Council Agrees to Press Banks for Foreclosure Reduction, Mediation – 10/11/11
COUNCIL MEMBERS COMMIT TO PRESS BANKS FOR FORECLOSURE REDUCTION, MEDIATION: Hundreds pack housing forum with St. Paul Council members attending
ST. PAUL, MN, October 11, 2011–At a400-person public meeting Tuesday, six city council members agreed to several community demands to address the housing crisis in St. Paul. All six agreed to take steps to hold banks accountable, including signing onto a letter calling for lenders to engage in best practices for foreclosure prevention. The meeting, organized by ISAIAH, was held to combat the housing crisis through a platform of policy initiatives around foreclosure mediation, raising vacant home fees, strong zoning policies, and holding banks accountable.
“In the last three years something very evil and bad has happened with this country, said Councilmember David Thune, who endorsed the three-point affordable housing and anti-foreclosure platform presented by ministers, neighborhood leaders and foreclosure victims. “The economy got wrecked in the halls of banks and financial institutions.”
Tuesday’s public meeting, held at St. James AME church in St. Paul, included testimonies from city residents, the Frogtown Neighborhood Association, and the Housing Preservation Project on the devastating effects this crisis is having on their lives and neighborhoods.
“My grandma taught me you always pay your bills on time, your word is all you have,” said St. Paul resident Sheronda Orridge. “Wachovia Bank [now Wells Fargo] kept changing the rules on me. When I couldn’t pay, I cried for weeks. They made me stoop down and then threw dirt in my face. They took away my dignity.”
Council President Kathy Lantry and Councilmembers David Thune, Dan Bostrom, and Russ Stark agreed to explore ways to require banks to enter into mediation with homeowners before foreclosing. Several also agreed to raise the vacant home fee and providing an incentive for banks to engage in mortgage mediation—a face to face conversation between a bank representative and distressed borrower that has dramatically reduced foreclosures in other parts of the country. “You cannot allow vacant homes to stand in your neighborhood and expect other homeowners to invest in that neighborhood,” declared Bostrom.
Additionally, Councilmembers Stark and Thune agreed to support a requirement that all publicly subsidized housing developments include affordable units, or payment into an affordable housing trust fund.
At the meeting, ISAIAH released a study on St. Paul’s housing crisisthat showed that minority neighborhoods have suffered from an extreme concentration of housing problems — subprime lending, foreclosures, declining home values, and vacant buildings.
Among the studies key findings:
- Wells Fargo Bank provides prime loans, while its subsidiary, Wells Fargo Financial, makes higher-rate subprime loans. Only 15% of Wells Fargo Bank’s loans in St. Paul were made in minority neighborhoods, while 28% of the loans made by Wells Fargo Financial were in minority neighborhoods.
- There are over 1,300 vacant residential buildings in St. Paul. Almost half of them are located in a minority neighborhood, although minority neighborhoods contain just 20% of the housing units in the city.
- Minneapolis has 802 vacant homes and buildings and charges over $6,700 a year to the owners. St. Paul has 1,452 vacant properties and charges only $1,200.
- Homes in the Dayton’s Bluff, Payne-Phalen, and Thomas-Dale neighborhoods experienced the greatest loss of value since 2006, whereas homes in the primarily white Mac-Groveland, Highland, and St. Anthony Park neighborhoods lost the lowest percentage of their value.
“The housing crisis is being felt in every neighborhood in the city,” said Eve Swan from Save Our Homes. “If the City doesn’t use all its power and resources to address the crisis city-wide now, efforts to protect low income and minority residents from losing their homes in Central Corridor neighborhoods will fail.”
Other organizations supporting this effort include Aurora St. Anthony Neighborhood Development Corporation, Frogtown Neighborhood Alliance, Housing Preservation Project, Jewish Community Action, and St. Paul Black Ministerial Alliance.
You may also be interested in: Foreclosure rate under fire – Star Tribune – 10/14/11 and Study: St. Paul’s housing crisis widens racial disparities – Eastside Review – 10/21/11
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