Editor's Note, July 25, 2012: This and other BankThink opinion columns written by Joel Sucher bearing this note, published between October 2011 and June 2012, mentioned the law firm of Stephen J. Baum, Litton Loan Servicing, or both. The columns should have disclosed that Baum's firm, working on behalf of Litton, had attempted to foreclose on the writer's property in 2009. American Banker's editors were unaware of this history at the time the columns were published.
I had hoped that Ms. Louise Davidson, the Loma, Colorado homeowner and subject of my last post, might have dodged the foreclosure bullet. I was wrong. Big Fannie, owner of her home, refused to postpone. B of A, the servicer, did respond to an e-mail inquiry, recounting their version of events dealing with Ms. Davidson's modification efforts, but turned the question of an eviction to Fannie, saying it was now their problem.
On April 4th — the scheduled day of Ms. Davidson's eviction — I tried contacting the PR powers that be at Fannie. I wanted a cogent reason why Fannie found it so absolutely necessary to pursue this course of action, removing Ms. Davidson from her home of twenty four years. After all, she was now employed and seeking financial options that might work for all parties.
In short, my efforts were an exercise in total, abject futility. Both contacts at corporate communications stonewalled; one simply saying that he "couldn't comment," the other weighing in with a "we know about it."
Later in the morning, the sheriff and a convoy of moving trucks showed up to begin the removal process. A reporter and photographer from the local paper arrived to cover the event. I stayed on the phone with Ms. Davidson, now outside the home, tearfully watching her lock being changed. Her four cats had scattered. I did speak to the deputy sheriff charged with carrying out Fannie's orders. He was sympathetic (as many in his position are), but couldn't halt the process unless some word came down from the Mesa County Court that Fannie's lawyers — based in Denver — would agree to a postponement.
I began to feel like somewhat like the emergency room surgeon trying desperately to save a victim of a hit-and-run. Frantically scouring the Fannie website, I found a few e-mails and phone contacts — lawyers and administrators — that weren't shunted through the main number with its Gordian knot menu designed to frustrate anyone from the outside from having any sort of communications with those on the inside. Calls and e-mails remained unanswered.
It was becoming increasingly clear that Fannie was pursuing a policy of intractability, in this case, and I presume, with millions of other homeowners in similar straits. Why would the GSE want yet another home – one that needed repairs – to add to an already bloated inventory of REOs. It just didn't make sense. Any foreclosures that sell are a drop in a bucket, being replaced ten times — one hundred times over — with a fresh stock. The impact on the housing market: disastrous.
By late afternoon hope began to vaporize. Piles of Ms. Davidson's accumulated possessions started to change the topography outside her home. Then a bit of hope arrived in the guise of a friendly court clerk who suggested that Ms. Davidson run over to nearby Grand Junction and file some papers asking the judge to try and stay the eviction process. By day's end a kindly neighbor offered Louise a warm bed, although her four cats would have to remain outdoors.
Fannie, like the forty-ton Chinese tank in the iconic Tiananmen Square photo, had not stopped nor veered away at the last moment. It simply rolled over Ms. Davidson. It became clear to me that nobody — nobody at all — in the beltway mansion that Fannie calls home had any sort of compassion for what a homeowner halfway across the country was going through. None at all.
Fannie had shown its true colors and demonstrated that we won't be able to come to grips with the housing/foreclosure crisis unless we take on the lumbering GSE tag team. Archaic bureaucracies Fannie and Freddie may be; they still control half the nation's mortgages between them, and continue to resist, under the guidance of their FHFA boss, acting director Edward De Marco, any out-of-the-box proposals that would put homeowners before foreclosures and profits. Truth be told, however, they're more adept at pursuing the former than reaping the rewards of the latter.
Most ordinary Americans know little about Fannie or Freddie. They're mysteries, and I'm sure if you stopped a person on the street and asked them what a GSE is they'd probably respond with "isn't it a medical test," or maybe "yeah, it's a high school equivalency degree." Or they might think that Fannie has something to do with those chocolate Easter eggs.
While the Fannie web site portrays an agency devoted to preserving "home ownership," when you probe deeper, another darker agenda reveals itself. The dirty little secret: Fannie the foreclosure factory. Examine Fannie's "retained attorney list," outlining, state by state, which law firms get the GSE's seal of approval for carrying out foreclosure dirty work. Fannie also provides guidelines for the shock troops, making it clear the time frames, again, state by state, they expect the eviction process to be complete. If a firm can't meet the deadline, they suffer financial penalties.
It's lucrative bread and butter work for these law firms, and woe to any mill that draws unwanted public attention. To wit, the notorious Stephen J Baum firm in New York (remember, the "Halloween pix"). Baum, highlighted in Joe Nocera's New York Times op-ed, making fun of its foreclosure victims, was the kiss of death.
Taking on the GSE's and their role in perpetuating the foreclosure problem doesn't seem to rate high on any Congressional must-do list. Certainly it doesn't inspire any confrontational rants between the presidential candidates. It should, given the fate of millions of voting Americans faced with the same problems as Louise Davidson.
In the meantime, Ms. Davidson continues the fight for her home. And for the Fannie functionaries who've created her current state of homelessness, I'd say this: Ms. Davidson might as well be your relative, neighbor or friend, and on this weekend — a convergence of both Easter and Passover — you just might find that more than enough spiritual grist for meditation.
Joel Sucher, a filmmaker with Pacific Street Films in Hastings-on-Hudson, N.Y., is working on "Foreclosure Diaries," a documentary about the financial crisis.