorry for it,” says Gabe Santos, who lived for five years at 2523. “I’d be like, ‘poor little house, no one wants you’.”

Of course, someone did want 2523, and the profits from flipping what was once a dilapidated, graffiti-covered squat, foreclosed after its owner was convicted of mortgage fraud and money laundering. There’s no trace of the little house’s former life, except for a characteristic that does not make the listing: The house is leaning, pitched several degrees sideways, and not in an endearing way.

It’s difficult to plot the precise center of Bay Area gentrification, but West Oakland—or “WeOak,” as some have speculatively tried to rename it—would be a strong contender.

A city that once suffered for catastrophic disinvestment is now plagued by a tidal wave of aggressive reinvestment. And with its proximity to San Francisco and mass transit, and its beautiful historic housing stock, this part of Oakland has seen some of the most dramatic changes, and a recent influx of new money from more affluent arrivals. Even the district’s council member was implicated in a shady local house flipping scheme.

But for all these most recent changes, West Oakland has been at the vanguard of the city’s accelerating demographic shifts for the last two decades. It was home to art galleries, maker spaces, punk houses, underground music venues, and other early indicators of gentrification long before Wall Street hedge funds purchased these homes and Google buses rolled through—galleries, spaces, and venues that are now facing their own evictions in turn.

West Oakland is the city’s oldest established neighborhood, a settlement that arose near the waterfront and the railroad terminus as Bay Area urban life began to take shape after the Gold Rush. Over time, it grew into a collection of neighborhoods, with a thriving jazz and business district and rows of sprawling, ornate Victorian and Edwardian homes alongside heavy industry and manufacturing centers that kept the locals employed.

Oakland suffered from white flight and blockbusting in the 1960s, and then from a loss of that manufacturing industry in the 1970s. But while the city became synonymous with California street crime over the next decades, it also became home to a quietly burgeoning arts community. In the 1990s and early 2000s, cheap, beautiful, industrial space in an expensive region attracted a wide, ill-defined range of creators who made everything from electronic music to fire-breathing cars. It was the first step toward a moneyed demographic shift that would be swifter than most anyone might have guessed.

In 2008, this Oakland showed no immediate signs of what was yet to come, just as the last tenants at 2523 were moving in.

Constructed years before its Victorian neighbors, 2523 is comparatively modest, with a tall false facade, like you’d see on an Old West clapboard movie set, instead of plaster medallions and leaded glass. This house was never supposed to be a very nice house—it was originally built in 1897 as a “rooming house … for transients,” and it’s still zoned and assessed for this purpose today. In 2008, the four-bedroom, 1,700-square-foot building rented for $1,200 per month to a revolving cast of young men who quickly established it as an integral part of West Oakland’s homemade art scene. Eventually they dubbed it Locos Only.

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“I didn’t move in there thinking, this is an ideal place to throw shows—because it’s not, it’s very far from ideal,” says Albert Luera, who moved to 2523 from his family’s home in East Oakland in 2008. “It took those first couple shows to kind of see that, oh yeah, I guess all these people can fit in the living room.”

Their predominantly black, impoverished neighborhood in West Oakland changed as so many predominantly black, impoverished urban areas have over the last decade, with DIY cultural hubs for new residents redefining a city’s function and value based primarily on its cheap rent.

In the early days, Luera and Santos say neighbors invited them to barbecues and never complained about the noise, which was always over before midnight. They paid rent to a property manager, Big Ed, who lived next door and made repairs as needed.

“It was very respectful—everyone was cool with each other,” says Santos. “It was just kids who wanted to listen to music.”

But 2523 was more than a home, or an underground music venue, or an unwitting tool of gentrification in a city on the brink of massive demographic change—it was also a piece of a multi-million-dollar mortgage scam.

Luera and Santos never met their landlord Jim McConville, who purchased 2523 in 2003 under the guise of his Sapphire Park Home Corporation. But McConville, who called himself “the West Coast Donald Trump” and is currently serving a nearly eight-year prison sentence for fraud and money laundering, was not a typical Oakland landlord.

In living room presentations to eager potential investors across California, McConville convinced dozens of straw buyers that he would pay them $10,000 each if they took out large mortgages on properties he said were undervalued in 2008, as the housing market was beginning to deflate. Instead, he kept the difference between the bank loan and the true home value, netting him and his accomplices millions while allowing the mortgages to default.

The public records on 2523 suggest McConville ran the same scam there years prior: In February 2003, he bought the home for $300,000 through one of his companies, the Sapphire Park Home Corporation; in October, he sold it for $430,000 to a John Wilson; one week later, Sapphire Park bought it back for $385,000. In 2005, McConville transferred ownership to his daughter, Nicole. After McConville’s arrest in 2009, Sapphire Park was shut down by the state along with his other shell companies, his daughter filed for bankruptcy, and 2523 became the latest in a fast-growing stockpile of Oakland properties facing foreclosure due to fraud, predatory lending, and a newly brutalized economy—a pile that in turn created a host of new opportunities for eager investors.

But as thousands of people were displaced from their homes through foreclosure, those houses did not in turn present new opportunities for other residents to become homeowners, even though they were suddenly cheap. Between 2007 and 2011, more than 10,000 Oakland homes were foreclosed, and 42 percent of those homes were purchased by investors.

While 2523 lingered in legal limbo, the houses around it were switching hands at a rapid clip, but research by the Urban Strategies Council and Greenlining Institute revealed a massive disparity between available mortgages for white buyers in Oakland versus people of color, who make up more than half the city population.

“What was alarming was the low numbers of mortgages particularly of people of color, but also just generally,” says Bobby Stahl, Housing and Economic Development Program Coordinator at Urban Strategies. “There is a belief that some of this limited opportunity for homeownership might be limited by speculative activity, all cash purchases”—which lock out small buyers.

Meanwhile, foreclosures that were already rented out left tenants in a new, precarious kind of housing purgatory.

When the news about their landlord’s crimes reached 2523, there was some debate about how to proceed.

“We got a note on the door, like, ‘this is the bank’s house!’ But we thought, this’ll just figure itself out. All these things were just happening around us, and we had no control,” says Luera. “It’s like when a cartoon character runs off a cliff and they keep running until they actually remember gravity and look down—that’s kind of how I felt about discovering how shady the ownership was. Like, wait, we’re on borrowed time.”

For a while, life continued as normal. “We kept paying for a little bit, because rent was so cheap,” says Luera. “I just felt like, I’m paying rent to somebody to let me live here and I don’t really want to ask any questions. I’m gonna have to do this anywhere I live—does it really matter that it isn’t going to who I think it’s going to?”

But ultimately the temptation to simply stop paying was too strong. “There was no scam on our part, it wasn’t like, ‘hey let’s squat this place’,” says Luera. “At a certain point we stopped paying rent because it was like, this is going to be taken away from us at some point anyway.”

They kept the utilities on, but with no rent came no sense of responsibility for the house. While banks were facing new regulations and fines for blighting Oakland neighborhoods with empty foreclosures, it was the tenants that let 2523 fall apart.

“Once we started squatting, that’s when the darkness happened. There was no one to fix anything anymore and we were a bunch of dumbasses—it went downhill real fast,” says Santos. “It turned into kids just trying to party and do drugs and drink, spray painting the walls and just general nastiness. It was infested with rats and everyone was doing heroin—it wasn’t so much about music anymore.”

The lean got worse, and more symbolic: As the homes around it were foreclosed and flipped, and Oakland became one of the hottest real estate markets in the country, 2523 couldn’t even stand up straight.

The definition of a flip for research purposes is simply a home that was sold twice in a 12-month period. While some flip markets are still thriving, most have cooled in recent years. “We think a majority of flips today are ‘good’ flips in the sense that investors are improving homes that were in need of rehabilitation,” says Trulia Chief Economist Ralph McLaughlin. “This is in contrast to the likely fact that a larger share of homes flipped 10 years ago were ‘bad,’ or speculative flips, where investors were buying and selling homes because they were speculating on pure price appreciation.”

Urban Strategies and other housing researchers differentiate between flipping and rehabilitation. “There’s a tremendous amount of overlap in the two and they’re not mutually exclusive—most folks engaging in rehab activity are flipping, but not all flippers are going to the trouble of rehabbing a property,” says Stahl. “In this current market it may be beneficial for someone to acquire a property and just hold on to it for six months.”

Home renovation is presupposed to be a productive thing, but the purchasing, changing, and reselling of a home at a higher price is no indication that the home has actually been improved. The most successful house flipping complicates the notion of a house’s value: Does $1,000 worth of glossy white subway tile actually add $10,000 of value, or does it attract the kind of person who likes glossy white subway tile, who is statistically more likely to have $10,000 more to spend on a house? Is flipping the practice of rehabbing old homes, or a more elaborate form of staging meant to appeal to a particular kind of buyer?

Brian Burke has flipped more than 700 homes as the CEO of real estate investment firm Praxis Capital. “The important thing for an operator that’s looking to fix up houses is finding ones with the right things wrong—if you can paint, install new carpet, modernize the flow, you’ll get paid for those things,” says Burke. “When you buy a house that’s leaning and your intent is to do a lipstick job by just correcting the easy things, but not fixing the structural issues, it can be challenging because now you’ve made the house look nice, but the buyers look at it and think, ‘Jeez, at some point I’m gonna have to fix that,’ and half the work to make the house look nice will have to get redone.”

Now, as one of the most expensive housing markets in the country, Oakland presents far fewer opportunities for investors looking to make a quick or even a medium-term buck. Flipping houses in the Bay Area still yields the highest profits in the country, according to RealtyTrac, but the deals are decidedly less attractive when one considers the growing cost of investment and shrinking margins. It makes the business of house flipping increasingly prohibitive to small operators.

“We think that flipping in the Bay Area will stabilize or even decrease over the coming years, even though profits are higher than other markets,” says McLaughlin.

“This is the time when amateur house investors and first-timers are itching to get started because of the excitement around the escalating real estate values and the proliferation of house flipping shows on television—everyone wants a piece of the action,” says Burke. “That euphoria causes everyone to kind of jump in, but they’re jumping into an empty pool.”

Since Urban Strategies published its report on the influx of investors to Oakland’s housing market, the money has changed hands. “The big investors of that time were not the common Wall Street hedge funds,” says King. “And that has certainly shifted—there’s been an influx of that institutional capital into Oakland since we finished.”

King, Stahl, and other housing researchers in Oakland are able to know where this new housing money is coming from because of new restrictions on investors passed after the foreclosure crisis—restrictions that are still easily avoided by motivated buyers.

Luera moved out of 2523 in 2010 and Santos in 2012, both to other homes in roughly the same neighborhood. 2523 was finally foreclosed in 2014.

“I figured it would just live the life of a trap house, eventually burn down or something,” says Santos. “I never thought it would get fixed up and cleaned the way it has.”

But Luera was always more skeptical. “I’m actually surprised it took them this long,” he says.

In 2015, after nearly a year on the market, 2523 sold for $240,000 to Vestis Holdings VIII, a real estate investment firm registered to Jonathan Owyang and an Oakland post office box. According to public records, Owyang owns 11 different limited liability companies, including Vestis Capital Group, Vestis Management, and Vestis JV, all established between 2010 and 2015. He flipped at least nine homes, including some foreclosures, under the Vestis title in the flatlands of Oakland and nearby San Leandro between 2011 and 2014, purchasing them for $189,000 on average and listing for $383,000. Owyang holds at least six more houses, each under a different Vestis LLC. He lists himself as the “managing member” of Vestis Capital Group on LinkedIn. Owyang did not respond to messages seeking comment for this story.

Running one business under the guise of several LLCs is not an uncommon tactic for house flippers in Oakland or elsewhere. “It could just be literally limiting his liability, keeping each interest separate,” says Stahl.

But after weathering the foreclosure storm, Oakland passed an ordinance to prevent this exact practice in the future, requiring investors who flip distressed properties to register with the city and pay a corresponding fee, ostensibly in order to prevent the kind of wide-scale blight that occurred when banks owned entire neighborhoods just a few years ago.

“If he has an LLC for every acquisition, he could potentially avoid having to register the properties,” says King. “Once you start accumulating properties like that it gets pretty pricey—and the penalty for not registering is even higher.”

But the most curious thing about 2523 is not that it keeps falling into questionable hands. It’s that it’s still leaning.

2523 Martin Luther King Jr. Way has toggled on and off the market since early March due to problems with the gas meter, according to the agent. It’s listed at a comparably fair $599,000 in a neighborhood where, according to Redfin, the median list price is $657,000 and $508 per square foot. In a way it’s hard not to root for 2523, which has the potential to be a relative rarity in the current market: A single-family home owned by a single family who actually lives in it.

But the lean has worsened to the point that 2523’s facade is actually resting against its neighbor to the north. It is listed in the disclosures. So far, this appears to be a dealbreaker.

“They’d have to take the whole house down to fix that,” Santos says, laughing.

Otherwise, 2523 bears little resemblance to its old self now, but its history hasn’t been fully erased yet: The former fast food restaurant two houses down that was painted during a Locos party is listed on Google as a neighborhood landmark, a welcome sign.

And for all the well-founded worry about what comes next for the city and its young misfits, its culture creators, its house destroyers, Luera at least still feels hopeful.

“Sometimes people are like, ‘What happened to the house parties in Oakland, where did they go?’ But I think they’re still there,” he says with a small smile. “I think we’re just not invited to them anymore.”

Editor: Adrian Glick Kudler
Illustrator: Susie Cagle

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Senate bill would let Springfield revive controversial foreclosure rules

Massachusetts lawmakers are considering a bill that would allow cities like Springfield to revive local ordinances requiring banks to pay to maintain properties that are under foreclosure.

“All we’re asking for is that the banks or financial institutions have the same responsibility as other landowners,” said Springfield Mayor Domenic Sarno, who supports the bill and called foreclosures “a cancer to our neighborhoods.”

The Senate debated the bill on Wednesday, but delayed a vote due to concerns about whether the bill would make it less likely for banks to continue to make mortgage loans to homeowners in municipalities that craft these laws. Lawmakers have until July 31 to revise and pass the bill.

Senate Minority Leader Bruce Tarr, R-Gloucester, predicted that if the bill becomes law as written, it would be struck down by the courts “because it is so incredibly vague and offers no restriction at all on the authority of cities and towns to pass a hodgepodge of ordinances.”

The Springfield City Council passed two anti-foreclosure ordinances in 2011 as the city was being hit by the mortgage foreclosure crisis. One ordinance required a bank to maintain a foreclosed home to certain standards and pay a $10,000 bond, which could be used by the city to maintain foreclosed properties, if the bank failed to do so. The other ordinance required the establishment of a mandatory mediation program to help homeowners facing foreclosure.

Banks challenged the ordinances in court. In 2014, the Supreme Judicial Court struck down the ordinances, finding that they were preempted by existing state laws. Similar ordinances in Worcester and Lynn were withdrawn after the SJC ruling.

The bill, S.41, sponsored by Senate Majority Leader Harriette Chandler, D-Worcester, would allow municipalities to require a cash surety from a bank on a foreclosed property, the way Springfield did with the $10,000 bond.

Springfield City Council approves anti-foreclosure ordinances

It also includes a general provision stating that unless expressly prohibited by state law, “municipalities shall have authority to enact laws for the purpose of minimizing foreclosures, ensuring the safety and security of residents, and ensuring the upkeep of vacant properties and those in foreclosure.”

Chandler said the bill would allow cities to collect money from banks to improve the conditions of vacant and foreclosed properties, in order to avoid blight. “Each of us understands all too well what happens as vacant property becomes vandalized property and what that means to first a neighborhood and then a community,” Chandler said.

In Springfield today, Sarno said the city must “jump through hoops” to rehabilitate foreclosed homes and return them to the tax rolls. Often, tax dollars are spent, because derelict properties will result in crime and fires, which the police and firefighters must respond to. City officials have trouble getting banks to clean up or secure neglected properties.

“It’s quality of life. People shouldn’t have to live next to this,” Sarno said.

State Sen. Eric Lesser, D-Longmeadow, a bill co-sponsor, said homes around Springfield fell into “extreme disrepair” during a spate of foreclosures after the 2008 recession. “The lawns were completely overgrown, the windows were broken, the doors were in some cases open and being infested with rodents and structural damage,” Lesser said. The foreclosures depressed the values of nearby homes and led to squatting and vandalism.

Lesser said requiring banks to post a bond, which could be used by the city for maintaining these homes, would let cities keep properties up to “the most basic safety and health standards,” to avoid those costs being borne by taxpayers.

“Otherwise, what was happening is the city, and through that city taxpayers, were on the hook for keeping these properties standing, which is fundamentally unfair,” Lesser said. “Why should the people of Springfield be asked to subsidize the banks?”

But Jon Skarin, senior vice president of the Massachusetts Bankers Association, said the problem with requiring a bond is that cities were trying to force banks to take responsibility for maintaining properties before the foreclosure process was finished – so before the bank actually had ownership of the property. Currently, banks are exempt from complying with state standards for things like sanitation codes until the banks take a property’s title. The bond would also require banks to take liability for the property. This would make lending more expensive for banks.

Skarin said even more problematic is the provision allowing municipalities to pass their own foreclosure ordinances, as long as they do not conflict with state law. That would potentially require banks to adhere to different rules in each city and town. Banks may then stop lending in cities and towns with onerous regulations.

SJC rules against Springfield in foreclosure ordinance case

“Mortgage lending in Massachusetts has to be regulated at the state level, it cannot be regulated on a city by city basis,” Skarin said. “To have a competitive mortgage market here in Massachusetts, you have to have standardized rules across the board.”

During debate on the Senate floor, several Democratic lawmakers spoke in favor of the bill. State Sen. Jamie Eldridge, D-Acton, called it a “common sense proposal” to allow cities and towns to recoup money from lenders to care for blighted properties in foreclosure.

But Tarr and other Republicans echoed Skarin’s concerns and said the bill could disrupt the availability of credit for homeowners.

“This clearly makes the process of lending more expensive and more difficult to do,” said State Sen. Viriato deMacedo, R-Plymouth. “My fear is a very well-intentioned piece of legislation, that would probably help some communities, will have the negative effect on those individuals … especially the young people and millenials trying to get into homes.”

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Colorado Springs’ foreclosure rate improves again in April

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As Colorado Springs’ housing market improves, the area’s foreclosure picture continues to brighten.

The Springs’ foreclosure rate – or the percentage of loans falling into some stage of foreclosure – declined to 0.48 percent in April, down from 0.62 percent during the same month in 2015, according to a report released Tuesday by CoreLogic, a California-based housing data firm.

The latest foreclosure rate also has dropped sharply from the years just after the Great Recession; in April 2011, the local rate was more than three times higher at 1.62 percent, CoreLogic’s reports show.

Another positive sign for Springs-area homeowners: The percentage of local mortgage holders who were delinquent on loan payments by at least 90 days fell to 1.66 percent in April, down from 2.10 percent a year earlier, according to CoreLogic. The latest figure also has fallen from 4.14 percent in April 2011.

Historically low mortgage rates, an improved economy and stronger consumer confidence have combined to fuel a surge in homebuying in the Pikes Peak region, local real estate experts have said.

That demand has helped drive up home values; as a result, financially troubled homeowners have a greater chance to sell their homes or refinance mortgages, which helps them avoid foreclosure.

The El Paso County Public Trustee’s Office also has seen a decline in foreclosure activity over the last several years. After foreclosure filings in the county reached a record high of 5,288 in 2009, they’ve fallen each year since; filings totaled 1,470 last year, the lowest annual total since 2001.


Contact Rich Laden: 636-0228

Twitter: @richladen

Facebook: Rich Laden

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Dallas housing investors are pushing families toward foreclosure, losing their paperwork

By Matthew Goldstein, Rachel Abrams and Ben Protess, The New York Times

When the housing crisis sent the U.S. economy to the brink of disaster in 2008, millions of people lost their homes. The banking system had failed homeowners and their families.

Private equity firms swooped in promising to do better.

But some of these new investors –  including three large firms that do business in Dallas — are repeating the mistakes that banks committed throughout the housing crisis, an investigation by The New York Times has found. They are quickly foreclosing on homeowners. They are losing families’ mortgage paperwork, much as the banks did.

And many of these practices were enabled by the federal government, which sold tens of thousands of discounted mortgages to private equity investors.

Private equity firms, and the mortgage companies they own, face less oversight than the banks. And yet they are the cleanup crew for the worst housing crisis since the Great Depression.

Lone Star Funds’ mortgage operation headquartered in Dallas has aggressively pushed thousands of homeowners toward foreclosure, according to housing data, interviews with borrowers and records obtained through a Freedom of Information request. Lone Star ranks among the country’s biggest buyers of delinquent mortgages from the government and banks.

Coppell-based Nationstar Mortgage, which leapt over big banks to become the fourth-largest collector of mortgage bills, repeatedly lost loan files and failed to detect errors in other documents. These mistakes, according to confidential regulatory records from a 2014 examination, put “borrowers at significant risk of servicing and foreclosure abuses.”

In the rental market, The Times found, other big private equity firms largely bypassed the nation’s poorest neighborhoods as they scooped up and renovated foreclosed homes across the country. Those firms include the nation’s largest private landlord of rental houses, The Blackstone Group LP, which has a subsidiary in Dallas.

These practices point to shortcomings of the government’s response to the housing crisis. Rather than enact sweeping changes to housing policy, the government largely handed the problems to a new set of companies.

These firms, unlike banks, raise money for their deals from pension funds.

Buried in a confidential bond document, in a jumble of legalese, Lone Star explains to investors one way it profits from delinquent loans. Lone Star’s mortgage subsidiary will lower a borrower’s monthly payment if “the net present value of a modification is greater than the net present value of a foreclosure, loan sale or short sale.”

Translation: If foreclosing on a homeowner is the most profitable option, Lone Star is likely to foreclose.

In a statement, Caliber Home Loans, Lone Star’s mortgage servicing subsidiary, said that “modifying a nonperforming loan for a borrower is almost always the most profitable option for a lender, and Caliber is incentivized to pursue that outcome.”

Yet Lone Star and Caliber have foreclosed on more than 14 percent of the 17,000 loans the firm picked up at auction from the Department of Housing and Urban Development in 2014, according to an analysis of loan filings that RealtyTrac performed for The Times. Caliber is now moving toward foreclosing on at least another 3,200.

Caliber and Lone Star have largely opted not to participate in government programs that encourage mortgage modifications. To date, Caliber has received just $3.3 million in payments from the Treasury Department for modifying loans in compliance with the federal Home Affordable Modification Program.

In contrast with Caliber, most banks have participated more fully in the government modification program, as has Nationstar, which has received $158 million in payments.

Inside Nationstar’s headquarters on the outskirts of Dallas, government regulators made an alarming discovery — and then another one, and another.

The regulators, who gathered at Nationstar in 2014 for what should have been a routine examination, found “inaccurate information” in customer loan files, according to confidential documents reviewed by The Times. Nationstar, which became a huge mortgage bill collector in recent years, often failed to detect these errors “until the foreclosure process is underway.” Some of the breakdowns, the documents said, “placed consumers at significant risk of servicing and foreclosure abuses.”

Nationstar, controlled by the Fortress Investment Group, was repeating some of the banking industry’s mistakes.

Authorities are investigating Nationstar based on the 2014 exam, and it could face an enforcement action this year.

Wesley Edens, a founder of Fortress, Nationstar’s private equity backer, maintains that the servicer has performed better than the banks it replaced. Since buying some of the banks’ most troubled assets, Nationstar has overseen a 50 percent decline in delinquent loans, though those improvements coincided with a broader recovery in housing.

A whirl of transactions illustrates how Nationstar can control nearly every stage of the mortgage process, posing potential conflicts of interest as it earns fees along the way. Nationstar collects bills and, when people don’t pay, can foreclose on homes. Nationstar earns fees auctioning those homes through Homesearch, another company it owns. Ads on Homesearch direct bidders to Greenlight Loans, which Nationstar also owns.

Nationstar then collects on new mortgages, bringing the process full circle.

New York-based Blackstone, one of the largest private equity firms, owns 125 homes in Ruskin, Fla., just south of Tampa, that it operates as rentals.

In making such a large investment in housing — $9 billion buying and renovating mainly foreclosed homes over the last four years — Blackstone effectively bet on which communities would emerge from the housing crisis as winners.

It bet correctly. The firm, which now owns about 50,000 homes in 14 markets, recently reported that the fund holding its Invitation Homes rental subsidiary in Dallas has generated a 23 percent annualized return for its investors.

Blackstone largely steered clear of more urban communities with older homes, which are more expensive to maintain.

About 3 percent of Blackstone’s rental homes are leased to lower-income tenants with federal housing subsidies known as Section 8 vouchers. Blackstone has said it welcomes Section 8 voucher holders, if the federal subsidy is enough to cover the rent.

“We are proud to provide quality housing choices for working families,” said Claire Parker, a spokeswoman for Invitation Homes.

From The New York Times

Posted by Julieta Chiquillo, Breaking News reporter


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Foreclosure, late payment rates continue to decline locally – Winston

Posted: Wednesday, June 29, 2016 12:15 am

Foreclosure, late payment rates continue to decline locally

By Richard Craver Winston-Salem Journal

Winston-Salem Journal

The Winston-Salem metropolitan statistical area reached another three-year low in two key foreclosure categories during April, a national real-estate research group said Tuesday.

The CoreLogic report focuses on residences in some stage of foreclosure. The Winston-Salem MSA comprises Davidson, Davie, Forsyth, Stokes and Yadkin counties.

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Wednesday, June 29, 2016 12:15 am.

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