Roline Burgison hasn’t paid rent on her South Providence home in almost a year. She, like many other Providence renters, was unaware that the apartment she had been living in was up for foreclosure until she received a letter from the bank last October, advising her to stop paying rent to her landlord and move out immediately. Burgison, who has moved 13 times in Providence the past 30 years —four times due to foreclosures—was sick of moving. So she stayed put.
Direct Action for Rights and Equality (DARE), a community organization based in Providence, wants tenants in foreclosed buildings to know and defend their rights. A day after the bank unsuccessfully tried to auction off the house Burgison was still living in, DARE door-knockers stopped by her house. DARE organizers use the auction section of the Providence Journal to identify homes have likely been foreclosed and go to these properties to inform homeowners and tenants of their rights and options if they want to stay in their home. They knocked on Burgison’s door last fall, and she has been working with DARE ever since.
It is harder to evict a tenant from a foreclosed home before the property is bought by another entity, so banks often try to encourage renters to move out by offering them a small lump sum—usually between $2,000-4,000—to leave immediately. “Cash for keys,” as this strategy is referred to, is “good if you have another place to move to,” Burgison says, “but I don’t want to move, I want to stay where I’m at.”
DARE models its methods for fighting foreclosures on those of City Life, a Boston community organizing non-profit that has pioneered a direct action approach to stopping foreclosures in the Boston area since 2007. City Life describes its strategy for fighting foreclosures on its website as: “getting out in the community to get the message out; holding meetings that build solidarity; providing access to lawyers; [and] organizing bold and creative protests that apply public pressure and attract media attention.”
City Life and DARE employ this two-prong approach of legal and direct action tactics to help individual residents stay in their homes, as well as to gain the attention of major mortgage lenders such as Fannie Mae and Freddie Mac, with the goal of radical policy changes. A major policy target is getting large lenders to reduce principal balances, which involves lowering the payments that homeowners owe to reflect actual market values (many houses are currently valued at far less than the original mortgage agreement). This policy would decrease the number of homeowners unable to pay off their debt, as well as increasing payments to the banks, who receive no money when owners default on loans. Other demands are an end to evictions of tenants and homeowners after foreclosure, and the selling of empty, foreclosed homes to investors and banks.
Soon after meeting representatives from DARE, Burgison attended a members meeting where she heard testimonies from other Providence residents who were fighting foreclosures. DARE’s solidarity efforts inspired her: as well as beginning her own legal battle to get Fannie Mae to give her a lease to her apartment, which has allowed her to stay in her home, she has been involved in rallies at other foreclosed homes, the Providence State House, and in other cities, including a protest at Freddie Mac’s headquarters in New York on September 12th.
In Providence, much of the activism around foreclosures has been focused on passing Just Cause legislation, a bill that was introduced into the RI House of Representatives four years ago by Tiverton Representative John Edwards. The bill, which is modeled after similar legislation in Massachusetts, would prevent banks from evicting residents in foreclosed properties without just cause—falling behind on rent, not maintaining the property or violating their lease in some way—allowing them instead to continue to pay their rent directly to the bank. Also known as “Right to Rent,” this bill has passed the House of Representatives but stalled in the Senate Judiciary Committee this year. The RI Mortgage Bankers Association lobbied against the bill, focusing their efforts on the chair of the Senate Judiciary Committee, Michael McCaffrey. McCaffrey has the power to stop the bill from being voted on in the committee, and thus from reaching the Senate floor, and his vote last spring did just that. Proponents of Just Cause have put together a study group to discuss future strategies for passing the bill.
Edwards, who introduced the legislation, stated in a phone interview that he believes that “this [bill] is a win for everyone. Banks have properties that are maintained, they have a source of income rather than a broken down shell of a house. Families aren’t disrupted, the kids don’t have to move to a new school district, and it is a win for the state, because the taxes continue to get paid.” Burgison has observed the effects of widespread foreclosures in her own neighborhood, where property values have been dropping as the number of foreclosed and boarded up homes grows. These homes are often vandalized or burgled. Burgison recently encountered someone trying to take the outdoor pipes off of the first floor of her building, unaware that someone was still living on the third floor.
According to data published by Rhode Island Housing Works, Rhode Island rates and first in New England for foreclosures, and 16th in the nation. Central Falls and Providence have the largest number of foreclosures per mortgaged stock in the state (13.7% and 9.8% respectively).
Sub-prime loans, which refers to loans made to borrowers with less-desirable credit ratings, have higher interest rates to compensate for the risk that the borrower will not be able to pay back the loan. Such mortgages, as well as the financial depression, account for much of the rise in foreclosures in the past decade. In 2003, a study released by the Mortgage Bankers Association rated Rhode Island number one in the nation for sub-prime loans (at 14% of all mortgage loans).
Analysis of lending patterns in recent years by the Federal Reserve points to a disproportionate number of sub-prime loans given to Black and Hispanic borrowers, who were approximately twice as likely to be steered into a higher interest loan by mortgage brokers than white borrowers with similar credit ratings. Both Wells Fargo and Bank of America recently agreed to settlements ($175 million and $335 million respectively) to minority borrowers in the face of accusations of racial bias and discrimination in their lending practices.
Recent investigations into the repercussions of the mortgage crisis suggest that property values in primarily Black and Hispanic neighborhoods are more likely to fall as a result of foreclosures. A national study published by the National Fair Housing Alliance this year, concluded that bank-owned homes “in minority neighborhoods . . . were 34 percent more likely to have significant trash and debris outside and 82 percent more likely to have broken or boarded windows. Bank-owned houses in white neighborhoods . . . were 33 percent more likely to be marketed with ‘for sale’ signs, which is critical to attracting owner occupants as buyers, rather than investors.” Whether or not these upkeep decisions are explicitly racially motivated, lower-income minority neighborhoods are more likely to have foreclosures, based on the disproportionate number of sub-prime mortgages. Unoccupied homes are more likely to be neglected or vandalized, contributing to the falling home values in these neighborhoods, which creates even greater disparities between the actual value of the home and the value of the mortgage payment. Based on his observations of foreclosed homes throughout Rhode Island, DARE employee and organizer Chris Rotondo believes that real estate agents’ upkeep decisions vary based on the racial and economic make-up of neighborhoods and that “a foreclosure in a community like Washington Park, or the South Side of Providence or even the West End brings down the housing values of the whole neighborhood, so everyone suffers.”
Some government services do exist for Rhode Island residents falling behind on their mortgage payments. The Rhode Island Hardest Hit fund, run through the state housing department, has given more than $23 million to RI homeowners with “documented financial hardship” towards paying off their mortgages. Adam Mbaye, a Pawtucket homeowner and DARE member, applied for financial help from RI Housing in March, and the Hardest Hit fund has been paying 70 percent of his mortgage for as long as he remains unemployed. With the help of DARE, he has still been petitioning Freddie Mac to reduce the principal of his mortgage, which he estimates is $80,000 over the market value of the home. Despite the help from the Hardest Hit fund, the current system still leaves Mbaye without a long-term solution for paying off an inflated mortgage. “People with hardship deserve principal reduction,” he says, because “a home is a right, not a privilege.” Burgison, like Mbaye, believes in the community organizing strategies of DARE because “We want to be heard, and not just seen as a piece of paper or this address or this number or this amount. People need to know that there’s a lot of us out there.”
MEGAN HAUPTMAN B'14.5 is staying put.