Campaign News

A Report on the Foreclosure CrisisCalifornia in Crisis: How Wells Fargo's Foreclosure Pipeline is Damaging Local Communities

Five years after the housing market collapsed, California’s economy remains weak. The unemployment rate is nearly 10 percent, twice what it was in 2006, and in 2012 the State’s underemployment rate averaged an astonishing 19.3 percent.

The continuing housing crisis remains a key cause of this widespread economic tragedy. Nearly two million California homeowners are underwater, owing more on their mortgage than their home is worth.

Since 2008, banks have foreclosed on approximately 1.7 million homes in the state. Right now, around 65,000 California homeowners are in the “foreclosure pipeline” – they’ve received a Notice of Default or a Notice of Trustee Sale. Every day, more and more families get added to this list.

Wells Fargo is the biggest mortgage service provider in California, responsible for nearly one in five of these impending foreclosures. This report shows the tremendous damage that will befall California’s communities if Wells Fargo continues to foreclose on so many families.

Download the report here.

Executive Summary

Five years after the housing market collapsed, California’s economy remains weak. The unemployment rate is nearly 10 percent, twice what it was in 2006, and in 2012 the State’s underemployment rate averaged an astonishing 19.3 percent. Millions of Californians are struggling to make ends meet.

The continuing housing crisis remains a key cause of this widespread misery. Nearly two million California homeowners are underwater, owing more on their mortgage than their home is worth. This tremendous mortgage debt is severely crippling the State’s economy by holding back consumer spending and preventing a robust recovery.

And the mortgage debt is devastating the lives of too many Californians. Since 2008, banks have foreclosed on approximately 1.7 million homes in the state. Right now, about 65,000 California homeowners are in the “foreclosure pipeline” – they’ve received a Notice of Default or a Notice of Trustee Sale. Every day, more and more families get added to this list.

Wells Fargo is the biggest mortgage servicer in California, responsible for nearly one in five of these impending foreclosures. This report shows the tremendous damage that will befall California’s communities if Wells Fargo continues to foreclose on so many families. As of February 2013, Wells Fargo had 11,616 homes in its foreclosure pipeline. If all of these homes were to go through foreclosure:

Each home would lose approximately 22 percent of its value, for a total loss of approximately $1.07 billion, Homes in the surrounding neighborhood would lose value as well, for an additional loss of about $2.2 billion; and Government tax revenues would be cut by $20 million, as a result of that depreciation.

Every month, more homes fall into the foreclosure pipeline, compounding this disaster. The foreclosure crisis has hit African-American and Latino borrowers and communities particularly hard. The pages below highlight the concentration of distressed loans handled by Wells Fargo that are in African-American and Latino neighborhoods. These communities have already suffered tremendous wealth loss due to the recession and this report shows that far more harm will occur in the coming months unless Wells Fargo changes its policies.

But Californians do not have to accept this bleak future. Economists and policy experts across the political spectrum agree that an alternative approach to the housing crisis can be a win-win-win for homeowners, mortgage holders, and California’s economy. As this report explains, widespread modification of home mortgages to current market value would prevent tens of thousands of needless foreclosures, inject billions of dollars into the economy, create hundreds of thousands of new jobs – and would even be in the financial interest of the investors who own the mortgages.

Wells Fargo is a pivotal actor in determining whether principal reduction becomes a widespread solution. Its failure to lead on this issue is clear. The most recent report from the national monitor of the multi-state Attorneys General mortgage servicing settlement shows that in California, Wells Fargo is providing far less principal reduction than Bank of America, despite the fact that it services more loans.

The solutions are clear: Wells Fargo should (1) commit to a broad program of principal reduction, (2) be honest with Californians by reporting data on its principal reduction, short sales, and foreclosures by race, income, and zip code, and (3) immediately stop all foreclosures until the first two solutions are implemented.

After years of predatory lending and heartless foreclosures, it is time for Wells Fargo to stop. Stop the needless foreclosures. Stop the needless evictions. End this housing crisis.

En el marco de un día de acción nacional a favor del Dream Act, más de  500 activistas exigieron este miércoles que el Congreso apruebe la medida, y condenaron al jefe de Gabinete de la Casa Blanca, John Kelly, por sugerir que algunos jóvenes indocumentados no se apuntaron al “DACA” de 2012 por “flojos”.

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Two San Diego elected officials have joined colleagues across the country calling for President Barack Obama to issue a blanket pardon of immigrants with green cards who have committed minor crimes.

San Diego Councilman David Alvarez and San Diego Unified School District Board President Richard Barrera, along with 57 others, signed a letter organized by Local Progress, a network of progressive municipal elected officials, that was sent to Obama this week.

The group wants to undercut President-elect Donald Trump’s ability to deport individuals who, without their minor criminal histories, would not be deportable. Between 100,000 and 200,000 families could be affected by such a pardon, according to the letter.

“From literally the day after the election, we started hearing concerns from teachers that students were worried and were afraid that they were going to be deported, that their parents were going to be deported, just based on the rhetoric from the campaign,” Barrera said by telephone. “What we’re trying to do is look for every avenue that’s available to us as elected officials to protect our young people and their families.”

The letter suggests that it would be within Obama’s power to make such a blanket pardon because of former President Jimmy Carter’s pardon of draft evaders in 1977 on his first day in office.

“We must protect the legal permanent residents of our city,” Alvarez said via email.  “President-elect Trump proposed a deportation plan modeled after Operation Wetback from the 1950s.  Dividing families by recklessly deporting hundreds of thousands of legal permanent residents would be morally wrong and economically destructive.”

Since 2014, the Obama administration has not prioritized minor convictions for immigration enforcement, as a matter of policy not any change in law. By law, green card holders can be deported for committing offenses that would not incur jail time in today’s criminal court system, like low-level drug offenses.

Trump campaigned on the idea of deporting millions of unauthorized immigrants, particularly criminals. His transition team has yet to set forth details about which immigrants and which criminals.

By Kate Morrissey

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Chicago Tribune - March 31, 2015, by Alejandra Cancino - The group huddled in front of a McDonald's in downtown Chicago, preparing to tell the 100 people who had gathered there how the Fight for $15 had taken on a broader fight on behalf of low-wage workers ranging from airport workers to adjunct college professors.

Many of the people who listened to the speeches were young, too young to recall the 1960s-era protests. But that clearly was the vibe of Tuesday's rally.

Participants in the Fight for $15 movement, who are planning protests on April 15, say they have taken on a broader fight on behalf of low-wage workers ranging from airport workers to adjunct college professors.

"This fight is a fight about racial justice and economic justice," Charlene Carruthers, national director of the Black Youth Project 100, told the crowd. Her organization is composed of black activists ranging in age from 18 to 35.

"For us, the Fight for 15 is also a fight for our lives," Carruthers said. "When we say 'black lives matter,' that includes black workers."

People in the audience held signs that said "Fight 4/15," a reference to April 15, when organizers of the campaign to increase minimum wages plan to bring together 60,000 protesters in major cities across America and in more than 40 countries and at more than 170 college campuses, including the University of Illinois at Chicago.

Ed Shurna, executive director of the Chicago Coalition for the Homeless, which is participating in the Fight for $15 campaign, said its strategy seems to borrow elements from eras of the 1930s and the 1960s.

"It has the feel of the civil rights movement, the feel of the labor movement, but it's 2015 so it's done in a different way," Shurna said. He said this campaign is trying to get corporations to take responsibility for the struggles of their workers and get them to increase wages, offer benefits and improve working conditions.

McDonald's and its franchisees have been the main target of the campaign. Workers have filed lawsuits and complaints at various federal agencies alleging labor law violations, wage theft and unsafe working conditions. Moreover, the campaign, backed by the Service Employees International Union, wants the National Labor Relations Board to declare that McDonald's and its franchisees share responsibility for working conditions, benefits and pay.

"We won't stop until these multibillion-dollar companies pay us a living wage of $15 per hour," said Douglas Hunter, a McDonald's worker.

In a statement, McDonald's said it respects people's right to peacefully protest. "Historically, very few McDonald's employees have participated in these organized events," Heidi Barker Sa Shekhem, a McDonald's spokeswoman, said in the statement.

Matt Hoffmann, an adjunct professor at Loyola University, said faculty members of colleges in Chicago and across the nation have drawn inspiration from fast-food workers and the Fight for $15.

He said adjuncts want to be paid $15,000 per course, a figure that would include wages and benefits. He said he currently is paid $4,500 per course and doesn't receive benefits.

Hoffmann, who spoke at Tuesday's rally, said, "We struggle with our bills; we receive no benefits and we have little job stability."

At an event announcing the actions in front of a McDonald's in New York City's Times Square, organizers said home health care aides, airport workers, adjunct professors, child care workers and Wal-Mart workers will be among those turning out in April.

Terrence Wise, a Burger King worker from Kansas City, Mo., and a national leader of the Fight for $15 push, said more than 2,000 groups including Jobs With Justice and the Center for Popular Democracy will show their support as well.

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