For the hundreds of thousands of homeowners who lost their homes to foreclosure, who felt robbed of their investment and lied to by the institutions that sold them on the American Dream, there is Good Grief America. The name sums up the frustration and disillusionment of former homeowners now trying to survive the aftershocks of the foreclosure crisis.
Nancie Koerber, along with Mark Thomas, started the nonprofit in August, an extension of the Southern Oregon Homeowner Support Group. The organization came together as a moral support group for homeowners in foreclosure and a way to find solutions, but soon became much more. It is now a a network focused on education and research into the causes and possible recourse to this catastrophic failure.
While it does not directly give legal or tax advice, Good Grief America brings together homeowners, lawyers, advocacy groups and political leaders to explore resource that will help people stay in their homes longer, or even permanently. It has trained hundreds of homeowners in Oregon on their rights and options, with more calling and writing for help every day.
Koerber, who lives in Central Point, spoke to Street Roots about Good Grief America and the trauma foreclosure is having on families and communities.
Joanne Zuhl: What stories were you hearing from homeowners that prompted you to launch Good Grief America? You talk about providing moral support for those suffering foreclosure loss. You speak of it as a grieving process. This is more than a material loss.
Nancie Koerber: Myself and my husband are homeowners that are dealing with the problem and we started talking to a few friends that were in the same situation. They invited a few more and the group has grown to over 400 families now in Oregon. We are also receiving calls from all over the nation.
We had never dreamed of being in such a situation and were devastated by it emotionally. We found that we and others were in a form of PTSD, and it was difficult to make sound financial decisions. Mark and I had little debt, a lot of equity in our home and a high credit score. We had been carefully planning for our retirement when the collapse of September 2008 hit us. We owned a real estate company that we had to shut down then regroup financially. We had to cash in on our pensions early as well as Social Security to survive. The real estate market crashed quickly around us so that we could not even sell our home of 18 years. The values on homes are still dropping 21 percent a year in many rural communities.
We called our loan servicer, Washington Mutual, now Chase, to ask for some temporary assistance while we could get on our feet. They made it very clear that they did not help people like us. I asked who they did help. They said people who are 90 plus days behind. After pleading with them for three months, we finally gave into their plan. The result was that they lost our paperwork, denied us a modification and tossed us under the foreclosure bus along with millions of others in America.
We started seeing this same pattern with most of the homeowners we talked to. As we started regaining our dignity by realizing that this was a strategic move by the banks, Mark and I set out on a mission to learn why and find out what we could do about it.
J.Z.: What do your workshops, movie nights and programs offer participants?
N.K.: Our first goal is to help homeowners regain their dignity by dropping the shame and finding their voice to talk about the issue. Then through education of what is actually going on behind the Wall Street curtain, to start making smarter and proactive financial decisions. We don’t tell folks what to do but give them knowledge and resources so they can decide what is best for their families. Another goal is to create a sense of community when people feel isolated and lost.
J.Z.: How does understanding the cause of the foreclosure crisis help people navigate their way through it? What actions are people taking as a result?
N.K.: When people realize that they are not the dead beats that created this melt down, they can regain dignity and start rebuilding their lives. The Wall Street bankers that made trillions of dollars off these dirty loans are now siphoning trillions from our treasury (in the form of) future taxpayer dollars. I have seen estimates of $13 trillion to $16 trillion to bail out these Wall Street dead beats. With $13 trillion, the feds could have paid off every sub-prime loan, every performing loan and had enough money left over to buy every American that didn’t own one a new home. What we have today instead, are rampant foreclosures, no money on Main Street to rebuild our economy and a handful of fat cats that are socking the money away off-shore.
Homeowners are seeking legal and financial council. Many are filing suits against the banks and holding them accountable. Others are stalling the foreclosures with simple tactics available as they get their finances in order. We currently have hundreds of families still in their homes today that would have been thrown to the curb. We have no guarantees except if we do nothing, we would have lost our homes and been evicted. We have felt that the longer we can hang on the more legal remedies will be available to us. This has proven to be valid.
J.Z.: What do you think of the plans to get rid of Freddie Mac and Fannie Mae?
N.K.: Change of this type is always painful, but I feel it would be a good move. When I started in real estate 35 years ago, Fannie and Freddie were small players in the marketplace and served a good purpose. The majority of loans written were conventional, wraps and contracts. These were products that could not be manipulated into the disaster we have today. People were buying, selling, trading and exchanging real equities. It was a solid and sustainable marketplace. Real estate agents had to have a lot more knowledge to put together a transaction. We weren’t just listing and selling real estate, we solved problems and brought value to the market.
J.Z.: There’s a push to do away with the Home Affordable Modification Program, or HAMP Act. Given its performance record, do you think that would be the right thing to do?
N.K.: Absolutely. Less than 1 percent of those who have applied have actually received a permanent modification. The servicers have used this program in a very predatory manner and compounded the grief and financial loss of the American people. The servicers have little to no intention of performing on the trial modifications that they set up. It is doubtful if they even have authority. They tell people that it will be a three-month trial period while they prepare the final modification. Six, nine and twelve months later, homeowners are still making the payments, increasing their anxiety each month as to why they don’t have a modification. We have seen them go up to 18 months and then the homeowner receives a letter that says they are denied. The reasons are all over the board. We often see them say “excessive deferred payments.” This means, now you are too far behind. Usually a sale date is within three weeks of the notice and the homeowner panics. We too often see the loan servicer foreclose right in the middle of the homeowner making payments without any notice. The PTSD escalates. We also find that little if any of these payments even go toward their loan.
A report that I read over a year ago explains why this goes on. It was called “Why servicers foreclose when they should modify, and other puzzling servicer behaviors.” They pointed out how profitable foreclosures are. On average, a foreclosure is 46 percent more profitable than a performing loan. This does not include the credit default swaps that the servicer may have purchased on the loans. Yes, those were bets that the homeowner would not perform. We have found up to 30 times the face amount of the loan could be the payout if the servicer is able to foreclose. The bottom line is that they lose money when they modify and can make a fortune when they foreclose.
J.Z.: How is that possible?
N.K.: Many different entities on Wall Street, including the loan servicers bought credit default swaps for pennies on the dollar on these loans. The dirtier the loan the more credit default swaps were bought. The numbers we are seeing are up to 30 times the face amount. The credit default swaps were sold like an insurance policy but they weren’t insurance because they weren’t regulated, registered anywhere and had very little reserves behind them if the loans defaulted. Basically, they were bets that the loans would go bad. By September 2008 the holders of the bets were coming forward as the loans were massively defaulting. AIG and Lehman Brothers were the two main houses on Wall Street that sold the credit default swaps. Lehman went down and the government stepped in and is backing all the bets. They have no idea how many trillion are still out there but it is massive and will break the taxpayers’ backs in ways no one is talking about.
J.Z.: What kind of policies are you advocating for in the future to protect homeowners?
N.K.: We want sustainable modifications with the party of standing. Unfortunately our research shows that in many cases there may not be a party of standing, “Someone who actually owns our loan that we can negotiate with and create a win-win.” This was difficult for me to believe in our early research but it is now hard to deny. The chain of title between the homeowner and the source that provided the money for the loan is seriously broken in many places. After years of being in the industry, I just couldn’t believe that this took place. As we continued to research, we found that the old process of transferring deeds and notes to the new owner “party of standing” had been destroyed in the securitization process that Wall Street banks created. They created a casino beyond my imagination with our loans. To do this, the old system had to go. Many of the notes were shredded and destroyed. The Wall Street bankers seemed to think they were invincible and could rewrite real estate law in America in the name of greed and profit. To a great degree they were successful but now that empire is crumbling around them. We just had a landmark ruling in Oregon on one of our cases regarding MERS, the Mortgage Electronic Registration System. This is the system that Wall Street developed instead of using the county recording system used for hundreds of years. MERS is non-transparent, so they could move the loans around at will without anyone knowing who owned them. This casino spun so fast that it is doubtful who owns what anymore. This is one of the issues at the heart of why the modifications aren’t working.
J.Z.: I know that legislative action on Oregon Laws is part of your agenda. What are you calling for?
N.K.: We are a 501(c)3 nonprofit and our lobbying abilities are limited, but we have shared our research with our legislators so they understand what is actually going on. This has enabled them to write amendments to the laws and new legislation. We have built a network of 22-plus attorneys that we have assisted in educating to help homeowners. Some of them are working with the legislators on legal issues as well. We want transparency and a moratorium on foreclosures until these issues are resolved. We are not counting on our legisltors to do the job for us. We are finding that fair and reasonable judges are digging in and learing these issues. We are looking for sustainable remedies in the courts.
More information is available at Good Grief America, or by calling the homeowner hotline at 541-690-8334.
For more coverage from Street Roots on the foreclosure crisis go here.