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Banks Encourage Homeowners to Sell at a Loss

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Pam Hall

By Tanya
Dennis

Banks are encouraging underwater homeowners to short sale their properties, that is, sell their home at a loss rather than go through foreclosure.
In 2009, the Obama Administration designed a $75 billion   “Making Home Affordable program, initially created to help distressed borrowers’ receive loans so they could stay in their homes.
Unfortunately, the plan also offers incentives for banks if they do not offer modifications for borrowers and allow homeowners instead to sell their home at a loss.
Lenders are increasingly using this program to receive government incentive payments by offering homeowners the opportunity to short sale their homes.  Under the plan, the government also shares the cost of extinguishing second liens in the form of second mortgages.
“Banks push homeowners into short sales, and the houses go to investors,” said Pam Hall, chairwoman of the Home Defender’s League.
“In Oakland, investor-owned properties are transforming our neighborhoods, especially in communities of color, as homeowners lose their homes, and Section 8 tenants are pushed out as tenants.
“Mayor Quan is dedicated to stabilizing the Oakland housing market, but rampant short sales are undermining any attempt Mayor Quan, grass-root organizations and housing organizations are using to try and keep people in their homes.”
Over 25 percent of California borrowers were underwater between 2007 and 2010, and average Americans lost 40 percent of their wealth during the recent Great Recession
With banks quick to foreclose and slow to offer loan modifications, the loss of wealth in the middle class is likely to increase.
“The Multiple Listing Service show homes in foreclosure, and real estate agents are flooding homeowner with ‘deals’ to bail out of their homes,” said Hall. “The results are, investors are able to come in, revamp a home and boost the price or get permits to tear down and build other entities that aren’t a fit for the neighborhood.”
According to Bill Fricke, senior credit officer for Moody’s Investors Service in Manhattan, banks like these short sales. “Banks have decided the deals are faster and less costly than foreclosures, which have slowed in response to regulatory probes of abusive practices. Banks are nudging potential sellers by pre-approving deals, streamlining the closing process, and in some cases providing large cash incentives.”
Looking for ways to keep people in their homes, community organizers point to the multi-state agreement between the nation’s attorneys general and the banks and how the banks continue to benefit to the detriment of homeowners.
As part of the nationwide $2-billion agreement with Bank of America, Ally Financial, Citi Mortgage, JPMorgan Chase and Wells Fargo, forgiving short sale debt is one way lenders can meet their financial obligations.
Nationwide, about 60 percent of the debt forgiven through Sept. 30 has been through short sale deficiency waivers.
“If banks were committed to stabilizing the housing market, they would keep homeowners in their homes by offering across the board principal reductions rather than short sales. Unfortunately the bank makes more money with short sales. The results are that homeowners get sold out,” said Hall.
About 14 million homeowners are in foreclosure, behind on their mortgages or owe more than their properties are worth, said RealtyTrac Inc., a property-data company in Irvine. California.

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Not Just a Southern Issue: Advocates Say SCOTUS Voting Rights Decision Has Already Started to Reshape Black Political Power

OAKLAND POST — Following the Civil War and Reconstruction, constitutional amendments expanded Black citizenship and voting rights across the South, leading to dramatic increases in Black political representation. But those gains were quickly met with violent backlash and the rise of Jim Crow laws designed to suppress Black voting through poll taxes, literacy tests, and other “race-neutral” restrictions.

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By Edward Henderson, California Black Media

U.S. Rep. Sydney Kamlager-Dove (D-CA-37), a member of the Congressional Black Caucus (CBC) whose district spans parts of Los Angeles County, joined fellow CBC member U.S. Rep. Troy Carter (D-LA-2) for a May 21 briefing with Black media outlets in California. 

The lawmakers highlighted what they describe as a mounting threat to Black political representation resulting from an April 29 U.S. Supreme Court ruling that weakened key protections under the federal Voting Rights Act.  

Kamlager-Dove and Carter warned that the decision, which narrowed the role of race in redistricting, is already reshaping congressional districts across the South and undermining Black voters’ ability to elect candidates of their choice.

“While we are a super blue state, we have far to go when it comes to Black representation; we tend to take that for granted,” Kamlager-Dove said of California, noting that the Golden State has the fifth largest Black population in the country and only has three Black members of Congress.   

“While I support building coalitions, we have to make sure that as a Black community we are not yielding our power,” she added.

Calling the fight “not unique to the South,” Carter urged Black communities nationwide to recognize the broader implications of the legal and political battles unfolding in Southern legislatures and courtrooms. 

The Supreme Court ruling centers on Section 2 of the Voting Rights Act of 1965, the portion of the law that prohibits voting systems or district maps that dilute the voting strength of racial minorities. For decades, Section 2 allowed civil rights groups to challenge district maps that weakened Black political representation even when lawmakers did not openly state discriminatory intent.

Now, advocates fear that standard has fundamentally changed. 

“You have to have smoking gun evidence,” said Mitchell Brown, senior voting rights counsel at the Southern Coalition for Social Justice, during a recent media briefing hosted by American Community Media on May 15. “Legislators are not going to say the quiet part out loud.” 

The implications could stretch far beyond congressional elections, Brown said.  

Section 2 protections have historically applied not only to U.S. House districts, but also to state legislatures, school boards, county commissions, judgeships, and local governing bodies. Voting rights advocates warn that weakening those protections could reshape political representation throughout the South, particularly in states with large Black populations. 

“This is not just a Southern issue,” said Amir Badat, manager of Black Voters on the Rise and voting special counsel at the NAACP Legal Defense and Educational Fund.

Badat described the current moment as part of a much longer historical pattern. 

Following the Civil War and Reconstruction, constitutional amendments expanded Black citizenship and voting rights across the South, leading to dramatic increases in Black political representation. But those gains were quickly met with violent backlash and the rise of Jim Crow laws designed to suppress Black voting through poll taxes, literacy tests, and other “race-neutral” restrictions. 

“This is the same move,” Badat said.

Advocates also emphasized that the consequences of weakened voting protections extend into everyday life. 

Local elected offices such as school boards, city councils, county commissions, and judgeships often determine funding priorities, public safety policy, education standards, and infrastructure investments.

“These are not abstract numbers,” Badat said. “These have real political consequences and policy consequences on people’s day-to-day lives.” 

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Rest in Peace: A.M.E. Pastor and L.A Civil Rights Icon Cecil “Chip” Murray Passes

The Rev. Dr. Cecil L. “Chip” Murray, former pastor of First African Methodist Episcopal Church (FAME) in Los Angeles, died of natural causes April 6 at his Windsor Hills Home. He was 94. “Today, we lost a giant. Reverend Dr. Cecil Murray dedicated his life to service, community, and putting God first in all things. I had the absolute honor of working with him, worshiping with him, and seeking his counsel,” said Los Angeles Mayor Karen Bass of the dynamic religious leader whose ministry inspired and attracted millionaires as well as former gang bangers and people dealing with substance use disorder (SUD).

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The Rev. Dr. Cecil L. “Chip” Murray, former pastor of First African Methodist Episcopal Church (FAME) in Los Angeles, died of natural causes April 6 at his Windsor Hills Home. He was 94.

“Today, we lost a giant. Reverend Dr. Cecil Murray dedicated his life to service, community, and putting God first in all things. I had the absolute honor of working with him, worshiping with him, and seeking his counsel,” said Los Angeles Mayor Karen Bass of the dynamic religious leader whose ministry inspired and attracted millionaires as well as former gang bangers and people dealing with substance use disorder (SUD).

Murray oversaw the growth of FAME’s congregation from 250 members to 18,000.

“My heart is with the First AME congregation and community today as we reflect on a legacy that changed this city forever,” Bass continued.

Murray served as Senior Minister at FAME, the oldest Black congregation in the city, for 27 years. During that time, various dignitaries visited and he built strong relationships with political and civic leaders in the city and across the state, as well as a number of Hollywood figures. Several national political leaders also visited with Murray and his congregation at FAME, including Presidents George W. Bush and Bill Clinton.

Murray, a Florida native and U.S. Air Force vet, attended Florida A&M University, where he majored in history, worked on the school newspaper and pledged Alpha Phi Alpha Fraternity.  He later attended Claremont School of Theology in Los Angeles County, where he earned his doctorate in Divinity.

Murray is survived by his son Drew. His wife Bernadine, who was a committed member of the A.M.E. church and the daughter of his childhood pastor, died in 2013.

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Court Throws Out Law That Allowed Californians to Build Duplexes, Triplexes and RDUs on Their Properties

Charter cities in California won a lawsuit last week against the state that declared Senate Bill (SB) 9, a pro-housing bill, unconstitutional. Passed in 2021, SB 9 is also known as the California Housing Opportunity and More Efficiency Act (HOME). That law permits up to four residential units — counting individual units of duplexes, triplexes and residential dwelling units (RDUs) – to be built on properties in neighborhoods that were previously zoned for only single-family homes.

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Charter cities in California won a lawsuit last week against the state that declared Senate Bill (SB) 9, a pro-housing bill, unconstitutional.

Passed in 2021, SB 9 is also known as the California Housing Opportunity and More Efficiency Act (HOME). That law permits up to four residential units — counting individual units of duplexes, triplexes and residential dwelling units (RDUs) – to be built on properties in neighborhoods that were previously zoned for only single-family homes.

A Los Angeles Superior Court Judge ruled in favor of the cities, pointing out that SB 9 discredited charter cities that were granted jurisdiction to create new governance systems and enact policy reforms. The court ruling affects 121 charter cities that have local constitutions.

Attorney Pam Lee represented five Southern California cities in the lawsuit against the state and Attorney General Rob Bonta.

“This is a monumental victory for all charter cities in California,” Lee said.

However, general law cities are excluded from the court ruling as state housing laws still apply in residential areas.

Attorney General Bonta and his team are working to review the decision and consider all options that will protect SB 9 as a state law. Bonta said the law has helped provide affordable housing for residents in California.

“Our statewide housing shortage and affordability crisis requires collaboration, innovation, and a good faith effort by local governments to increase the housing supply,” Bonta said.

“SB9 is an important tool in this effort, and we’re going to make sure homeowners have the opportunity to utilize it,” he said.

Charter cities remain adamant that the state should refrain from making land-use decisions on their behalf. In the lawsuit, city representatives argued that SB 9 eliminates local authority to create single-family zoning districts and approve housing developments.

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