The Obama administration is about to announce a new plan for the foreclosure mess, but the government and industry responses thus far have done little to stop millions of people from losing their homes. Over the past several days, some of those people have been protesting outside the homes of bank industry executives in New York and Connecticut.
In the superexclusive neighborhoods in Westchester County, N.Y., things don't get very loud or crazy too often. Which is why it definitely got the neighbors' attention on Sunday when a housing group brought in 50 van-loads and two tour buses full of upset homeowners.
About 300 homeowners with bullhorns marched past a police cruiser, up the driveway and to the front door of the house where Morgan Stanley CEO John Mack lives.
"John! Where are you, John?" one protester called up to the castle-like stone walls of the house. Bruce Marks is the housing advocate behind what he calls a "predators tour."
"This guy, he has a net worth of over $400 million," Marks says. "Look at his house. He gets lost in his own house. It's so outrageous."
Marks, who is with the Neighborhood Assistance Corporation of America, is singling out big Wall Street executives personally to try to pressure them to do more to help homeowners facing foreclosure.
"While Americans are losing their homes by the millions, he's living in the lap of luxury here in his beautiful house, isolated — and he thought he was safe," Marks says. "Well, it's Sunday, and it's family day, and we're bringing our families to his family."
The protesters also went to a hedge-fund manager's house, where they dumped a couch and a bunch of old furniture.
Families Seeking Help
Morgan Stanley says its mortgage-servicing company is working with Marks' group to help qualified borrowers stay in their homes. But many homeowners say they are not getting any help.
Some home-owners said they got scammed by a crooked mortgages brokers who lied to them about how high their payments would be.
One home-owner, a corrections officer who didn't want his name used, said
"You wait 10 years to buy a home. You put $20,000 — every penny we had at the time — into our dream," he says. "And to have somebody swindle us at the closing table, I felt taken advantage of, lied to, and I felt cheated."
Some home-owners also complained that when they tried to get help from their lenders they didn't get any response.
Working With Lenders
Economists say many people could stay in their homes if there was a better system for fixing the bad loans that were approved in recent years. Companies have pledged to do that, but in the vast majority of cases, it's not happening.
But the counselors at this NACA event have better contacts with the lenders. They are documenting homeowners' incomes and making direct proposals to lower their payments. Many lenders are cooperating. The group says it has restructured more than 25,000 loans over the past year. This is the kind of thing some economists would like to see on a much larger scale.
Not All Cases The Same
But there were all kinds of people at this event. And it's harder to see some of them as victims.
"I was two months out of college, and they gave me $465,000," says Chris Donohue, a structural engineer who makes about $40,000 a year.
He clearly couldn't afford the house he bought. He got the loan from IndyMac bank, which collapsed last year after many of its loans went sour.
"Every single other bank in the country told me no — wisely," Donohue says.
Still, Donohue would like his payments lowered. Deciding where to draw the line on loan workouts will be a challenge for the government going forward.
Editor's Note: After our story aired, Wells Fargo gave the following response to NPR: "Wells Fargo services mortgage loans that are largely held by investors. Workout options are based on a homeowner's financial ability to repay their mortgage debt according to investor guidelines. For this reason, we must consider these guidelines and each homeowner's circumstance.