By Timothy Y. Fong, an attorney in the San Francisco Bay Area who practices in the field of foreclosure defense litigation. His e-mail address is tyfong919 at gmail.com
On Monday afternoon at 12:00 p.m., a group of protesters organized under the umbrella of the “Make Banks Pay California” campaign picketed a foreclosure sale at the Alameda County Courthouse located at 1225 Fallon Street, Oakland California.
I had heard about the protest from a contact in the real estate industry, and so I resolved to go down and see what it was about. I went specifically as an observer and not as a protester.
When I arrived around noon, I saw a group of roughly 10 to 15 people protesting. Some had yellow shirts marked “ACCE” picketing on the courthouse steps. Many of them had signs, like “Stop Foreclosures/End Bankster Fraud” and pictures of various Wall Street Executives tagged as “Wall Street Robber Banker.” One woman held up a sign that said “Chase and LPS Crime Scene.” After chatting with a few of the protesters I found out that some of them were part of the Alliance of Californians for Community Empowerment, and others were part of the local teachers union, SEIU Local 21. This being Alameda County, both the bystanders, protesters, auctioneers and bidders were a broad spectrum of ages and ethnicities.
Over the next 2 weeks, the Make Banks Pay California group plans to have a variety of actions in the San Francisco Bay Area and Los Angeles to “make Wall Street banks pay for destroying jobs and neighborhoods with their greedy, irresponsible and predatory business practices.” Several of the protesters I spoke with on Monday indicated their belief that because banks “don’t pay” it impoverishes local governments and causes school, library and government service cutbacks.
There were already a few auctioneers standing there with clipboards in hand, ready to start their auctions. The protestors started to chant, with at least one person blowing a whistle. Some of the chants were “they got bailed out, we get tossed out” and “vultures.” I spoke with a well dressed gentleman who said he was there with his client to place a bid. When asked for his thoughts, he said he thought it was a “joke” and that people should “go home” and “pay their bills.”
The bidders and auctioneers at first seemed somewhat confused or even amused by the situation. However once the protest started to get going, the protesters would circle up around an auctioneer and start chanting so loudly that it was difficult for the auctioneer to be heard. In response, the auctioneers distributed themselves around the steps so that the protesters couldn’t stop all of them. The protesters broke up into a couple of groups, with each group attempting (and succeeding in some cases) in surrounding an auctioneer with chanting people. Electronic media devices were everywhere– people were pulling out phones and digital cameras and taking pictures. I even saw one of the bidders do a self-video with what looked like an Android phone– he showed the crowd then turned the phone on himself and gave a quick narration of the scene. The protesters were able to disrupt the sales enough that one person I took to be an auctioneer (due to his clip board and demeanor– I have been to more than a few courthouse step auctions) got on the phone and said that it was “getting rough” and he “need[ed] everyone here.” Thankfully he didn’t pull a Gary Oldman and demand EVERYONE.
There was no law enforcement presence on the steps, although I know for a fact that a sheriff’s security station was within 150 yards of the steps inside the courthouse. I did see one law enforcement officer ride by on a bicycle. A picketer waved to him and he waved back.
I spoke with one of the protesters, Shirley Burnell, an older African-American woman using a walker. She said that she was there because banks are selling homes out from under people. When I asked her whether she had been personally affected by the situation, she related her story to me. Shirley had taken out a loan on her home to make some repairs. She had been given two years of fixed payments, and then told that she could refinance after that into a 30 year fixed loan. That did not happen for her, so she has been seeking a loan modification since 2007, to no avail. I did notice more than a few older people with gray hair in the crowd of protesters. It was more than just college students.
In an effort to understand both sides of the story, I also attempted to speak with one of the auctioneers. No one I talked with would go on the record with me. I did talk to one younger man, with a pair of earbuds around his neck. His name was Connor, and he related that he worked for a company that buys foreclosure. Connor said that he would be willing to listen to the protesters if they had some kind of alternative plan. In fact he asked me, “what’s your alternative” and I told him that I was there to write a blog post about it and as a journalist, and not as a protester. Connor also related that he had asked some of the protesters not to yell in his ear, and that they continued yelling.
After about half an hour of protesting, I saw some tempers start to flare as a few frustrated bidders yelled at the protesters. One man in particular stood out to me. He was dressed in a white suit with a pair of bug-eyed Gucci sunglasses. In the middle of a crowd of chanting protesters he yelled out “make your payments” and a few taunts. After a little bit of that he seemed to think the better of it and walk away. It was one of those totally stereotypical, Marie-Antoinette moments that I would not have believed had I not seen it with my own eyes.
Although the bidders yelled about “pay your bills” and “make your payments,” in my experience as an attorney, many of my clients and prospective clients have fallen into foreclosure when banks told them that they had to stop making payments in order to qualify for a loan modification. When the modification does not happen, they find themselves foreclosed upon, with the bank demanding not only the back payments but interest as well. Very few people are able to become current at that point. This practice is known as dual tracking.
In speaking with my colleagues who also practice foreclosure defense, Shirley’s experience is distressingly common. Litigating a dual tracking case is difficult because of litigation costs. Costs are driven in part by the procedural requirements put in place to eliminate “frivolous” lawsuits– effectively this places justice out of the financial reach of many.
I have also seen more than a few people who were put into loans where they had a low payment for the first few years, and then it ramped up afterwards. Like Shirley, they were told that they would be able to refinance into a 30 year fixed, and like Shirley they were unable to do so after the economy crashed in 2007. Even people who are not in a loan with escalating payments still seek principle reductions, since the value of their real estate has dropped from the bubble years.
My experience has been that there is a deep reluctance in the financial industry to make principle reductions on loans. Even relatively well off professionals in the bottom half of the top 1% category have a difficult time getting their bank to negotiate with them. I spoke recently with a mid-senior level finance professional at a major bank who indicated to me that his preferred solution would be to make the banks take their medicine; do the write downs and sell the existing inventories of foreclosed homes. This would , in his opinion push some of the banks involved into FDIC resolution. Clearly balance-sheet concerns are the source of the reluctance by management to make the principle reductions.
However, the job of our political leadership is not fealty to bank balance- sheets, but to the well-being of the American people. I had hoped that President Obama and the Democratic Party leadership would make bailouts conditional on principle modifications but that has not been the case. I suspect this comes from a reluctance to push major banks into FDIC resolution. Also, there seems to be a certain institutional and personal blindness among our elite, as exemplified by the Gucci-sunglasses-wearing man I saw yelling at the demonstrators. Even though he was surrounded by chanting protesters he thought it might be a good idea to taunt them. Thankfully the crowd was non-violent and nothing happened other than some shouting.
I am positive that the financial and political elite fail to understand the level of anger out there in today’s America. Probably the most disturbing thing I heard at the protest came from a conversation between a couple of bystanders. An older man was commenting that he’d tried to seek justice against his bank through the legal system but that it was “bullshit” [his exact word] and that the system was stacked against normal people. It’s a sentiment that, as an attorney, I have been hearing altogether too often lately from all kinds of people. I am disturbed by it because our government, indeed all governments, depend on public faith in institutions. When public trust in government institutions fails, the result is chaos and violence. As seen when the Soviet Union collapsed, organized crime steps in to fill in the void.
Our elite leadership is a lot like the man with the Gucci sunglasses– flaunting their wealth and positions while taunting a crowd of angry people. I can only hope that the recent upsurge of protests across America can succeed in convincing our elites to effectively respond to the concerns of ordinary Americans before we step over the precipice.