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Op-Ed: Wells Fargo and Other Big Banks Bear Blame for NJ's Foreclosure Crisis

How is it that a bank can violate the terms of its own mortgage modification whenever it wants to?

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According to a legal analysis published earlier this year by the New Jersey law firm Denbeaux & Denbeaux, Wells Fargo not only pushed predatory mortgages on low-income communities of color in the lead-up to the housing bubble and subsequent economic crash, but it is using its power and influence to manipulate settlements with the state and federal government that ultimately strip homeowners of their rights. And it’s not just Wells Fargo. Big banks across the board have worked hard to avoid being held accountable for the mess they created.

Consider the story of Paulette McQueen, an in-home childcare provider in Irvington.

Paulette also cares for her elderly mother, who owns the house where they both live. In June 2010, the family missed one mortgage payment to Wells Fargo. The following month, Paulette personally delivered two mortgage payments to the local branch near their home -- one payment was for the current month, the other payment was for the previous month they had missed. The bank refused to accept the payment, triggering the foreclosure mill and beginning the long and stressful process of pushing the family out of their home and the community they’ve grown to love.

Fortunately, Paulette and her family have a lot of support in their struggle to save their home. She has connected with our partner NJ Communities United, which has organized demonstrations, petitions, and delegations to Wells Fargo. Paulette has also turned to her union, the Communications Workers of America, to leverage some influence in her fight.

The collective power of these organizations successfully stopped an impending sheriff’s sale and won a trial mortgage-modification from Wells Fargo that has allowed Paulette and her family to stay in their home.

But after Paulette and her family met all the terms of the trial modification for the three-month period, Wells Fargo changed the terms of its own agreement and re-scheduled the sheriff’s sale. After more negotiations, more public pressure, and the added weight of our national leaders at the Communications Workers of America, Wells Fargo finally signed a document guaranteeing a mortgage modification that keeps Paulette and her family safe in their home.

Despite this hard-won victory, the process raises an obvious question: If Wells Fargo agreed to a trial modification and Paulette complied with the terms, then how can Wells Fargo even consider not honoring its agreement with Paulette?

The answer is also obvious: because Wells Fargo has done this to struggling homeowners before, and gotten away with it.

The legal analysis from Denbeaux & Denbeaux spells out exactly how Wells Fargo has gotten away with this practice time and again. Essentially, Wells Fargo peddled toxic loans to borrowers it knew would fail. When the housing bubble imploded and its actions were revealed, Wells Fargo negotiated settlements with state attorneys general and the Department of Justice, which ultimately stripped homeowners of their rights to sue or defend foreclosure actions taken by Wells Fargo. Essentially, Wells Fargo denied homeowners their legal rights and then moved aggressively to foreclose on families across New Jersey and the country. This is simply unacceptable.

From the streets of Irvington to the national offices of the Communications Workers of America, a movement was built to support Paulette’s fight to save her family’s home from foreclosure. But Paulette and other homeowners like her should not have to wage this type of campaign to achieve justice, or in this case simple fairness and the rule of law. They should be able to rely on the legal system and regulatory agencies to protect their interests. Unfortunately the New Jersey attorney general’s office doesn’t consider families like Paulette’s worthy of their attention.

Ken McNamara is president of Local 1037 of the Communications Workers of America.

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