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Lawsuit, new local movement fight foreclosure practices

By Fabien Tepper · February 28th, 2012 · News
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A Madisonville couple that has spent the past decade fighting against predatory Big Bank lenders that tipped them into bankruptcy and foreclosure might see their case go before the U.S. Supreme Court.  

Ten years ago, Demetrious Smith hoped to buy a building and work as a landlord after non-work-related injury ended his 13-year career with General Electric, but getting financed on the strength of his monthly $1,182 disability check seemed unlikely. Then a postcard arrived in his family’s mailbox from a company called National Mortgage Funding, which promised home financing for anyone.

Smith, now 57, arranged an appointment and swiftly got financed for a $109,000 mortgage through ABN AMRO Mortgage Group Inc., for the home he still lives in with his wife Amy, 53.

He was staggered to find out it was so easy.  “On Social Security income?” he says.  “I thought: This is a blessing.”

Over the next year the same broker persuaded him to buy three rental homes through other banks, with mortgages ranging from $80,000 to $128,000.

Demetrious was able to keep up with all of the payments for a few months, but in July 2003 he received a huge utility bill, lost a tenant and could no longer make his mortgage payments. The Smiths filed for bankruptcy.  

The broker turned out to be unlicensed and had sold Demetrious a fake deed.

On Amy’s wages — she operates ovens at a Kellogg bakery — it took the couple until 2008 to dig themselves out of Chapter 13 bankruptcy, and they lost one of the four houses to foreclosure.

As a result, the Smiths are suing 12 entities including ABN AMRO, Chase Bank and Mortgage Electronic Registration Systems on multiple charges including fraud, predatory lending and conspiracy. In 2008 they were offered a settlement in the 6th Circuit Court of Appeals — which they say Judge Michael R. Barrett intimidated them into accepting when he told them that refusing the deal would only land them in front of an all-white jury of suburban “rednecks,” who would not be sympathetic to the Smiths.  

The case is now under review by the Supreme Court because Amy, who withdrew her verbal acceptance of the settlement shortly after giving it — has asked Judge Barrett to recuse himself from the case and he has refused.

 

It’s not the first time that Barrett, a former chairman of the Hamilton County Republican Party, has been fingered for racial intimidation; before the 2004 presidential election, an Avondale couple secured a restraining order against him to prevent him from sending vote challengers to polls, aimed at intimidating African-American Democrats.

But that’s not the only reason Amy wants to see Barrett off the case.

She also believes Barrett has a direct conflict of interest in her case against the banks, since he served as a director of Carl Lindner’s holding company, American Financial Group (AFG), until 2006 — one year before he became a judge. AFG insures banks and other major lenders through its insurance division, the Great American Insurance Co.

As the Smiths await news about their case, they have found support and legal advice in a new local movement known as Occupy the Hood Cincinnati (OTH).

The movement formed last October, shortly after Occupy Cincinnati (OC) took over Piatt Park. Robert Pace, 52, co-founder of two citizen groups which drove reforms of police-community relations after a spate of black men were shot by local police a decade ago, found that OC “wasn’t really addressing a lot of issues that were of concern to the minority/black community,” so he decided to start a new group.  

OTH is an autonomous part of a nationwide movement by the same name, which has emerged to mobilize communities of color in at least 16 other cities.

According to a 2011 report by the Center for Responsible Lending, borrowers of color are more than twice as likely to lose their homes to foreclosure as white borrowers with the same income and credit status. The report attributes this to an aggressive marketing of high-risk loan products to families of color.

Between 2006-10, foreclosures affected 6,731 homeowners in Cincinnati.

On Martin Luther King Jr. Day in January, OTH organized its first action: a “foreclosure tour” along several blighted blocks of Avondale. The march paused twice in front of shuttered houses, which had been left to fall apart by out-of-state lenders.

Vanessa Sparks, 45, a community organizer who runs the Mohawk Area Development Corp. in Over-the-Rhine, delivered OTH’s three demands to the city, aimed at staunching the flow of families losing their homes:

• Impose a six-month moratorium on foreclosures;  

• Grant common pleas judges — who rule in foreclosure cases — the ability to modify a mortgage to a home’s current appraised value;  

• Increase foreclosure filing fees for lenders, using the extra money for housing counseling and foreclosure prevention.

OTH’s next action will occur March 14 in East Price Hill, which is Cincinnati’s third-worst-hit neighborhood, with more than 630 homes lost to foreclosure in the past six years.

The group’s push to hold banks accountable may already be paying off. Last week City Councilmen Cecil Thomas and P.G. Sittenfeld announced a proposal to require lenders to enter a foreclosure registry within 15 days of foreclosing on a home or face a civil lawsuit.

According to Sittenfeld, Fannie Mae alone has had 188 building code enforcement cases in Cincinnati during the past five years. 

“That’s not acceptable,” he said, “Banks and lenders must maintain the properties they own, just like the rest of us.”

Those struggling to avoid foreclosure can seek help from Working in Neighborhoods, online at www.wincincy.org. To connect with Occupy The Hood, visit them on Twitter @OTH_Cincinnati or call 513-655-7826.  ©


OCCUPY THE HOOD will host a potluck dinner 6 p.m. March 14 at Corner BLOC Coffee, 3101 Price Ave.


 
 
 
 

 

 
02.29.2012 at 03:09 Reply

FACT CHECK:

  • Couple buys four houses on one income.
  • Couple cannot pay their bills, gets in the financial hole.
  • Couple sues banks for their own personal choices.
  • Couple improperly uses the race card.
  • Article author constructs story to place blame Republicans, and Capitalism.

CityBeat, have you no shame? Why would you publish such nonsense? Are you actively attempting to teach people that they don't have to be responsible for their own decisions?

Instead of cutting their losses and taking responsibility, the couple sued the banks. Ingenious! It's your dance partner's fault, not you! You danced perfectly. They were the ones who dipped when you wanted to spin them! It's all their fault, right? The mind of Leftists is absolutely astonishing.

 

03.17.2012 at 09:31
AK

What do you do when you buy three homes at a Fortified Land Sale 2011 after researching and making sure the properties have no liens, or current code violations. The deed is delivered past the due date and you find one of your newly purchased homes is demolished, another was refunded because of legal issues, and the third is slated for demolition? Who is to blame then? How do we save our last purchased home from demolition?

 

03.04.2012 at 11:43 Reply

For folks reading this article...don't give up, just as this couple didn't give up. You can get your loans modified. We found ourselves in an unfortunate situtation and heard Anna Cuevas known as America's loan modification guro. She has a few books out and we used tips from How to save your home without loosing your mind our your money. It teaches you to think like the banks and know what their tricks are. Think positive outcome and you will win. http://www.askaloanmodguru.com/

 

 
 
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