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Fighting Foreclosure: Advocates Tell Homeowners To Stay Put

Northwest foreclosures were hot properties this fall. A report from RealtyTrac, a service that develops foreclosure data for real estate agents, finds third quarter sales of foreclosed homes in Washington rose five percent from the previous quarter. In Oregon, foreclosure sales actually dropped, but buyers were snapping up pre-foreclosure homes at a rate that was 22 percent higher than the previous quarter.

The financial crisis has made foreclosures much more common in Oregon neighborhoods. As lenders and homeowners ponder the worth of these properties, one group is encouraging homeowners not to let go of their homes without a fight.

Debbie Austin bought her in North Portland home for $39,000 in 1986. Twelve years later, her family hit a financial wall.

Ron and Debbie Austin

Ron and Debbie Austin

April Baer/OPB

“The company my husband works for was sold,” she remembers. ‘They did a pay cut on Ron. He had a second job there as a janitor, they took that away from him, and gave it to somebody else.  Then we found out he had cancer, and I had to have a second back surgery, and when I went through cancer the year after his, I had a big surgery,” she said.

All these problems against the backdrop of the national financial crisis didn’t make for a happy meeting when the couple went to talk to their lender. They were in the midst of declaring bankruptcy.

“We asked to refinance, was what we did. They said they couldn’t do that, but they would give us a second mortgage,” Austin explained.

The bank agreed to work with them on a second mortgage, within the constraints of their bankruptcy.

At the end of November last year, Austin got confused about whether she’d made a mortgage payment. She spent a month trying to establish whether the bank had received the money. In January, she sent in a three-month mortgage check, only to receive a notice that crossed in the mail saying she was considered late for three months total.

“And so,” Austin said, “We called the bank right away. The bank would not talk to us.”

Austin later learned she had made the payment in question in the first place. But she says she was still charged penalties. As the dispute grew, Austin says the couple couldn’t afford an attorney to represent them in court. The foreclosure went forward. Fannie Mae bought the house back from Austin’s lender, and issued an eviction date, November 20. The Austins’ lender, Home Street Bank, declined to comment on their case. Fannie Mae did not make anybody available to comment.

Since then, each day has been a waiting game.

Mike Crenshaw, a volunteer from We Are Oregon, sits on the Austin’s couch, watching the windows whenever a car goes by. “I’m just basically filling a shift,” he says.

The group "We Are Oregon" is working with Austin and a half-dozen other Portland families fighting to keep their homes.

The group “We Are Oregon” is working with Austin and a half-dozen other Portland families fighting to keep their homes.

Kristian Foden-Vencil/OPB

There are volunteers covering nine hours each day at the Austin’s, ready to relay information if an eviction is enforced.

If law enforcement arrives, We Are Oregon will send a text to hundreds of people who volunteered to show up in protest of evictions. Crenshaw considers himself moral support, too, for homeowners who may have to leave to go to work.

“It can be overwhelming, feeling like at any moment somebody could come kick you out of your house. In this climate it’s fair for us to be doing what we’re doing, which is supporting people staying in their homes.”

We Are Oregon has staged move-in events and rallies for a half-dozen families throughout North Portland. Many of the families the group has chosen are African-American, from a community has been gradually priced out of this historically black part of town.

The group’s Angus Maguire says We Are Oregon was founded when some local unions started thinking about how to expand organizing on issues outside the workplace. They settled on foreclosures, especially where homeowners got in trouble after a downturn job loss or medical crisis.

Angus Maguire

Angus Maguire

April Baer/OPB

“We hear the same kinds of stories repeatedly, over and over - difficulty working with banks, difficulty figuring out who holds their mortgage. I always use the term ‘stumble’, because it’s really like a high-risk game. You really have to miss only one payment to be in crisis,” he said.

The group holds “Know Your Rights” workshops for homeowners, in addition to public rallies aimed at raising awareness of pending foreclosures.

A spokesman for Multnomah County Sheriff Dan Staton would not comment specifically on what’s in store for the Austin’s house. Lt. Steve Alexander did repeat a statement he’s made several times since We Are Oregon started challenging evictions. Alexander underlines the department’s role.

“We act at the orders of the court under the civil eviction process,” Lt. Alexander says. “We carry out the court orders and that is the job and duties within the Sheriff’s office. We continue to perform those duties as the court’s orders come through.”

In a written statement, Alexander also says that when eviction orders are administered, deputies have community resource information available for the residents.  He says the department tries to ensure the eviction is done, quote, “as considerately as possible.”

Oregon has a long-standing system of non-judicial foreclosure. That means the process can be settled outside the courts. It’s traditionally perceived as more streamlined, less confrontational and less expensive. Homeowners in default can sometimes avoid owing the balance of their loans.

But the financial crisis put new strains on the system. And a pending set of cases before the state Supreme Court has the potential to slow the foreclosure pipeline.

But Angus Maguire says his the group will still counsel people to stay in their homes if they receive a threatening letters from lenders — even if their houses are sold at auction.

“When we look at the overall environment,” he says, “the preponderance of evidence is that the system is overwhelmingly stacked against homeowners.”

Gerry Mildner is a professor at Portland State University’s Center for Real Estate. He says there are multiple causes for the problems in the prime and sub-prime lending markets right now. But he questions whether it’s wise to ignore foreclosure proceedings.

“I think the risk you take in trying to interrupt the foreclosure process is you make the next lender more nervous about lending to someone who has weak credit or doesn’t have equity in the house.

But there are some who say foreclosures aren’t necessarily serving that purpose in the current economic climate. Mark Thoma is a professor of Economics at the University of Oregon in Eugene.

“Generally,” Thoma says, “you want to use foreclosure as a method of disciplining people when they’ve made poor decisions. So the extent to which you’re foreclosing people who’ve done the wrong thing, speculated in the market, people take a risk, it hasn’t paid off, then I think foreclosure serves a useful role. Where it all breaks down from a market perspective is when things happen people couldn’t see coming things happen out of their control.”

Thoma looks at the financial crisis, and says some basic assumptions about home ownership were tipped upside down — along with home values. He sees a market where people relied on the expertise of brokers and lenders. In that context, Thoma says, foreclosures aren’t serving their more traditional purpose, and are harder to justify.

As of today, the Austins are still in their home. But they know this holiday season that they could be evicted at any time.

Tuesday, we’ll have more about the changing landscape for foreclosures in Oregon.

Oregon Foreclosure We Are Oregon Real Estate