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Joint Press Statement by Special Rapporteur on visit to Detroit Oct 18-20

Upon invitation from civil society organizations, we visited the city of Detroit (Michigan – USA) from 18 to 20 October 2014. The purpose of this informal visit was to learn more about the impact of water disconnections on the living conditions of individuals and households and on their human rights to water, sanitation and housing, and to discuss international standards on human rights.

During the visit, we went to different parts of Detroit and met with people whose water had been shut off and others who are struggling to pay expensive water bills to avoid shut-offs. We listened to stories from single mothers with low income, older persons, people with disabilities and chronic illnesses. We also discussed the situation with Mayor Duggan, City Council, Congressman Conyers, civil society organizations, Detroit water department workers, and with lawyers.

Detroit is undergoing large-scale water disconnections. This year alone, at least 27,000 households have had their services disconnected. While it is not the first time in recent decades that city residents are confronted with such a critical situation, the scale of water shut-offs carried out by a contracted company since last year is an unprecedented level. The utility has passed on the increased costs of leakages due to an aging infrastructure onto all remaining residents by increasing water rates by 8.7 percent. This, combined with the decreased number of customers, and increased unemployment rate, has made water bills increasingly unaffordable to thousands of residents in Detroit living under the poverty line. In addition, repeated cases of gross errors on water bills have been reported, which are also used as a ground for disconnections. In practice, people have no means to prove the errors and hence the bills are impossible to challenge.

Without water, people cannot live a life with dignity – they have no water for drinking, cooking, bathing, flushing toilets and keeping their clothes and houses clean. Despite the fact that water is essential for survival, the city has no data on how many people have been and are living without tap water, let alone information on age, disabilities, chronic illness, race or income level of the affected population.

Denial of access to sufficient quantity of water threatens the rights to adequate housing, life, health, adequate food, integrity of the family. It exacerbates inequalities, stigmatizes people and renders the most vulnerable even more helpless. Lack of access to water and hygiene is also a real threat to public health as certain diseases could widely spread.

In addition, thousands of households are living in fear that their water may be shut off at any time without due notice, that they may have to leave their homes and that children may be taken by child protection services as houses without water are deemed uninhabitable for children. In many cases, unpaid water bills are being attached to property taxes increasing the risk of foreclosure.

Disproportionate effects on vulnerable people and low income African Americans
About 80 percent of the population of Detroit is African American. According to data from 2013, 40.7 percent of Detroit’s population lives below the poverty level, 99 percent of the poor are African American. Twenty percent of the population is living on 800 USD or less per month, while the average monthly water bill is currently 70.67 USD. This is simply unaffordable for thousands of residents, mostly African Americans.

We were deeply disturbed to observe the indignity people have faced and continue to live with in one of the wealthiest countries in the world and in a city that was a symbol of America’s prosperity.

We were also distressed to learn from the low-income African American residents of the impossible choices they are being compelled to make – to either pay their rent or their medical bill, or to pay their water bill.

It was touching to witness mothers’ courage to strive to keep their children at home, and the support people were providing to each other to live in these unbearable circumstances. And it was heartbreaking to hear of the stigmatization associated with the shut-offs – in particular the public humiliation of having a blue mark imprinted on the sidewalk in front of homes when their water was shut off due to unpaid bills.

In line with the mandates entrusted to us by the Human Rights Council, we would like to underline that the United States is bound by international human rights law and principles, including the right to life as well as the right to non-discrimination with respect to housing, water and sanitation and the highest attainable standard of health. These obligations apply to all levels of Government – federal, state and municipal. Moreover, they also extend to the various functions of State, including the judiciary.

The rights to non-discrimination and equality are core principles of international human rights law. Governments are obliged not only to refrain from discrimination in the design and implementation of laws and policies, but must strive to ensure substantive equality for all. The United States has ratified the United Nations Convention on Elimination of Racial Discrimination which explicitly prohibits and calls for the elimination of racial discrimination in relation to several human rights directly affected by water disconnections, including the right to housing and the right to public health.

The human rights to water and sanitation and to adequate housing 
The human rights to safe drinking water and sanitation and to adequate housing both derive from the right to an adequate standard of living which is protected under, inter alia, article 25 of the Universal Declaration of Human Rights which is fully applicable to the United States. In addition, adequate housing and access to safe water are clearly essential to maintain life and health, and the right to life is found in treaties the United States has ratified, including the International Covenant on Civil and Political Rights.

Ensuring freedom from discrimination does not mean that everyone should be treated equally when their circumstances are different. Water and sanitation does not have to be free. It must rather be affordable for all. The price cannot put a household in debt or limit access to essential services such as food or medicine. A human rights framework provides that people should not be deprived of these rights if they cannot pay the bill for reasons beyond their control. Disconnections of water due to non-payment are permissible if it can be shown that the resident is able to pay but is not paying. When people are genuinely unable to pay the bill, it is the State’s obligation to provide urgent measures, including financial assistance, a specially low tariff or subsidies, to ensure access to essential water and sanitation for all. Not doing so amounts to a human rights violation.

Similarly, the human right to adequate housing means that housing must be affordable, including the costs of water, sanitation and other housing-related services. Houses without water and sanitation are unsafe and uninhabitable. They expose residents to disease, exacerbate existing health conditions, and threaten the security of tenure of residents. If costs associated with housing are not in line with income levels, housing is rendered unaffordable for many low-income residents, leading to accumulated arrears which in turn create real risks for foreclosure, eviction and homelessness. This contravenes the State’s obligation to ensure tenants and owners enjoy secure tenure.

City residents have been fighting against water bills, which are higher than the national average, for many years. The 2006 Water Affordability Plan, for example, was the result of community mobilisation, intending to avoid the recurrence of widespread shut-offs due to inability to pay, but it was unfortunately not implemented. In recent months, the local government has taken some measures. However, such initiatives are insufficient to ensure affordability of water and sanitation and adequate housing. The Mayor’s 10 point plan, for instance, does not seem to take into consideration the ability of chronically low-income persons to pay water bills and arrears, unlike more reasonable affordability models found in other states in the United States.

We have heard of a number of households who have been “constructively” evicted from their homes due to the water being shut-off and are now homeless. We also learned that as a result of a law adopted in September 2014, those who are homeless will be subject to criminal sanction if they are found to be living in a dwelling without a valid lease, which threatens those who choose to live in abandoned or foreclosed homes and may threaten evictees harboured by friends or family.

These issues did not come as a surprise, even if the magnitude of people affected deeply startled us. In recent years both our mandates have officially visited the United States of America at the invitation of the United States Government. In 2011, the Special Rapporteur on the human right of water and sanitation encouraged the United States Government to adopt a mandatory federal minimum standard on affordability for water and sanitation, to ensure due process guarantees and to provide protection against disconnections for people living in poverty. In 2009, the Special Rapporteur on adequate housing raised concerns about the housing conditions of African Americans and other low-income population groups. She noted the lack of affordable housing, substandard conditions of existing housing units and their experiences of discrimination.

Due process and access to justice
We also heard testimonies from residents about the lack of information about the shut-offs, confusion regarding water bills and notices of unpaid bills, lack of due process in the way some disconnections have been carried out, and lack of effective remedies to challenge decisions.

Suggested recommendations: 
We suggest that the City of Detroit restore water connections to residents unable to pay and vulnerable groups of people, stop further disconnections of water when residents are unable to pay, and provide them the opportunity to seek assistance that must be made available through social assistance schemes.

We also urge the City of Detroit, the state of Michigan and the national government to adopt a mandatory affordability threshold. In addition to this, specific policies should be adopted to ensure specific support to people who live in poverty.

We suggest that the City of Detroit provide urgent measures, including financial assistance, to ensure access to essential water and sanitation (minimum amount of water necessary for personal and domestic uses, which should be about 100 liters per person per day) and to housing when people are unable, for reasons beyond their control, to cover the costs themselves. In such measures, protection of vulnerable groups of people (those with disabilities, chronic illnesses, with children, etc) must be prioritized.

We recommend that the authorities make an urgent assessment of the public health consequences for the individual, schools and community of the water shut-offs, and take steps to mitigate adverse impacts.

We recommend Governments make every effort to ensure that the most vulnerable, including those who reside in Section.8 housing, are not evicted from or lose their housing as a result of water shut-offs or water bill arrears.

We recommend that the city of Detroit stop converting delinquent water bills to property liens for collection and enforcement through the tax foreclosure process. We further recommend that the Government advertise and make accessible property tax exemption programs for those living in low-income.

In the event that an individual or family is rendered homeless due to water shut-offs, the city of Detroit must have in place emergency services to ensure alternate accommodation with running water is available. Immediate and urgent steps must be taken to find long-term viable housing solutions for these residents.

We recommend that the Federal Government immediately undertake an investigation into the water shut-offs to determine if they are having a disproportionate impact on African Americans and other groups protected against discrimination.

Federal and state agencies with relevant authority should require water and sanitation utilities, as a condition for funding and permits, to collect data and report annually on water shut-offs by age, income level, disability, race, and chronic illness. This information should be made publically available. Any practice that has a discriminatory impact must be addressed and discontinued.

In our view, residents of Detroit should be ensured access to administrative and legal remedies, in particular those who are unable to pay current water bills and/or arrears or who want to challenge the amount of their water bills or the cutting-off of their water supply. These procedures must be made public and accessible, and adequately resourced.

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Five real estate investors indicted in bid rigging scheme in San Mateo, San …

SAN FRANCISCO – Five real estate investors accused of rigging bids at foreclosure auctions in San Francisco and San Mateo County have been indicted in federal court in San Francisco, according to the U.S. Attorney’s Office.

The indictment filed Tuesday charges Northern California real estate investors Joseph Giraudo, Raymond Grinsell, Kevin Cullinane, James Appenrodt, and Abraham Farag with participating in conspiracies to defraud mortgage holders and others through bid rigging and mail fraud.

Beginning in August 2008 and continuing through January 2011, prosecutors allege the defendants rigged dozens of public auctions in San Mateo County and three of the five men – Giraudo, Grinsell and Appenrodt – engaged in bid rigging in San Francisco County as well.

The defendants allegedly agreed to refrain from bidding or to stop bidding on certain properties that were for sale at public auctions, the indictment alleges. They would designate which among them would win certain properties and then buy those properties at an artificially deflated price.

Those who didn’t bid on the properties received payoffs, prosecutors said.

“These defendants corrupted the public foreclosure auctions in San Mateo and San Francisco counties, and they did so to line their pockets with money that rightfully belonged to mortgage holders and others,” Deputy Assistant Attorney Brent Snyder said.

To date, 47 people have agreed to plead or have pleaded guilty to charges of bid rigging and fraud at public foreclosure auctions in Northern California as part of the U.S. Attorney’s Antitrust Division’s criminal enforcement program.

In 2009, President Barack Obama established the Financial Fraud Enforcement Task Force, charged with investigating and prosecuting financial crimes.

Each bid rigging violation, which is prohibited under the Sherman Antitrust Act of 1890, carries a maximum penalty of 10 years in prison and a $1 million fine. Judges also have the option of imposing a fine that is twice the gain derived from the crime or a fine that is twice the loss suffered by the victim, according to the U.S. Attorney’s Office.

Each count of mail fraud carries a maximum sentence of 20 years in prison and a $1 million fine, according to the U.S. Attorney’s Office. The government can also seek to forfeit the proceeds earned from participating in the mail fraud schemes.

Anyone with information about bid rigging schemes or fraud related to public foreclosure auctions is asked to contact the Antitrust Division’s San Francisco office at (415) 934-5300, or the FBI’s tip line at (415) 553-7400.

Copyright © 2014 by Bay City News, Inc. … Republication, re-transmission or reuse without the express written consent of Bay City News, Inc. is prohibited.

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Can’t Afford a House? Don’t Buy One

America needs more low-down-payment loans.

That seems to be the opinion of our government, anyway. The government agencies that drive most of the housing market are pushing for lower down-payment standards on mortgages, easing the 20 percent requirement that has become standard for much of the market.

The Center for American Progress approves: “We shouldn’t obsess about down payments,” said Julia Gordon, director of housing policy. “Research confirms that low-down-payment loans to lower-wealth borrowers perform very well if the mortgages are well-underwritten, safe and sustainable.”

This depends, of course, on what you think “perform very well” means. A low-down-payment loan made to someone with a good credit rating and a low debt-to-income ratio will perform better than a low-down-payment loan made to someone with terrible credit and a lot of debt. But it has a higher default risk than a mortgage made to a similar borrower with an adequate down payment, because when you start out with little equity, you’re apt to find yourself in foreclosure if you get into financial trouble.

I’m with Arnold Kling on this:

There is simply no way to make low down payment lending stable in any environment any than in a rising house price environment. [The Center of American Progress's] study says it covers the last decade. If you made a low down payment loan in 2001, there was enough of a price increase after that you’re probably fine. But it only works in that environment and it creates this cycle of a boom as house prices are rising, and then once they stop rising everybody crashes. You get this epidemic of foreclosures. It destabilizes the entire market.

Is there a good public-policy reason to encourage people to make a heavily leveraged bet on continued upward movement in home prices? Presumably, the argument is that many homeowners have done very well out of this over the past 50 years; rising home values sowed the seeds of many a college education and retirement fund.

But there are huge drawbacks to housing, too. Leveraged bets are great when they pay off; when they don’t, they leave you dead broke. Especially a bet on a large, illiquid asset such as a house. Put a homeowner into one of these gambles at the age of 35, send the local housing and job markets south a few years later, and the end result is a broke middle-age person with trashed credit in desperate need of a good rental unit. Which legislators should know, because we seem to have a lot of them around right now.

You also end up with a much more unstable housing market. When a huge segment of the market has negative equity or has equity too low to cover the substantial costs of a sale, then in any economic downturn, you are going to end up with a lot of foreclosures. Those foreclosures will, in turn, depress both the housing market and the broader local economy. Which again, we should all know, because we just went through this very process. So why are we so eager to return to this situation?

Because, I think, most of us still haven’t managed to shed the idea that buying a house is a good way to get some unearned bonus wealth. Too many people managed to do just that for too many years. We think of 2008 as an aberration, rather than reversion to the mean. And that’s a costly mental error.

The long, steep increase in American home prices from 1946 to 2008 was driven by a whole lot of trends that are hard to repeat: the invention of the 30-year, fixed-rate, self-amortizing mortgage, which allowed people to pay more for a house by lowering the monthly payments. The securitization revolution, which lowered mortgage risk by bundling the loans into large, diversified portfolios, thereby lowering rates. Rising inflation, which pushed up the price of houses. Falling inflation, which lowered interest rates and monthly payments still further and allowed people to pay even more for those houses. The credit-scoring revolution, which allowed banks to offer loans to more people, increasing demand for the existing housing stock. And in dense coastal areas, you also had the rise of NIMBY zoning laws, which made housing scarcer and therefore more expensive.

The problem is, these things have already happened. Most of them cannot happen again — interest rates can’t really go much lower. NIMBYism will go on, but the expectation of rising land values is already priced into the current value of the houses. If anything, it’s overpriced; I have a lot of conversations with Washingtonians who expect our housing market to follow a path like Brooklyn’s did, despite the notable absence of hyperwealthy financiers and international billionaires who want a pied-a-terre in our modest burg.

So I’m unimpressed by the argument that it’s unfair to lock financially marginal buyers out of this wondrous investment product. It’s unlikely that current homebuyers are going to experience the kind of windfall that their parents and grandparents did, if for no other reason than the fact that too many of them are still expecting that sort of windfall and factoring that expectation into what they’re paying for a house.

Which is not to say I am against buying homes. I am very much for buying a home — so much so that I went and bought one myself a few years ago. But buying a house is a good idea only if you meet the following conditions:

  1. You can afford a sizable down payment to cushion you from the effects of local economic downturns or you have a super-stable job, such as working for the government or your father-in-law, that makes you unlikely to ever miss any payments.
  2. You can afford the maintenance as well as the payments, insurance and property taxes.
  3. You have good disability and/or mortgage insurance to make sure that you do not miss any payments even if you break your back and can’t do your job anymore.
  4. You are pretty sure you do not want to leave your area or move to a larger, more expensive home anytime in the next five years.
  5. Your payment is a reasonable percentage of your take-home pay (I shoot for under 25 percent; anything over 35 percent is far too risky).
  6. You have a sizable emergency fund to deal with contingencies.
  7. You can afford other forms of savings, rather than counting on your house as a piggy bank for future needs. In general, if declining home prices would send you into a hysterical panic about your financial situation, you are buying too much house.

If you do not meet these conditions, then buying a house is gambling — not just on rising home prices, but also on the continued soundness of your roof, boiler and plumbing. If you wouldn’t borrow the money to go to Vegas, then don’t borrow it for a house, either.

When legislators and activists say that we need low-down-payment loans because most people couldn’t possibly save up for a 20 percent down payment, what they’re really saying is that people can’t actually afford to buy a house. Helping them to go buy one anyway is not a great idea; it will work out well for some, to be sure, but it will have tragic consequences for others, and for the housing market as a whole if there’s another downturn. We just spent six years learning, the very hard way, that you can’t borrow yourself rich. That knowledge is too expensive to throw away so easily.

To contact the writer of this article: Megan McArdle at

To contact the editor responsible for this article: Brooke Sample at

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A Wave Of Foreclosures In Detroit Could Leave 150000 People Homeless

Detroit, Abandoned, Foreclosure, Wreck, Foreclosure, House, HomeBill Pugliano/Getty Images

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Evone Brown, a 55-year-old former machine operator, survives on $850 a month from retirement and disability checks, which wasn’t enough to cover the roughly $8,000 she owed in property taxes on her home on the east side of Detroit. This year, because she was at least three years behind on her tax payments (most of which she inherited when she bought the house in 2011), Wayne County’s treasurer foreclosed on her. As a result, her house is up for sale this week in Wayne County’s online foreclosure auction, at a starting bid of just $500. She will most likely be evicted this January.

She’s not alone: As Detroit seeks to leave bankruptcy behind and get back on its feet—ramping up development with construction of a light rail and a new hockey arena that will cost the city hundreds of millions of dollars—it is simultaneously bearing witness to a process that could evict up to 142,000 of its residents, many of whom are too poor to pay their property taxes.

Detroit is 83 percent African-American, and 38 percent of its population lives below the poverty line. But the older, blacker Detroit starkly contrasts with a whiter, wealthier new Detroit that’s been wooed in by tax breaks and living incentives—which gives these evictions a heavily racial subtext.

“Do you think they are going to take my home away from me?” Brown asks, breaking down in tears. A few feet from her lies her brother, sleeping. He has just come back from the hospital after being diagnosed with prostate cancer. Brown herself suffers from arthritis and has mobility issues. A knee-replacement surgery gone wrong last year left her with one leg shorter than the other.

“If they kick us out, we won’t have anywhere to go. We will have to go to a shelter. I don’t want to go to a shelter. I want to stay in my home,” she says.

This year in Detroit, there have been 22,000 foreclosures on properties whose owners failed to pay property taxes three years in a row. Of those, 10,000 are estimated to be occupied, meaning this year’s foreclosures are set to oust about 27,000 Detroiters from their homes.

That’s a large number in a dwindling city with fewer than 700,000 residents, but the figures are set to get even worse. In the next couple of months, Wayne County’s treasurer will be serving foreclosure notices on 110,000 more properties, 85,000 of which are in Detroit, according to its chief deputy treasurer David Szymanski. With half of those Detroit properties estimated to be occupied, this means a further 115,000 Detroiters might lose their homes next year.

detroit housesRebecca Cook/ReutersIt’s not just unoccupied houses being foreclosed.

In a city supposedly trying to attract residents rather than lose them, this means a potential 142,000 Detroiters—one-fifth of the city’s population—will be shown the door within the next year and a half. The city has yet to announce plans for accommodating those who get evicted.

Detroit’s tax-delinquent residents, who together occupy more than half of the city’s properties according to local data firm Loveland Technologies, are frequently blamed for the city’s underfunded, poorly functioning public infrastructure and are considered part of the reason the city went bankrupt in the first place.

The city’s still relatively new mayor, Mike Duggan, likes to say at press conferences and town-hall meetings that he wants to work with Detroit’s “good” residents—those who seek to pay their bills and mow their lawns. But with little active effort put into retaining residents who are behind on their bills and facing foreclosure, some are beginning to feel like the evictions are a part of a bigger ploy to rid the city of large chunks of its poorer residents—a modern-day form of forced relocation.

“It’s a tragic and extreme version of a familiar pattern,” says Cheryl Harris, a professor of civil rights and civil liberties at the UCLA School of Law. Harris calls the Detroit auction a massive form of “racial dispossession.”

Forced relocation is a sensitive subject in Detroit, where, in the 1950s, large chunks of poorer, black neighborhoods were razed to make way for highway development. Black residents were violently kept out of whiter areas of the city until the ’60s.

Harris says that these evictions should be viewed alongside the “legacy of specifically racialized housing policies that put these [black-owned] properties and these [black] property owners at a distinct disadvantage within the relative marketplace, and located them as devalued to begin with.”

In a seminal book on Detroit’s inequality, Thomas Sugrue, a professor of history and sociology at the University of Pennsylvania, highlighted the long-lasting effects of postwar housing-discrimination policies, including redlining, which categorized neighborhoods with even a small handful of black people living in it as unfit for investment or mortgage loans. (In the July issue of The Atlantic earlier this year, Ta-Nehisi Coates extensively mapped how these practices played out in Chicago.)

The establishment of two segregated housing markets strongly favored white people, blocking black people from federally sponsored low-interest housing loans and making them vulnerable to extortion from opportunistic lenders. These dual markets set the scene for Detroit’s 1967 race riots and accelerated the pace of white flight. Ongoing, growing wealth disparities between white and black families—a recent estimate is that white families are an average of six times wealthier than their black counterparts—can in part be explained by a continuing history of housing discrimination.

To many former and current homeowners in Detroit, this history is at the heart of their relationship with the city. Arquesha Esters, a 32-year-old mother of two, who formerly worked as a political organizer around the country and is now studying social work, returned to Detroit five years ago with her husband DeAndre after inheriting her great-grandfather’s house. It’s the only house her family has ever owned.

“This is the house my grandfather grew up in, my mother grew up in, and the one I remember being in as a child. I want my daughters to grow up in this house too. This is our home,” she says. And yet Esters, who wants to eventually turn her home into a haven for teenage girls transitioning out of foster care, may forfeit it in the next few months.

When she first got back to Detroit, finding work was near impossible, Esters says. The only jobs she could find were at dollar stores and fast-food restaurants. Eventually, she went back to school and her husband found a job in construction as a forklift driver. Still, they struggled to make ends meet and fell behind on bills.

After their basement had a water leak, Esters was hit with a $4,000 water bill she was unable to pay. The debt was transferred over to her property taxes—a common practice, one that links Detroit’s water-shutoff crisis directly to these foreclosures. When her house was foreclosed on this year by Wayne County’s treasurer, she owed more than $12,000 in taxes, a bill that had skyrocketed because of fees and an 18 percent yearly interest rate. The sum was unreachable for Esters and her family, as was any payment plan made available to her.  

Many homeowners are unaware that they could erase their debts and regain ownership by bidding on their own homes for prices as low as $500.

Esters may keep an eye on her lawn, and even plant flowers, but to those in charge, that doesn’t quite cut it. “If they can’t afford to pay their taxes, they really can’t afford to own a home. Therefore rather than being a homeowner, they should be a renter,” says Szymanski, the chief deputy treasurer.

Perhaps because so many believe that poor people are ill-equipped to be homeowners, very few people losing their homes to foreclosure have been informed that they can re-buy their homes. A given house’s unpaid property taxes can amount to thousands of dollars, yet many homeowners aren’t aware that they could erase their debts and regain ownership by bidding on their own homes for prices as low as $500.

When Michele Oberholtzer, a Detroit-based writer and engineer, surveyed a thousand foreclosed properties on a private contract last month, she noticed that few of the residents knew about their options. She says around 90 percent of the people she spoke with were either unaware of the auction’s existence or of their ability to at least try to buy back their foreclosed houses, canceled of all debt. Community-based organizations are doing as much as they can to redress this information gap, but resources are limited.

Properties for sale in the Wayne County auction went up in a first round in September for the total cost of taxes and liens owed. The second October round irreversibly expunges all debt and sells houses at a starting bid of $500, covering Wayne County’s estimated administrative costs for one house. The second round of the auction started on October 9 and runs through October 28, but its most heated days are in its final week. Starting yesterday, final bids are closing on 100 houses every 15 minutes.

Harris says that these evictions should be viewed alongside the “legacy of specifically racialized housing policies.”

Since her discovery that families with young children live in foreclosed houses and are often ill-informed about what can be done to reclaim them, Oberholtzer began seeking funds. She created the ‘Tricycle Collective” and has managed to raise money for 10 families, including Esters’s, with the aim of buying their homes back at auction. Many of Oberholtzer’s friends—young, white, college-educated professionals like her—are bidding in the Wayne County tax foreclosure auction on houses for themselves, she says.

Tragically, the most desirable homes to be bought up at auction are those that are still occupied, like the houses Esters and Brown are living in. Abandoned properties, on the other hand, tend to quickly get stripped of all their valuable parts and are therefore very expensive to get back up to livable conditions.

There are other, larger-scale efforts to help. Ted Phillips, the director of the United Community Housing Coalition in downtown Detroit, has been leading the charge to inform people about their options once their houses have been foreclosed on. If they aren’t granted an extension or put on a payment plan, the coalition will do its best to bid on their homes. Phillips says he and his team of seven will be cramming round a conference table this week, seeking to buy back around 500 houses at an estimated average price of $1,250. When a wave of foreclosures hit the city a decade ago, the United Community Housing Coalition was able to prevent most evictions, but there are too many foreclosures now for the organization to fight all of them.

People like Brown, the former machine operator on the east side, inevitably fall through the cracks, putting them at risk of opportunistic lending schemes. The only person who has offered to help so far is a “foreclosure specialist” who phoned Brown last week offering her a last-minute loan, she says.  

Predatory lenders and speculators circle around like vultures during the tax foreclosure process. Two years ago, a 96-year-old woman who was taking care of her 65-year-old disabled daughter was, unbeknownst to her, foreclosed on. Her house was bought by a speculator at auction for just $1,300, Phillips says. The following January, the new owner of her former house threatened her with eviction but offered to sell her the house back for $19,000. With the help of Phillips and his team, who managed to negotiate the price down a little, the house was eventually sold back to its original elderly occupant and daughter at a price of $13,000. This is common practice, Phillips says, with many houses being bought at auction by “investors” and sold back to poorly informed occupants at inflated prices—five to 10 times that of the auction sale.

Esters seems hopeful that she’ll get a last-minute reprieve, but second chances for people like her do not currently seem to figure within city policy. A recently revamped Detroit Land Bank Authority is focusing on attracting new residents to the city, not retaining old ones. The authority is selling homes owned or reclaimed by the city of Detroit through a much more curated online auction of its own—“Neighbors wanted,” its website chirpily declares.

detroit houses2Rebecca Cook/ReutersAn occupied house sits next to two of fifteen empty lots on Desoto Street. This house was on the auction block when this photo was taken back in 2009.

The second part of the Detroit Land Bank Authority’s mandate—apart from attracting a desirable kind of resident—is to execute a plan to completely eradicate blight in Detroit over the next five years at a total cost of between $500 million and $1 billion. The money initially being used for blight removal is $52 million in federal funds that was originally marked for foreclosure relief. Craig Fahle, a spokesperson at the authority, called demolition efforts some neighborhoods’ “most pressing need.”

The only person who has offered to help is a “foreclosure specialist” who phoned Brown last week offering her a last-minute loan.

But Esters, whose block in East Detroit only has six occupied houses left out of around 26, says that in the past five years, three occupied houses have become vacant as a result of foreclosure. All three houses are now completely dilapidated, fit for demolition. “Don’t you think the best way to stop blight is to keep people in their homes?” she wondered.

Esters points to the house next door to hers, which had belonged to a family named the Longs for three generations. The Longs were foreclosed on two years ago, and now the house has become a magnet for crack users, she says. Still, Esters wants to stay. “This may look like a third-world country, but we’re a tight-knit community,” she says.

Regardless of whether she manages to keep her house, the future of Esters’s neighborhood may not be in her hands. Detroit’s movers and shakers have widely accepted an urban-planning report and “strategic framework” released by Detroit Future City last year. Mayoral 10-point plans, city reports, and grant applications all self-consciously keep in step with Detroit Future City’s agenda, which includes provisions for the emptying out of certain neighborhoods over others.

Detroit Future City’s maps show that Esters’s and Brown’s neighborhoods are set to be emptied out, with the recommendation that they be “steadily depopulated.” This would be to make way for “innovation productive” use, which seems to refer to land being used for water containment and possible aquaculture.

The Detroit Land Bank Authority will be given all of the un-purchased lots from the Wayne County auction, meaning that the authority may soon begin to have what it needs to realize the Detroit Future City plan.

For Harris, the civil-rights law professor at UCLA, pushing residents out and blaming their lack of ability to pay is ignoring the larger, structural issue of racial discrimination. “I do want to resist the notion that this is about individual behavior of individual Detroiters when what’s been happening in the city is a kind of slow hollowing out for the purposes of a re-takeover,” Harris says. “They have no intention of locking the gates on Detroit and walking away. That is not what is happening here. What is happening is a kind of clearing on the ground for its reconstitution.”

This article originally appeared at The Atlantic. Check out The Atlantic’s Facebook, newsletters and feeds. Copyright 2014. Follow The Atlantic on Twitter.

There’s A Bicycle Boom Quietly Occurring In America’s Motor City

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Deb Goldberg for state treasurer

The Massachusetts state treasurer could stay busy with the basic responsibilities of managing the state’s cash flow and debt. But the holder of the office has a much broader portfolio, overseeing the state school building fund, lottery, alcoholic beverages commission, public pension fund, state retirement board, and other duties. The position demands an executive with high energy and wide-ranging experience. That candidate is Democrat Deb Goldberg.

Goldberg, whose family used to own Stop Shop, learned the grocery business from the ground up. Unlike her opponent, Republican Mike Heffernan, she has held elected office on the local level, gaining valuable political and fiscal experience.

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Serving six years on the Board of Selectmen in Brookline gave Goldberg pragmatic experience, which would serve her well when keeping tabs on school construction costs. She also has an appreciation for the impact that Lottery proceeds can have on police, fire, and other basic services, and vows to streamline the process further by fixing the outmoded technology used by lottery vendors.

Whoever becomes the next treasurer will follow a solid term by outgoing state treasurer Steve Grossman. He set a high bar for transparency, cash flow management, and return on investments in the state pension fund, which rose by 17.6 percent in the fiscal year that ended June 30. Goldberg pledges to continue that tradition of excellence with her plan to create a nonpartisan fiscal agency to predict the cost of new legislation and provide multiyear budget forecasts. She also promises to publicize the budgets of all departments connected to the treasurer’s office, reasoning that transparency must start with her.

Heffernan, of Wellesley, has more than 25 years of experience in the financial industry. He is a bold candidate who vows to block the issuance of debt for the $1 billion expansion of the Boston Convention Exhibition Center, which he believes would be built on “unrealistic projections” of convention attendance and tax revenues. Goldberg views the convention center upgrade as a significant economic driver.

The candidates also differ significantly on casinos. Goldberg favors a ballot question to repeal the state casino law, which would allow up to three destination casinos and a slots parlor. Heffernan supports building casinos in economically disadvantaged areas of the state. Ian Jackson of the Green-Rainbow party is also on the ballot.

Consumer education has become an important part of the treasurer’s role in recent years, which is especially valuable for low-income residents who are most likely to be overwhelmed by debt or foreclosure. Heffernan’s knowledge of the securities markets isn’t likely to be much of an advantage in this effort. Goldberg offers a formidable background in marketing and promotion that could lead to effective financial literacy programs in a state with one of the nation’s largest income gaps between rich and poor. She is the better-rounded candidate, and the best choice to be the next state treasurer.

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David Trott Faces Election ‘Foreclosure’

David Trott Faces Election ‘Foreclosure’

By Todd Heywood

One time king of foreclosures in Michigan, David Trott, may be headed to defeat in Michigan’s 11th Congressional district. Trott is vying to replace Rep. Kerry Bentivolio against Bentivolio, Democrat Bobby McKenzie and Libertarian John Tatar.

Bentivolio lost the Republican nomination to Trott in August, but has decided to run as a write-in candidate.

Trott has dumped another $1 million of his own fortune into the campaign, bringing his total self funding to $3.4 million, our friends at Electablog report. And how did Trott gain all that cash? Well, while the state and the country was being crushed by the 2008 economic crisis, Trott – with his foreclosure empire headed by Trott Trott – was busy foreclosing on homes all over the state. Not content to make a fortune just booting people out of their homes, Trott bought up businesses that are also necessary for the foreclosure process – from a title agency to a newspaper to advertise foreclosure actions as required by law. Trott turned his agency into a one stop shop for quick foreclosure.

Ingham County Register of Deeds Curtis Hertel Jr. has a different label for it. He called the Trott empire a machine “meant to feed off of human misery,” and Hertel would know. Since taking the reigns in Ingham, he has been a national leader in the fight against foreclosure fraud and foreclosures.

Despite being booted to the curb by Republican voters in August, Bentivolio, the “accidental” congressman from Michigan, has decided to mount a write in campaign against Trott. While that might be a quixotic mission, it certainly fits in Bentivolio’s beyond eccentric personality. He is, afterall, a reindeer farmer who once testified in a deposition that he sometimes is unsure if he really is Santa Claus or not.

But that write in campaign could upset Trott’s plans to take what should be a comfortable Republican seat. Fox News is reporting Trott could lose the election to McKenzie.

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EHT school officials to take financial concerns to Gov. Christie’s office

EHT school officials to take financial concerns to Gov. Christie’s office

Written by Laura Stetser

Tuesday, October 21, 2014 11:23 am

EHT school district news

EGG HARBOR TOWNSHIP – School officials from Egg Harbor Township are scheduled to meet with Michael Carucci from Gov. Chris Christie’s counsel team this week in Trenton, a discussion they are hoping opens the administration’s eyes and ears to the financial woes it is facing from a variety of factors.

Their message, previewed in the following letter, outlines the effect of Atlantic City casino closings on the district and the rapid growth that was mandated on Egg Harbor Township over the years, as well as addresses their concerns over state debt assessments and school funding.

Co-authored by Egg Harbor Township Board of Education member Pete Castellano, Superintendent Scott McCartney and Business Administrator and Board Secretary Kateryna Bechtel the letter states:

“On behalf of Egg Harbor Township, we would like to once again bring to your attention our desperate situation with regard to state school funding, and to explain the unique circumstances that Egg Harbor Township has faced, and continues to face, with each passing year that our School District is not adequately funded.

Mandated Growth and State Aid

As a school district located in a Pinelands Regional Growth Area, the State Pinelands Commission dictates the amount of residential growth in our township – our local officials were and still are powerless to stop, or even slow, residential growth.  At the same time, caps placed on budget and aid growth, coupled with years of flat state aid, simply did not allow us to keep pace with this growth.  As a result, the continuing burden on the property taxpayers of Egg Harbor Township is particularly onerous.

To state the issue as simply as possible; the State of New Jersey has mandated the population growth of our township, which caused our school district to grow, but did not provided us with sufficient funds to educate the students that came to our district as a result of that mandate.  Between 2000 and 2007, our district grew by 2,008 students, for a 7-year growth rate of 34.7 percent.  Only one school district in the entire state grew by more students than we did during that period – but our rate of growth was the highest in the state.  Our current enrollment is approximately 7,648 – back in 2000, our enrollment was 5,791.  During all this growth, the state aid formula was not funded, or our increases were capped and did not keep up with this growth.   Our budgets have never been able to catch with this growth.

According to the Department of Labor, over the 5-year period from 2000 to 2004, Egg Harbor Township had 2,976 single-family housing starts – that’s the highest number of any municipality in the state.  During that same period of time, our population grew by approximately 10,000, from 30,000 to 40,000.  Residential growth has since slowed due to the economy, but we are still mandated to accommodate 22,000 additional residential units.

It is important to note that when forming the Highlands protection area, the Legislature chose, after learning about our situation, not to include mandated growth areas in their plan.

Under the current law that provides State Education Aid, the state Department of Education imposes a two-tiered cap on the growth of state aid given to a district over the prior year’s state aid.  This cap applies regardless of costs, or the actual growth in student population.  The Egg Harbor Township School District has lost approximately $200 plus million over the last decade due to caps, freezes, and cuts in state aid to education.

For the prior school year 2013-2014, our district had $33 million in aid withheld due to arbitrary aid caps, coupled with frozen state aid.  While our state aid according to the formula should have been approximately $73 million – it was capped off at just under $40 million.  

For the current year, 2014-2015, our district again had $33 million in aid withheld.  Our formula aid is almost completely flat from last year – again coming in at just under $40 million. This difference has to be made up by the property tax payers. 

And again this year, the state charged us a $500,000 EDA Assessment.  This arbitrary assessment is unfair, was never part of our bargain with the state, and was never agreed to by the people of Egg Harbor Township when we chose to use the then Schools Construction Corporation to build new schools.

Our township residents have been faced with large property tax increases for most of the past decade, with no end in sight – this year – we again had to go to the 2 percent property tax “cap” and raise property taxes by just over 4 cents – yet we are still under-funded and need to make significant cuts.  Our property tax payers cannot sustain this burden – and our district has run out of places to cut.  Note: In 2001, state aid was approximately 60 percent of our budget – next year state aid will be more like 35 percent of our budget.  It’s time for the state to pay its fair share.

We spend our funds wisely, as demonstrated by the Department of Education’s Taxpayer’s Guide to Education Spending.  Our total per-pupil budgetary spending is the 24th lowest in the state, at $12, 964 – nearly $2,000 per student lower than the state average of $14,783.  And, our budget is $11.5 million below “adequacy” – that’s the amount of money the state says we should spend given the number of students we have.

This situation is unacceptable – our students and taxpayers deserve better, and the path we are stuck on is unsustainable.

To add insult to injury, P.L.2012, Chapter 37, approved Aug. 7, 2012 was passed to assist certain districts that experienced significant enrollment increases after 2008.  However, our growth occurred earlier, so the criteria developed exclude our district from being eligible.  Despite our exponential growth, we received no additional aid, and are still suffering through the caps on our formula aid, which has never caught up with our student growth.  At our urging, our local legislators introduced A-934/S-1685 last year, to address rapid growth that occurred before 2008.  However, these bills have not gone anywhere, and have yet to even receive a committee hearing.

The State of New Jersey is failing to live up to its constitutional duty to fund a thorough and efficient education for the children of Egg Harbor Township, and is failing to abide by the constitutionally-imposed principle of ‘State Mandate State Pay.’  It is both fundamentally unfair, and completely contrary to the principle of  ‘State Mandate State Pay’ for one arm of the state government to mandate growth in a school district, while another arm of the state government refuses to provide the aid necessary to provide a Thorough and Efficient education for an increased student population in that same district.  

Effects of Atlantic City Job Loss – Regional Recession

Egg Harbor Township paid a price for the economic boom of the local economy in the early to mid-2000s.  However, Egg Harbor Township is now bearing the brunt of the current national, state, and most notably, regional recession.  Atlantic County currently has the highest unemployment rate in the nation, with a four year average of 12.6 percent.  Due to the current climate of up to four casino closures in Atlantic City, Egg Harbor Township is projected to lose nearly 900 of 5000 direct casino jobs – not including indirect employment loss.  This also impacts our foreclosure rate, which in turn, will burden those paying property taxes even more.

Mandated Affordable Housing – The Last Straw

Now, in 2014 – we face yet more state mandated students enrolling in our district as a result of Affordable Housing mandates.  On September 17, The Egg Harbor Township Committee approved 137 state mandated affordable housing units.  These units are projected to generate 1.8 students per unit, or approximately 243 students, at a cost of over $3 million.  Yet there is no identified local or state revenue source at this time, and we would simply have to absorb these costs in to an already broken budget. 

This situation is unacceptable – our students and taxpayers deserve better, and the path we are on is unsustainable.


1. Fully fund the formula on the books.  With the imposition of a 2 percent budget cap, our only hope to be able to educate our children is through adequate state aid.  Funding must be on a per pupil basis, based on actual student counts.

2. Lift Caps on aid growth.  No stabilization ceilings or floors; fund the students while they are actually in the district – the money should follow the students.

3. Do not require the district to pay back part of our aid to the EDA in the form of the EDA assessment.  This arbitrary assessment is unfair, was never part of our bargain with the state, and never agreed to by the people of Egg Harbor Township.  Again, this year’s assessment is $500,000.

4. Aggressively pursue A-934/S-1685 or similar legislation to fund rapid growth districts like Egg Harbor Township.

5. Fund mandated students who will enter our school district as a result of Pinelands Mandates, and state affordable housing mandates.

6.  CRDA – Seek funding from the Casino Reinvestment Development Authority.”

Read related:

EHT committee moves affordable housing project forward, despite school board opposition


District budget woes shared with state legislators and officials


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CONSUMER FRAUD: Attorney Siringoringo disbarred for loan modification … – Press

Stephen Lyster Siringoringo, a Garden Grove attorney with offices in Rancho Cucamonga, Upland and Glendale, has agreed to be disbarred for his role in a multi-million dollar home loan modification scam.

The State Bar Court announced the stipulation Tuesday, Oct. 21.

Siringoringo, 33, admitted to illegally taking advanced fees from 14 clients facing foreclosure and failing to provide the clients with an accounting. He also allowed employees who weren’t attorneys to meet with clients, set fees and perform legal services without supervision, the court record says.

It has been illegal to collect up-front fees for home loan modification services since October 2009.

Siringoringo was the subject of hundreds of complaints from clients who were largely recruited in social media and on Spanish-speaking TV and radio shows broadcast across Southern California, according to testimony from a July 9, 2013, state hearing in Los Angeles.

In August 2013, State Bar Court Judge Richard Honn ordered the Siringoringo Law Firm to stop practicing law. Months later, the court found Siringorino culpable of collecting advance fees for loan modification work in 20 client matters and recommended an 18-month suspension.

Siringoringo admitted to culpability in 14 of the 20 cases and agreed to provide refunds of $1,500 to $5,970 to the 14 clients.

The State Bar’s Office of Chief Trial Counsel, though, disclosed Tuesday that it has received 796 additional complaints regarding alleged misconduct by Siringoringo Law Firm. Those mortgage modification clients may be eligible for reimbursement by the State Bar’s Client Security Fund after the disbarment is finalized by the California Supreme Court.

Consumers who believe they’ve been defrauded by a California attorney can get more information by calling 1-800-843-9053.

Contact the writer: 951-368-9423 or

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Harrisburg City treasurer designee issues ‘no comment’ on personal bankruptcy … – The Patriot-News

Timothy East, who was picked to become the next city treasurer in Harrisburg, said Tuesday he didn’t want to comment about his personal bankruptcy case.

East called a PennLive reporter Tuesday morning in response to messages the reporter left on Monday.

East said he wanted to let people know that he is licensed as a certified public accountant in New York, which has a reciprocal agreement with Pennsylvania. A PennLive commenter had questioned whether East had a proper CPA license.

But East said he didn’t want to discuss the reasons for his bankruptcy case.

“The story behind it, I don’t want to get into it,” he said. “I’m a very private person and I was just trying to help the city by applying for treasurer.”

City council members selected East to fill the vacant treasurer’s office after a series of public interviews on Sept. 29. When city officials tried to get East bonded, which is a requirement for the job, they discovered he was in the midst of a personal bankruptcy case.

Council members were surprised by the finding and at least one councilor said he thought East owed an explanation.

East filed for Chapter 13 bankruptcy in June 2011, but the case was dismissed from the federal court last year after East failed to make some required payments. His attorney asked for the case to be reinstated, which the court allowed in January.

The United States Courts website notes that the most significant advantage of Chapter 13 is that it “offers individuals an opportunity to save their homes from foreclosure. “
Under a Chapter 13 filing, people can stop foreclosure proceedings but must still make all mortgage payments on time.  The filing also allows people to reschedule other debts and consolidate them.

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Gubernatorial debate gets personal

On Sunday’s gubernatorial debate, MPR’s Tim Pugmire says, “DFL Governor Mark Dayton and Republican challenger Jeff Johnson highlighted their differences on gun control Sunday during the fourth of five scheduled debates of the campaign. … Both candidates said they own guns. They agreed with continuing the policy that allows law-abiding citizens to carry guns inside the state Capitol building.”

For the PiPress, Frederick Melo says, “Asked by panelists whether they had ever spanked their children, Johnson and Dayton said they had done so on one occasion. Asked whether they had ever smoked marijuana, the candidates responded with one-word answers: ‘no’ for Johnson, ‘yes’ for Dayton.”

Daniel Heimpel, who knows something about child protection issues says in a Strib commentary, “The fact is that black and Indian families are disproportionately exposed to ‘child maltreatment risk factors’ in Minnesota and across the country. The DHS’ 2010 Minnesota Child Welfare Disparities Report provided a comparison of maltreatment risk among racial groups. … Citing 2008 data, for example, the DHS determined that Indian children were more likely to be rated as high risk than blacks, whites or Asians, while blacks were more likely to be rated as moderate risk than Indians and whites.”

The Washington Post followed Massachusetts Sen. Elizabeth Warren to Minnesota. Paul Kane writes, “Speaking before more than 400 people at Carleton College, Warren repeatedly invoked the spirit of the late Paul Wellstone, the fiery liberal senator who died 12 years ago this month in a plane crash during his reelection campaign. Wellstone remains a revered figure in Minnesota politics, and his brand of populism — out of step in the Clintonian Democratic Party of the 1990s — is now mainstream among leading liberal activists. Warren has become the most prominent public face of that movement, and the Wellstone disciples in this town 40 miles south of Minneapolis gave their approval Saturday. ‘The game is rigged, and the Republicans rigged it,’ Warren said to loud cheers.”

Another course that was not offered at my grade school back in the day. Kim McGuire of the Strib writes, “The students in Kirsten Lunzer’s fourth-grade class watch as Codey the Troll crosses their computer screen, guided by the program they wrote to leap obstacles and collect blue jelly beans. These programming-savvy students in Minnetonka are on the leading edge of a new high-tech era that has Minnesota schools scrambling to respond to student demand for computer science classes that teach them how to develop software, apps, games and websites.”

Losing your home to foreclosure? Would you like a fat check? MPR’s Annie Baxter says, “People forced into foreclosure rarely find a silver lining. They lose their homes and their credit ratings tank. But under the right circumstances, Minnesotans in foreclosure can walk away from the process with tens of thousands of dollars.”

Lacking anything new on Denny Hecker, we offer Amy Senser instead. Dave Chanen of the Strib says, “Less than 2½ years after being sentenced for criminal vehicular homicide in the death of a Minneapolis chef, Amy Senser will be freed Monday. That is, she’ll be on supervised release — able to go home to Edina or another residence of her choosing, but not allowed to drive, and subject to random drug and alcohol tests. … She was one of about 200 offenders in Minnesota approved for it at any given time, according to the Department of Corrections. Historically, fewer than 2 percent commit a new offense while on work release.”

Job creation! Dee DePass of the Strib reports, “Soaring demand for wireless monitoring systems at oil production sites has led Emerson Electric Co. to undertake a $110 million expansion in the Twin Cities’ southwest suburbs. In Shakopee on Tuesday, Emerson will open a $70 million headquarters building for its Rosemount-brand operation. … Emerson also recently completed $40 million in renovations and upgrades to factories in Chanhassen and Eden Prairie. The St. Louis-based company plans to add more than 500 new jobs at the three sites over five years to help fulfill demand for Rosemount instruments.”

Mug shot of the day. WCCO-TV reports, “Mankato officials say a 56-year-old man was arrested after he called 911, saying he’d heard there were bombs placed along the city’s marathon route. Brian Douglas Mechler allegedly called 911 on Friday, saying he got an anonymous call about four bombs that had been placed along the route, city officials said. When police investigated, they found that Mechler never received any such phone call. Officers arrested Mechler on Saturday for probable cause of terroristic threats, and he was booked into the Nicollet County Jail.” He has one of those looks that kinda says, “You know I’ve done something worth arresting me.”

Meanwhile: The AP tells us,A Wisconsin man has been arrested for allegedly urinating on a marked Madison Police Department squad car. A police statement says officers observed the 21-year-old Dodgeville man relieving himself on the squad car late Saturday night near a bar on State Street in downtown Madison. It says several people warned the man that police were approaching, but he didn’t stop.” Didn’t because he couldn’t or wouldn’t?  

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