The stories were sad and most of the speakers were nervous. They had experienced a helpless frustration that extended to a voiceless impotence in dealing with banks.
Foreclosure in St. Louis remains an epidemic. When people can't afford to remain where they have lived and invested for years, it can represent for them a tragedy that is hard to communicate. But this went beyond that.
One woman talked of losing her employment, taking on a lower paying job to make ends meet. She knew she couldn't afford to continue meeting her obligations. A loan modification seemed a possibility. She had built up a history of on-time payments. A modification was eventually offered, but it reduced an $1100 monthly payment to $1000. That was still over half her income. She had helped raise her grandchildren in the home she loved. But she knew she had to move. She offered to leave right away, was prepared to sign everything over to the bank, in order to prevent actual foreclosure.
The bank would not even discuss it with her. They held things up for months, began proceedings, and foreclosed. The process was expensive, but they had no motivation to take on maintenance sooner, since a sale would not be quick. The unnecessary legal costs were substantial, but they were simply assigned to her, increasing what was already an overwhelming burden. She had no idea of her rights.
Another homeowner managed to scrape together enough financial help from friends and family to pay back every bit of what was owed. In her case, the bank refused to accept payment. Foreclosure had already started. Money in hand, the homeowner was evicted.
The County Council of St. Louis is considering a regulation that would require banks to enter mediation with an eye to preventing foreclosure when a homeowner asks for it. A counselor would be present. Rights would be explained and options sought. But, in the end, no resolution would be required that did not benefit everyone. The cost, to be borne by the banks, would be a few hundred dollars. Compared to the monthly payments involved, this is nominal.
A couple of evenings ago, I listened at a Council hearing on the proposal.
In addition to homeowners, religious leaders testified. They spoke of the frustration of trying to work out arrangements with financial institutions. Phone calls not returned, fleeting conversations with quick promises forgotten by the following day, hostility, obfuscation, fast shuffling, as pastors tried to help congregants find out the right people to talk with.
Counselors spoke, volunteers and professionals alike, working through non-profit organizations. They told of successes during active intervention, combined with sadness at the sheer volume of homeowners they could not help, simply because there was not enough of each counselor to go around.
The stories varied. The constant thread that began to form into a continuous theme was a careless refusal to communicate. Occasionally it took the form of buck passing, sometimes a seemingly deliberate unavailability of key people, doors closed, phones unanswered, messages ignored. The atmosphere as described was a sort of hybrid of apathy and hostility.
It seemed like a clear cut case to passage of the measure. How many ways does something have to be right?
The hearing room was mostly quiet as each speaker was given three minutes. Voices were soft, stories were told haltingly. Attendees strained to hear what was being said.
Then a banking representative spoke. Someone at a control panel noticed something. I could see a minor commotion. A switch was apparently turned and the banker's voice suddenly filled the room, as if the Lord was speaking to Noah. The banker was an angry God.
He began by talking about the costs. The direct expenses of mediation did not seem to attract his attention as much as the more general, bothersome, regulations. A forestalled foreclosure here, a delay there, an additional meeting, the assigning of personnel to shepherd the process would only increase the cost of doing business. That might have some effect on the interest rates on new mortgages, and could even motivate financial institutions to take their business elsewhere.
Although I didn't know it at that moment, he contradicted the later testimony of an expert who had spent years studying the success of similar regulations across the country. As the banker spoke, I was impressed at his familiarity with every nuance of argument. He was well rehearsed. The facts, as he was presenting them, seemed plausible. But it occurred to me that his case, at its core, was about the financial benefits of rank unfairness.
It is cheaper, he seemed to be arguing, to operate without inhibition. It costs less to do business without regulation. Greater efficiency is a benefit of dealing without someone watching. There are savings to be affected if the industry can move in the shadows, and a price to be suffered if banks are moved into the sunlight. It lowers the cost of doing business if homeowners have no voice, if nobody looks, if every individual who is denied the courtesy of an audience with a banking representative becomes a lone cry in the wilderness. If nobody helps, nobody advises, nobody cares, it will save the industry a few dollars. And the banker promises the savings will be passed on to others more fortunate than the one who stands alone.
But the marginal increase in efficiency, the resulting savings, the decrease that the banker promised would be passed along to consumers (he promised with all the sincerity he could muster), was the kind of bargain that, as citizens, we can't afford.
He was making a strong case for the mediation he thought he was arguing against.
But when he made the final closing argument, the entire mood was transformed. His amplified voice thundered as he pointed at the council. The banking industry would not tolerate regulation at the municipal level. That was the word he nearly shouted. Tolerate. He instructed the council to imagine the volume of litigation they were inviting. The resources of the financial industry are an enormity that can scarcely be comprehended. And the focus of that power would be concentrated against them.
It was a startling attempt at blatant intimidation. We must win, he was telling them, because we are bigger, much, much bigger, than you. And it must have been effective. Just sitting in the audience I was intimidated.
I hoped, and I still hope, that as he thundered menacingly at them, the members of that governing body might find the vision to imagine themselves, not as elected representatives, but as individual owners facing that same power and intimidation, alone and friendless and afraid.
The thundering banker with the amplified voice had made the most powerful closing case I could have imagined in favor of the modest proposal the Council is considering.
They will discuss it again next week.
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