We speak to you today with a common interest, shareholders of Bank of America. That’s a long way from sharecropping and we owe it to the New South born amidst the Civil Rights Movement that made all America better.
Our company faces deep challenges today – much resulting from the toxicity inherited from the questionable acquisitions of Countrywide, the nation’s largest sub-prime lender, and Merrill Lynch.
And our economy faces deep challenges – still deep in the throes of a jobless recovery, and homeowners, churches, communities – indeed whole cities and states – underwater and drowning, swept under by the foreclosure/housing crisis.
This is a crisis facing us all: homeowners are losing their homes; but banks suffer from the toxic assets and destabilization and our economy is undermined by the waves of the housing tsunami. Increasingly churches – the house of the Lord – are facing foreclosure. Students are drowning in student loan debt. Consumers are victimized by credit card scams, and pay day lenders still prey on our people.
When banks got nearly $1 trillion in TARP funds, the people expected monies would be used to expand lending to small businesses, and provide resources to families to save their homes. But the banks got bailed out being deemed to big too fail, families facing foreclosure seemed to be too small to matter. Something is wrong with our priorities.
So the money went from Washington to Wall Street, now from Wall Street back to Washington, bypassing homeowners and small businesses. The investment has never reached our neighborhoods and communities.
RealtyTrac reports that 88,000 people had their homes repossessed in January, a 31 percent increase from a year ago. 4 million homeowners are staring down foreclosure. Another 15 million, or 30%, are underwater, their mortgages greater than the sinking value of their homes. Some analysts say that figure may rise to as high as 50% - or half of all homeowners in America.
For many families they are losing their most valuable asset – the equity in their homes. And when they are foreclosed upon and evicted, they not only lose their homes, they lost their dignity, their family wealth built up over generations.
As of January 1, less than 1% of HAMP eligible homeowners received permanent modifications. Some progress has been made since then, but minimal and nothing compared to the enormity of the problem.
Clearly the system is broken. It needs to be fixed. Until it is fixed and a plan is in place to do systematic, comprehensive, scalable permanent modifications to save ur homes:
1. There should be a moratorium on home and church foreclosures;
2. There should be a suspension of mortgage payments for the unemployed and underemployed until they can get back on their feet with a job and income;
3. There should be a suspension of mortgage payments for at risk veterans – they should not come home from war only to find they’ve lost their homes;
4. But as many experts now feel, banks must negotiate principal write downs commensurate with the actual value of their homes; a reduction not just of interest rates, but of the actual principal owed on their homes.
As part of this equation, banks must support “cram down” legislation to empower judges to modify residential home loans in bankruptcy court.
5. We need student loan forgiveness, to protect the future of our next generation of leaders. Education is an investment, not a commodity.
6. And we need banks to open up access to capital and credit for our nation’s small businesses - - - banks must prioritize lending, not trading.
Bank of America is the nation’s largest bank. It can and must take the lead in prioritizing principal reduction as the key to successfully modifying mortgages and saving our homes. By not doing so, banks are ultimately working against their own self interest, and a day of reckoning is inevitably coming where the losses from the toxic assets will come due.
Saving people’s homes is in the best interest of banks, homeowners, small business owners and the overall economy.
It’s time to act and it’s time to act now. There is no time to waste.
The Rainbow PUSH Coalition is a progressive organization protecting, defending and expanding civil rights to improve economic and educational opportunity. The organization is headquartered at 930 E. 50th St. in Chicago. For more information about the Rainbow PUSH Coalition, please visit www.rainbowpush.org or call (773) 373-3366.