WEDNESDAY, JULY 14 — Union leaders including Local 100’s John Samuelsen, the UFT’s Michael Mulgrew, Local 1199’s George Gresham, DC 37’s Oliver Gray, and Brooklyn’s Rev. Dr. Herbert Daughtry joined with City Comptroller John Liu today and with Jon Kest, Director of New York Communities for Change, to announce what amounts to a fightback against financial institutions who have profited from the subprime crisis, and now refuse to address its devastating fallout.
Foreclosures in New York City are up 16% in the first quarter of 2010 over the same period in 2009 and rising, according to the Furman Center for Real Estate and Urban Policy. Big banks have been repeatedly told by the Obama Administration that they have to make good faith efforts to modify loans of qualified borrowers whose homes are “underwater” because of the subprime mortgage crisis. But when the rubber meets the road – and borrowers with unaffordable mortgages actually try to get better terms, they often face agonizing run-arounds by nameless customer service agents working for the same banks.
As the Comptroller put it, “Unresponsive staff, misinformation, and repeated requests for paperwork – the red tape and bureaucracy New Yorkers often cite as they struggle to save their homes – are symptoms of a system that lacks incentives for banks to take action and find solutions.”
Officials from New York’s top unions have been hearing from members that banks are unresponsive and have decided to do something about it: put the power of their pension holdings, and the clout of City Comptroller John Liu, behind tough letters to the Bank of America, Citibank, HSBC Bank, JPMorgan Chase, and Wells Fargo. The letters went out July 14. They demand that the major banks explain to the unions the time frames in which they respond to loan modification requests, the progress they are making in writing down the principal of loans which are higher than the value of the property, and whether they are working with non-profits on plans to purchase homes so that current owners can remain there.
At stake if the banks do not reply are the huge bond and equity holdings in these corporations which the unions hold as trustees of both the New York City Employees’ Retirement System (NYCERS) and the Teachers Retirement System (TRS). For example, as of the end of the last fiscal year, NYCERS held shares in JPMorgan Chase valued at $147 million and $136 million in JPMorgan Chase & Subsidiaries bonds. Positions in Bank of America were valued at $137 million (shares) and $67 million (in bonds). Holdings in the other banks named in the union letters are also in the hundreds of millions of dollars. The letters are signed by Samuelsen (TWU Local 100), Mulgrew (UFT), Roberts (DC 37), Gresham (1199), and Comptroller Liu.
The press conference at the Comptroller’s office also featured testimony from two union members, including Jamie Fidler, a teacher who lives in Sunset Park and is struggling to pay her mortgage, and Joy Allen, a member of Local 1199 whose house is also “underwater.” They described the runaround they are getting from the banks in spite of holding jobs and making every effort to meet their obligations.
Union leaders made it clear that their patience is wearing thin. TWU Local 100’s John Samuelsen said that banks “must restructure and modify your mortgage loans, following established federal guidelines, so that the workers you took advantage of have an opportunity to keep their houses and stop the foreclosures. Because you profited so handsomely, it’s now time to pay back. Local 100, with a seat on the New York City Employees Retirement System, considers this a criterion for our future investment decisions in the stocks of these banks and associated financial institutions.”
Said the UFT’s Mulgrew: “Banks must realize that keeping people in their homes is not only good for working class families and communities, it’s good for the entire city and a key part of or economic recovery.”
George Gresham of 1199 said that “whenever a home is foreclosed it sends a ripple effect throughout neighborhoods. Not only do these families have trouble obtaining new loans, but the value of neighboring properties drop and communities are devastated. Clearly, current efforts to modify loans are not working.”