Up against the banks
The effort to halt foreclosures grows
Published: July 6, 2011
They came to the microphone, one after another, each bearing witness to a disaster that continues to unfold.
As eight Wayne County commissioners and two Detroit City Council members listened, a stream of people spent nearly three hours at the Coleman A. Young Municipal Center in early June talking about the issue of home foreclosures.
Some wondered why such a hearing was needed at all, given the extent of the crisis.
"If you aren't already aware of what's going on, you are not in touch with the pulse of the people. You are not in touch with reality," said Charles Williams, a Baptist minister. "Michigan is in a state of emergency."
And some did more than talk: They demanded immediate action.
"We're not asking you," one woman shouted. "We are telling you."
What they were calling for is something many would consider a radical reaction to the foreclosure problem: a moratorium that would put a halt to sales and evictions for one year.
The problem is clear enough: Far too many people are losing their homes to foreclosure, and that is having a devastating effect not just on the families being evicted but also on the property values of their neighbors, the well-being of communities and on the budgets of local governments.
Detroit may be one of the epicenters of this crisis, but it has long since spread across Michigan and throughout the country.
More than 2.8 million properties nationwide were in some stage of the foreclosure process in 2010, according to RealtyTrac, a California company that monitors foreclosure activity. Another 197,112 properties were added to the list during the first three months of this year.
In Michigan, about 200,000 homes have been repossessed since 2009. The Center for Responsible Lending, a nonprofit research and policy organization, predicts another 140,000 homes will be foreclosed on in the coming 18 months.
"The reality is that we have a way to go before we hit bottom," says Steve Tobocman, a former state legislator who is now co-chair of the Michigan Foreclosure Prevention Task Force, a collaborative statewide project involving several legal services programs.
Since 2006, what began as a small group of activists has been calling for a moratorium on home foreclosures. For much of that time, their voice has been largely ignored.
But as the crisis has deepened and spread, the movement has gained support. Though still facing a difficult battle, this much has happened:
At the end of that June public hearing, the eight county commissioners who attended — representing a majority of the 15-member body — pledged to support the Homeowner Protection and Neighborhood Preservation Act, a measure introduced by Highland Park's Martha G. Scott in April.
If approved, the act would call upon the Wayne County sheriff to implement a one-year moratorium on foreclosure sales of occupied residences.
State law dictates that foreclosed properties in Michigan be sold at auctions conducted by county sheriffs, who are elected officials. As such, the Wayne County Board of Commissioners lacks the authority to order Sheriff Benny Napoleon to do anything.
The purpose of passing Scott's measure, activists say, would be to amp up political pressure on Napoleon to halt the sale of foreclosed homes.
Asked to comment on the proposal, Napoleon's director of communications Paula Bridges responded via an e-mail that said, in part:
"As a life-long resident of Detroit and Wayne County, Wayne County Sheriff Benny Napoleon joins countless others in their concern and dismay over economic conditions ravaging what were once strong and vibrant neighborhoods in the form of mortgage foreclosures. As a homeowner who also faces the declining value of neighboring properties, Sheriff Napoleon empathizes greatly with those struggling to maintain ownership of their property. However, due to his position, Sheriff Napoleon is obligated to honor his oath of office which requires him to adhere to state statutes governing the foreclosures."
In other words, the sheriff isn't on board with the plan.
But the legalities aren't that clear-cut, the activists say. For starters, they point out that in early 2009, then-Sheriff Warren Evans — who was also campaigning in what turned out to be an unsuccessful attempt to be elected mayor of Detroit — did briefly impose a unilateral moratorium on the foreclosure auctions.
He claimed his actions were legal and justified because homeowners needed time to take advantage of the federal Troubled Asset Relief Program (TARP), passed by Congress in October 2008 as part of the bank bailout. That federal legislation superseded Michigan law, Evans claimed.
"Federal law pre-empts state law, which means that the TARP provision prevents Michigan's foreclosure law," Evans said during a press conference. "That in turn means that foreclosures cannot move forward until efforts to modify the mortgages of homes covered by TARP have been exhausted. As a result, I have determined that there are sufficient legal grounds for me and for other sheriffs in Michigan to halt mortgage foreclosure sales."
An area lender filed a lawsuit almost immediately, and Evans quickly reversed course. (Attempts to reach Evans for comment were unsuccessful.)
In addition to his own action, Evans also asked then-Governor Jennifer Granholm to declare a state of emergency and impose a statewide moratorium. Granholm responded that she didn't have the authority to do that.
Advocates of a moratorium, however, say there is ample precedent for such an action.
Between 1932 and 1934, during the height of the Great Depression, 25 states passed moratoriums on foreclosure of mortgages. The issue made it all the way to the U.S. Supreme Court. In a 5-4 decision, the court upheld the legality of such measures, saying that they were a justified response by government during a time of economic crisis.
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