Local Forum on Foreclosures: From Bad to Worse

State Assemblywoman Lori Saldana and San Diego Councilman Tony Young Presented Gloomy Forecasts

Gregg Robinson, one of our regular irregular bloggers, is also the Chair of the San Diego Housing Coalition, and incidentally also is vice-chair of the Peninsula Planning Committee, former stalwart of the Ocean Beach Grassroots Organization, and sociology professor at Grossmont Community College. Gregg couln’t go bicycling with me last Saturday as he was preparing for the forum, held that night, June 28th. To punish him, I asked him to write a summary of the forum. – FG

by Gregg Robinson / July 3, 2008

For over three hours last Saturday an audience at the Tubman-Chavez center listened to a series of horror stories by homeowners facing foreclosure. The only thing more depressing than these stories, were the responses of the politicians who were there to address this issue.

The current approach to the housing crisis amounts to billions for big banks and pennies for poor property owners. This fact was brought home by two local politicians, State Assembly member Lori Saldana (Chair of the Assembly Housing Committee) and San Diego Councilperson Tony Young (from District Four, one of the areas most affected by housing problems), who gave presentations on the foreclosure crisis and what could be done about it. The answer to this latter question, seemed to be, not much. The reason for this is simple and can be called the three rules of the foreclosure crisis: money, money, money.

Take the response to the problem at the national level. Both Soldana and Young agreed that the root of the problem was national, and that any effective response would have to come at this level. Unfortunately, the federal government’s priorities follow the “Jerry McGuire rule”. That is, our representatives, Republican and Democrat alike, create programs to help those that “show them the money”. While the Bear Stearns bail out will ultimately cost tax payers 35 billion dollars, and tax relief for builders hurt by the down turn will price out at 30 billion, even the most aggressive version of the home owner’s rescue bill going through Congress (the Dodd/Frank bill) would cost less than 3 billion.

This small amount of funding for home owners must be seen against the need for help. Currently one in eleven mortgages in the U.S. is either in foreclosure or behind in payments, a situation that will only grow worse in the next eighteen months. The total equity owned by homeowners is now exceeded by their mortgage debt, a first in modern American history. It has been estimated that within the next year nearly three million Americans could be in need of help to keep their homes.

Even the most generous version of the Dodd/Frank bill would help less than one million home owners, and most analysts believe the version most likely to pass will only aid 400 thousand. To paraphrase Churchill, never have so many done so little to help so few.

At the state level the news is no better. While Ms Saldana supported a bill to protect renters in properties that were foreclosed (giving them an additional 30 days to find housing), she was not hopeful about anything more substantive passing the legislature. One of the most effective things a state government can do is to initiate a moratorium on foreclosures. When Massachusetts recently passed similar legislation, foreclosures fell there by nearly 90% in ONE month! During the Depression, the last time we had a housing crisis of this magnitude, over two-thirds of the states passed foreclosure moratoriums of this sort.

When asked if she thought there was any chance of a moratorium in Sacramento, Ms Saldana admitted that the odds were slim to none. An audience member asked her if this was because of Republican resistance. Ms Saldana, a Democrat, gave a depressingly honest response by saying “No, I’m afraid not”. The problem, she admitted, was the power of the Real Estate and Banking interests in Sacramento. Bankers are obviously threatened by a moratorium, but so are Real estate interests. What few houses selling are those that go into foreclosure, and there is no lack of real estate “sharks” willing to take advantage of this blood in the water. Both bankers and real estate interests fund a legion of lobbyists, while homeowners presence is felt only at the ballot box once every two years. Guess who gets listened to more regularly?

Locally, Mr. Young has been the politician most concerned about foreclosures. Even he, however, balked at supporting a moratorium. The good news about a moratorium enacted by local city governments is that it is a largely a symbolic gesture with no power of enforcement (city governments have little control over foreclosures which is controlled at the state or county level). The problems for politicians who might be willing to pass a moratorium is that this symbolism can alienate powerful interests. In cities which have passed moratoriums, they have acted as pressure on the housing industry. In Philadelphia, for example, where the city council passed a moratorium, the local sheriff (John Green) took this ordinance as an excuse to not conduct any sales of foreclosed homes (in Pennsylvania local sheriffs conduct foreclosure sales) for a month. He then threatened to limit future sales to twice a year (normally they are conducted monthly). This pressure caused local baking and real estate interests to sign an agreement that obligated them to more aggressively help distressed home owners. This example demonstrates how these “symbolic” moratoriums can have real impact, but it also shows why local politicians are so scared of them. In a city like San Diego where the real estate industry has dominated local politics, few will be the politicians brave enough to face their anger.

Equally dispiriting is what passes for activism around this issue. Locally, there are at least four organizations with interests in foreclosures. Unfortunately, each of them as individual organizations lack either the interest in or the ability to produce a moratorium.

This is particularly true of the more “mainstream” organizations. The Housing Federation, one of the most important housing organizations in San Diego, is supportive of those facing foreclosures, but the main focus of this group is producing affordable housing. The Community Housing Works is one of the most professional organizations with a specific focus on foreclosures, but that is also its weakness. Its professionalism limits its willingness to alienate the politicians, builders, and realtors it may need to work with in future campaigns around different issues. Moreover, CHW is not an activist organization, and it has neither the resources, nor more importantly, the desire to organize people to pressure politicians.

The limits of the more activist housing groups are different. The Affordable Housing Coalition of San Diego (AHCSD) would be willing to push for a moratorium, but it lacks the resources to do so. The AHCSD is small, with a core membership of no more than four or five people. As such it lacks the “people power” to start a serious lobbying campaign. Moreover, the AHCSD lacks activist roots in the community. The last few years the AHCSD has been most successful in waging law suits around such issues as condominium conversions, which has tended to sidetracked its community activism.

Finally, and most importantly, ACORN is a national anti-poverty organization that has committed itself to the foreclosure issue. With this national presence and its dedication to community organizing, ACORN should be the heart of any activist campaign about this issue in San Diego. Unfortunately, ACORN in San Diego has been hamstrung by a series of personnel changes. The head of their housing campaign has changed no fewer than four times in the last year. They have also focused a great deal of energy on counseling homeowners facing foreclosure. This means they are enmeshed in the complicated, time consuming, and emotionally devastating process of helping homeowners to refinance loans, pay their utilities, and feed their children, leaving little energy for an equally demanding campaign around a moratorium.

The obvious solution to this situation is for all of these groups to work together to pressure local city councils to enact moratoria through out the county. A campaign that combined the resources of these four groups would have a real chance at success. The professionalism of the Housing Federation and CHW combined with the activists of ACORN and the legal expertise of the AHCSD would be a formidable force.

Of course, even if this campaign was successful, it would only be a stop gap measure. As was said previously, the real solution must come from national leaders. The good news here is the bad news. Given that this housing crisis will only grow worse over the next year, the band-aids that Congress has handed homeowners so far will not be enough. Maybe with Obama in the White House, a veto proof majority of Democrats in the Congress, and, most importantly, with millions of voting (and therefore politically powerful) homeowners facing foreclosure, Congress will be able finally do something substantive about this issue. If this happens, then a moratorium will have been more than a stop gap, it will have been a life saver that kept thousands of San Diegans from drowning economically.