They're racist and predatory

Julien Ball reports on San Francisco activists fighting foreclosure--and their efforts to win justice for Wells Fargo's racist and predatory lending practices.

Larry Faulks (second from right) and anti-eviction activists rally outside his homeLarry Faulks (second from right) and anti-eviction activists rally outside his home

SHERIFF'S DEPUTIES, accompanied by Jak Marquez, a lawyer for foreclosure vulture DMG Asset Management, knocked on the bedroom door of Larry Faulks on December 13 at 7 a.m. to evict him from the San Francisco home where he's lived since the age of 9--for the past 50 years.

Larry, who has been fighting to save his family home since 2010, is just one of 27 San Francisco homeowners who are calling themselves the "Wells 27" since they joined with the Alliance of Californians for Community Empowerment (ACCE) to fight Wells Fargo for their homes after having been denied loan modifications.

Larry's struggle began in 2010 when an illness and a failed surgery left him too disabled to continue working as a technical writer. He filled out multiple applications for a loan modification, but received no satisfaction.

"The bank lost document after document, and then claimed I never sent them, and forced me to repeatedly start over," Larry told the San Francisco Chronicle earlier this month.

Instead of working out a solution that would allow Larry to stay in his home affordably, Wells sold it at auction to DMG Asset Management, an investment company that has bought at least nine residential San Francisco properties in foreclosure and invested in at least 15 foreclosed properties outside of San Francisco.

Several months ago, Larry joined ACCE and Occupy Noe to protest both DMG Asset Management and Wells Fargo, demanding that they rescind the sale of his home so that his loan with Wells could be reinstated and modified. ACCE and Occupy Noe led protests and sent e-mail alerts demanding justice for Larry, but he was finally evicted on Thursday, December 13.

About 30 people showed up to defend his home the day before, since Wednesday is the day of the week San Francisco Sheriff Ross Mirkarimi's office generally carries out evictions. But perhaps in order to avoid publicity, the deputies came the following morning. This is the face of the foreclosure crisis, even in "progressive" San Francisco.

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LARRY'S IS the face of the foreclosure crisis in another way, too. It exemplifies the racism at the heart of the displacement of African American residents of San Francisco. When the Faulks family bought the home in the now-affluent neighborhood of Diamond Heights in 1962, they were the first African American family to own a home there.

They bought the home brand new from builder Joe Eichler, Larry says, "because...Eichler was the only builder at the time who would sell to Black families."

Now, unless Larry can win back his home, Wells and DMG's drive to maximize their profits at the expense of human needs will drive Larry from the still-predominately white Diamond Heights neighborhood, and perhaps from San Francisco, where rents have skyrocketed over the past several years.

So-called market forces--really the individual decisions of countless banks, investors and real estate developers--have driven tens of thousands of African American residents from San Francisco over the past several decades. While African Americans comprised 12.7 percent of the city's population in 1980, according to the 2010 census, only 6.1 percent of the population is now Black.

Of the major banks, Wells Fargo is perhaps the worst offender in this regard. Last July, Wells settled for $175 million with the U.S. Department of Justice (DOJ) for racially discriminatory lending practices. The DOJ charged that Wells Fargo steered African American and Latino lenders into more expensive subprime mortgages.

As Deputy Attorney General James M. Cole said upon announcing the second largest fair lending settlement in the history of the DOJ, "Systematic discrimination...resulted in more than 34,000 African American and Hispanic wholesale borrowers paying an increased rate for loans simply due to the color of their skin--including approximately 4,000 African American and Hispanic wholesale borrowers who were steered into subprime mortgages."

One of the Wells Fargo branches cited by the Department of Justice for discriminatory practices is in San Francisco's predominantly African American Bayview-Hunters Point neighborhood. Because of this, it became the site of protest when as many as 60 people rallied there December 6 to demand justice for the Wells 27 as part of a national day of action on the anniversary of the formation of Occupy Our Homes, a national network of local groups protesting foreclosures and evictions.

Among the protesters were dozens of homeowners either currently facing foreclosure, or who fought foreclosure previously and won. About 30 people, led by ACCE but joined by groups such as Occupy Bernal and Occupy San Francisco Direct Action Working Group, took over the bank branch for 45 minutes, picketing and chanting inside, while about 30 people rallied outside.

Chants included "Racist lending is a crime. John Stumpf should be doing time," in reference to Wells CEO John Stumpf.

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PROTESTERS STATEWIDE demanded that Wells Fargo offer a real principal reduction program to homeowners, which would allow them to reduce their debts enough to stay in their home affordably. Through the Keep Your Homes California program, the state makes $1.7 billion available for just this purpose, but Wells refuses to use the money.

Instead, they have been forcing homeowners into short sales, the term for selling a home for less than the value of the loan. Worse still, Wells has been able to count these short sales as "homeowner relief" under the terms of last February's $25 billion national mortgage settlement, which the big banks were forced to sign because they were found to have robo-signed scores of documents leading to countless foreclosures.

Of the "relief" Wells Fargo has offered to homeowners under the settlement since March, half of it--amounting to more than $1.2 billion--has come from short sales.

Unfortunately, Wells is far from unique in this regard. Of the $20 billion in "relief" the "big five" banks that were part of the settlement have offered homeowners, 49 percent has gone to forgive debts in short sales. This means that the end result for a homeowner is the same as in a foreclosure--a lost home. With this in mind, the theme of the December 6 protest was "Don't sell homeowners short."

Following the bank occupation, foreclosure fighters emerged to hold a press conference outside the branch. Bernetta Adolph, a 66-year-old cancer survivor who is scheduled to be evicted in March from her home in the Lakeview neighborhood, was among the speakers.

Bernetta defaulted on a predatory pick-a-pay loan, just one of the many bad financial instruments lending institutions offered to homeowners during the housing boom, and then she was foreclosed on.

Pick-a-pay loans involve a structure in which borrowers could accept one of several payment options. Accepting a lower payment meant that the loan balance would increase, and monthly payments would start to balloon. Homeowners were deceived into accepting loans on these terms, and these types of loans led to scores of foreclosures.

Bernetta, who recently recovered from two eye operations that brought her back from blindness, lives on social security and a fixed annuity. "I'm not only here for myself, but for all the other people who had predatory loans. And they weren't only predatory. They're racist," she said. "But we're not going anywhere. We're fighting to stay in our homes."