#MyHomeMyVote Town Hall

The foreclosure and housing crisis seems unending, especially for Ohio’s homeowners.
We have seen first-hand the damaging impact of predatory lending, a foreclosure epidemic, and underwater mortgages.

Across the nation, nearly a quarter of our homeowners owe more on their mortgage than their home is worth.  Estimates of the national “debt overhang” afflicting our housing markets range from $700 billion to over one trillion dollars.  Too many people in our country are bound to their mortgage lenders, preventing the rebound of the housing market and stalling an economic recovery.

With this in mind, Empowering and Strengthening Ohio’s People (ESOP) is hosting #MyHomeMyVote Town Hall, on Thursday, August 23, 2012, at 6:00 pm at Akron-Summit County Public Library at 60 South High Street, Akron, OH. We would like you to join us at this town hall event. We hope to unite homeowners from Ohio, state and local elected officials, and policymakers, to discuss this current situation and how we, as a country, can work together and rebuild our housing market.

ESOP would be honored to have you attend the #MyHomeMyVote Town Hall.

RSVP at: http://bit.ly/MuZc1E

If you have any questions, please feel free to contact Deonna Kirkpatrick, via email at dkirkpatrick@esop-cleveland.org  or by phone at 216-361-0718, at any time.

Thank you for your time and attention to these important matters.  We look forward to talking with you and hope to have you join us at the Akron Public Library. Directions to the location can be found at this link: http://www.akronlibrary.org/map_main.pdf .


Federal Housing Regulator Fails His Duty to American Homeowners and Taxpayers in Refusal to Correct Mortgage Principal

CLEVELAND, OH – Ed DeMarco has used shortsighted analysis and myopic perspective in his refusal to allow Fannie Mae and Freddie Mac to correct principal mortgage balances for millions of underwater homeowners.

“Once again Ed DeMarco is thumbing his nose at the vast number of economists, industry analysts, housing advocates and underwater homeowners who have made the economic case for principal correction,“ said Mark Seifert, Executive Director of Empowering and Strengthening Ohio’s People.

As acting Director of the Federal Housing Finance Administration, DeMarco has a duty to consider not only the dollars and cents effect of principal correction on Fannie Mae and Freddie Mac assets, but also the impact of FHFA policies on the overall housing market.  DeMarco’s claim that the costs of principal correction outweigh the benefits is simply false.  Any short term gains will never outweigh the benefits of righting the housing market with principal correction and putting the nation’s economy and its taxpayers on solid footing for the long term.

Nearly one in three U.S. homeowners is underwater, meaning they owe more on their home than it is worth.  By all accounts the approximate $1 trillion dollar in negative equity is severely holding back a recovery in the housing market.  Moreover, underwater homeowners are nearly twice as likely to face foreclosure as those with some home equity.  This looming threat is the last thing we need as the second quarter of this year has already seen a spike in foreclosure filings across much of the nation.

The mostly rehashed discussion in DeMarco’s letter to Congress and supporting documents is full of references to borrowers, strategic defaulters, Fannie, Freddie, investors, servicers and more, discussing the upsides and downsides for parts of the country.  Yet FHFA never seems to consider what’s right for the long suffering, debt-oppressed American people.

DeMarco has the opportunity to be more than an accountant.  He has the chance to be a real leader by helping repair the damage of the housing crisis and restore a healthy, stable and accessible housing market for all Americans. Instead his failure to act leaves the housing market stalled and homeowners shackled to debt for which there is no underlying value.

ESOP urges DeMarco to reconsider his refusal to correct mortgage principal and the continuing harm caused by his inaction.


Principal Reduction At Work

I’m looking at loan modification papers for homeowners who recently came to ESOP for help on their delinquent mortgage.  I’m struggling to understand what I’m looking at because it seems to be a mistake.  It must be a mistake.  A home on the Westside of Cleveland, Ohio, with an outstanding mortgage balance of $174,400 has been reduced to $54,650. That’s $119,750 of principal reduction, 68% of the loan amount.

This is one of those SAM (Shared Appreciation Modification) workouts that Ocwen Financial, has spent the last year touting to whomever will listen, in or outside the Beltway.  Ocwen is a subprime servicer with years of hard-knock experience dealing with the back end of the subprime mess.  Ocwen is on to something our friends at FHFA seem not to understand, but more on that later.

Looking at the underlying numbers, the thinking behind the modification becomes clear.  The Marshalls bought their house in this neighborhood of tidy bungalows at the top of the market in 2006, with a subprime loan.  They hit a dry patch just as home values began to tank.

So they bought high, fell delinquent low, and what with penalties and fees, court costs, lawyers, and etc. the outstanding balance jumped to nearly $175,000. Under the Ocwen SAM, the Marshalls have to make three years of payments at the reduced interest rate on the reduced balance and each year 1/3rd of the $119,750 is deducted.  The upside for Ocwen’s investors is that they stand to get back 25% of any increase in value over $54,650 when the property is sold or refied.

This deal raises serious questions about what we have been told: that principal “forgiveness” won’t work, can’t work, and shouldn’t work, (because it’s bad for our morals).  Many of the arguments against adjusting the mortgage balance to match a collapsed home’s value are simply myths.  Falsehoods, so often repeated, they become industry, and then, cultural memes.

For example, how often have we been told that private label Pooling and Servicing Agreements (PSAs) won’t permit servicers to make principal reductions, because modification options are so limited and locked down by contract language.  Not so, says Ocwen.  Read most PSAs carefully and the “prime directive” for the servicer is always the same: maximize cash flow and investor returns.  Not very complicated.  Actual fact: common sense and the duty to act in the client’s best interest is not usually prohibited by contract.

Here’s another legend:   Net present value calculations “are what they are”.  We are assured that NPV analysis is mathematically rigorous—you can’t negotiate with numbers.  In fact, there are numerous input/variables for NPV calculations that are supposed to predict the value of future cash flows.  Not what the values are today, what they will be over the potential 30 to 40 year term of a modified mortgage.  (Care to venture a guess on what capital returns will be in 2053? Uh huh, sure.)  As a rule, two major NPV inputs have not been shared by servicers with borrowers.  The discount rate for future cash flows and the servicer’s estimated current value of their home.  There’s a lot of wiggle room here people, no one should be surprised that honest men can disagree about that-which-has-not- happened-yet. . . but might, in 40 years.

Truth is, net present value calculations are what we chose them to be, not “what they are.”

Rest assured Ocwen cleared this deal with their investor-clients.  Ocwen’s NPV inputs (whatever they were) simply persuaded investors that deep cuts now, will yield better returns later.  Investors will certainly lose money, but they will lose more money taking the home back. Not very complicated.

Then there is the Most Pious and Holy Meme of them all. Moral hazard will create “false” loan defaults by homeowners who see an opportunity to game the system.  Horrors!  What will we do?  What ever will we do?

Ever seen what happens to a credit score when a borrower falls 60 days behind on their mortgage?  Very ugly, and very costly to any American consumer.

But let’s say a desperate homeowner will trade in their credit standing for a chance to bail or to get new and better price   for their home.  (Yes, we know, it will happen.) But are we supposed to believe that a contrived delinquency cannot be discerned from reviewing the documentation required for loan workouts?  How many software products are peddled to loan originators, all promising to expose fraud or suspicious activity in a loan application?  And what is a loan workout but an application for a re-originated loan?

OK, but what about the moral hazard here, in the Marshall workout?  We asked the ESOP staffer who worked with the Marshalls.  “Well to tell the truth, it never came up.”  Not very complicated.



May 4, 2012


Media Contact:

Deonna Kirkpatrick
216-361-0718 ext. 1027



FHFA Director Ed Demarco Ignores Reality of Last Three Years; Over 3 Million Homes Under the GSEs Have Gone Into Foreclosure Nationwide

CLEVELAND, OH – Empowering and Strengthening Ohio’s People (ESOP), an Ohio-based homeowner advocacy organization, announced today that, after analysis of GSE and Federal Housing Finance Agency data, it is clear that inaction by the FHFA on a 2009 pilot program around principal reduction has likely resulted in hundreds of thousands of underwater homeowners unnecessarily losing their homes to foreclosure.

“While FHFA Director Ed DeMarco counts beans, the catastrophic human and economic toll of the housing crisis mounts,” said Mark Seifert, the executive director of ESOP, the largest grassroots and foreclosure counseling group in the country. “Exactly how many more families must lose their homes?”

ESOP estimates that, had the FHFA implemented principal reduction programs back in 2009, the number of family homes saved would be well into the hundreds of thousands. This analysis is based on foreclosure filings by Fannie Mae and Freddie Mac, and FHFA studies of borrowers’ negative equity positions.

In the last three years, between June 2009 and March 2012, more than 3 million loans owned by Fannie Mae or Freddie Mac started into foreclosure. FHFA figures suggest that over 1 million of those were underwater homeowners. In a January letter to Congress, DeMarco included a table that showed nearly 1.2 million homes in the GSE portfolio as seriously delinquent or in foreclosure – and that close to 40 percent of them were underwater by more than a 105 percent loan-to-value ratio. The GSE foreclosure actions, therefore, should reflect the same negative equity percentages.

ESOP’s analysis and extrapolations show that a large proportion of the 1 million underwater foreclosures (40 percent of 3 million total filings) could have been avoided with a principal reduction as part of the loan modification.  Principal reduction is not a cure all, and many negative equity households aren’t always good candidates for loan modification. Yet, through years of experience assisting thousands of homeowners across Ohio, ESOP knows that many of those hundreds of thousands of upside down families in the GSE portfolio could have stayed in their homes had they been offered a principal reduction.

“Preventing foreclosure is ESOP’s top priority,” Seifert said. “Mr. DeMarco needs to understand this problem from the perspective of our communities – that every home saved means innumerable and collateral benefits for our neighborhoods, taxpayers, investors and our economy.”

“Principal reduction has garnered broad and bipartisan support in Congress, from federal and state agencies, and from large private banks which already have implemented programs with great success,” Seifert said. “It is time for the GSEs to accept principal reduction and implement it in a way that benefits homeowners and communities and keeps more families in their homes.”


ESOP is a HUD-approved foreclosure prevention counseling agency. We have 10 offices across Ohio to help urban, suburban and rural homeowners. We have been on the frontlines of the predatory lending and foreclosure epidemic since 1999.


Stuck in an Underwater Mortgage

ESOP and underwater homeowners are continuing the fight for principal reduction.  Today Mark Henderson describes what it’s like for millions of American homeowners who are stuck in an underwater mortgage.

Calling on Chase for Principal Reduction

Friday ESOP continued its direct action against JPMorgan Chase focusing on the need for principal reduction. This was our fourth principal reduction action since December 2011.

View more photos and video on our Facebook page. (Link)

The action was led by northeast Ohio homeowners Tony McNary, Bruce Allen, Pastor Sneil, and Marvetta Rutherford. More than 100 people took a stand at a downtown Cleveland branch of Chase Bank, delivering a letter and asking for a phone call to speak with Chase CEO Jamie Dimon. The branch manager took our letter and even called Dimon’s office.

The real news came when Tony McNary called Chase and spoke  directly to a man who identified himself as Jamie Dimon. This is the first time an ESOP homeowner was able to talk directly to a Bank CEO during an action.

Dimon’s office has until Friday to call ESOP and schedule a time to meet with us.  Look forward to more information next week!


No More Excuses!

For Immediate Release

March 23, 2012

For More Information Contact:

Deonna Kirkpatrick

(216) 361-0718   or (216) 296-0363


No More Excuses!

Underwater Homeowners Demand Principal Reduction

CLEVELAND, OH – Today a startling new report revealed that even the nation’s mortgage giants Fannie Mae and Freddie Mac agree that reducing principal balances on underwater mortgages will help families and communities while saving taxpayers money. (Link to report)

So why won’t they do it?   The decision rests with Edward DeMarco,the acting director of the FHFA, who has refused to allow it, claiming it’s bad business.  Now his own employees’ analysis proves that’s not the case.

No more excuses!

Today underwater homeowners and neighborhood leaders from across northeast Ohio will board buses and take their message to a local bank, demanding serious action on principal reduction.

Stuck in an underwater mortgage

All this month we’ll bring you the stories of homeowners held hostage to their underwater mortgage and the effect it’s having on their life, their family and their community.

Today Janine tells us her mortgage is for more than $130,000 while the house next door sold for $19,000.

Join ESOP and underwater homeowners across Ohio to ask Ed DeMarco to use principal reduction to help repair the housing market.

Call our Community Organizing Department at 216-361-0718 or email Geoff Englebrecht at genglebrecht@esop-cleveland.org.

Toxic Asset

All this month we’ll bring you the stories of homeowners held hostage to their underwater mortgage and the effect it’s having on their life, their family and their community. Today Paul Simmons says his home is a toxic asset.

Join ESOP and underwater homeowners across Ohio to ask Ed DeMarco to use principal reduction to help repair the housing market.

Call our Community Organizing Department at 216-361-0718 or email Geoff Englebrecht at genglebrecht@esop-cleveland.org.

Tony Asks Chase for Principal Reduction

All this month we’ll bring you the stories of homeowners held hostage to their underwater mortgage and the effect it’s having on their life, their family and their community. Today Tony McNary asks Chase CEO Jamie Dimon to use principal reduction.

Join ESOP and underwater homeowners across Ohio to ask Ed DeMarco to use principal reduction to help repair the housing market.

Call our Community Organizing Department at 216-361-0718 or email Geoff Englebrecht at genglebrecht@esop-cleveland.org.

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