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NLS-LA & One LA
Foreclosure Prevention
Our Approach
Partner with community organization Train “cohorts” of borrowers Cohorts negotiate as a group with
banks that service their loan Monitor modifications Craft community supported proposal
Collaboration With Multiple Partners
NLS-LA One LA-IAF New Economics for Women Volunteer with banking background
Train “cohorts” of borrowers
Financial literacy Understanding your mortgage Understanding securitized mortgages
– i.e., the bank that takes your money is not the institution that owns your loan)
Types of loan modifications
Cohorts Negotiate With Banks That Service Their Loan
Over 200 borrowers to date Four banks (servicers):
– Chase (includes WaMu & EMC)– Wells Fargo (includes ASC)– Countrywide/Bank of America– Indymac
Monitor Modifications- follow up with banks follow up with borrowers
develop criteria to evaluate mods
Craft Community Supported Proposal Listen to homeowners in house meetings Evaluate financial capacity of the group Understand self-interest of the bank Develop proposal with key stakeholders in
mind Bring back to local constituency
One LA Proposal
Long-term fixed payment Reasonable interest rate Principal reduction so borrower has
equity & reason to keep paying Publicly funded “soft” second to secure
affordable payment for more borrowers
Problems With Modifications
Bank disorganization (e.g., over 90 days to get a decision; by then info is old & have to start over)
Modification is voluntary President’s plan leaves out more than 75% of
our borrowers Most modifications are short-term fixes: 5
years or less before payments jump by hundreds per month
One LA Proposal at Work
LA City Council votes unanimously to invest $1 Million in demonstration project May 13th:– Long term fixed payment– Principal reduction– Publicly funded soft second (with $1M CRA funds)
One LA-IAF in negotiation with banks to leverage participation
Implementation in progress
Time Line
Sept 08: Community led house meetings Nov 08: Organization of borrowers into
cohorts and secure NEW as a partner Dec 08 – Jan 09: Negotiations begin for first
three cohorts Jan 09 – One LA Community Assembly –
1,500 participants; federal, state & local elected, proposal publicly presented to elected officials
Time Line, Cont’d
Feb 09 – LA city council approves program in principle
March - May 09 – Ongoing borrower training and meetings with banks
May 09 – LA City Council approves investment of $1 Million into project
Sept 09 – Program operational?
Moderators
Antonio Hicks, Staff Attorney, Consumer & Housing Advocacy Group, Neighborhood Legal Services of LA Countye-mail: [email protected]
Carlota Garcia, Organizer, One LA – IAFe-mail: [email protected]
