By John McCarron
February 21, 2011
Too bad Isidra and Wenceslao Martinez couldn't make it to Davos, Switzerland, a couple of weeks ago to hear the CEO of JPMorgan Chase explain how his bank is getting a bad rap for the foreclosure/bailout/Great Recession thing.
Money has been scarce in the Martinez household ever since the couple both lost their jobs two years ago, so a trip to the Alps and the World Economic Forum was out of the question. They even missed some mortgage payments to Chase Bank, though they claim it was at the suggestion of a Chase counselor who told them they'd qualify for a loan modification if they missed three months in a row.
Since then, there's been a lot of back-and-forth between the Martinez family, who've lived in their three-flat on the Northwest Side for 20 years, and Chase Bank, which holds itself up as one of the good guys in the national mortgage mess. So good, in fact, that President Barack Obama didn't think twice about summoning Chase's Midwest vice president — Mayor Richard M. Daley's brother, William — to succeed Rahm Emanuel as the White House chief of staff.
But according to Marcelo Ferrer, housing counselor for the Logan Square Neighborhood Association, the Martinez family has been given the royal runaround by Chase. He said the family entered two "forbearance agreements" with the bank, and made timely payments, only to learn Chase was foreclosing anyhow.
It's messy business, foreclosure, and with property values still falling and people still losing their jobs you can bet every one of the 49,967 foreclosures filed last year in the Circuit Court of Cook County has its own messy facts. Same for the 45,182 foreclosures filed in 2009. Or the like number expected in 2011.
What is clear is that blocks in some neighborhoods — neighborhoods like Austin, West Englewood, Roseland, Marquette Park — are dying under the weight, what with four or five board-ups per block, many gutted by metal thieves and vandalized by squatters. By my lights it's the biggest physical disaster to hit Chicago since the Great Fire, even if its scatter pattern masks the enormity. Only this time, unlike 1871, there's no rush to rebuild.
There is, however, a rush to lay blame. Right-wingers say it's the fault of all the Martinez families out there for overreaching on credit. Or they blame the federal Community Reinvestment Act that requires banks to lend in all types of neighborhoods. Or they blame Fannie Mae and Freddie Mac, the government-backed investment houses that, it turns out, purchased relatively few of the funky-type mortgages that went bad.
Me? I've read enough expert post-mortems and interviewed enough mortgage counselors to know it was a Wall Street screw-up. The originating brokers, the big lenders, the repackaging bond houses, the sanctifying rating agencies — they all behaved miserably.
But what's done is done. Now we can only ask those responsible to do the right thing. Do it by the Martinez family. Do it by the maimed blocks and neighborhoods.
So it's painful when a credible researcher like the Chicago-based Woodstock Institute reports many big lenders and servicers are simply "walking away" from repossessed properties. Woodstock recently counted at least 2,558 unoccupied single family homes not registered under Chicago's vacant property ordinance and just sitting there, unsecured, with no plan for resale or rehab.
The banks with the most walk-aways, according to Woodstock, are: Bank of America, Wells Fargo, U.S. Bank, Deutsche Bank and JPMorgan Chase.
That last one surprises because Chase has been held up as a do-right outfit that generally steered clear of the sub-prime loan business.
Chase CEO Jamie Dimon, moreover, is said to have a soft spot for Chicago, having run Bank One here before it merged into Chase, during which time he got to know then-Sen. Barack Obama. Some say Dimon was short-listed for Treasury secretary.
He sure talks a good game. Earlier this month in Davos, the posh Alpine resort where even the cabbies drive Audis, Dimon vented to an audience of the world's top business and financial thinkers. Chase Bank, he said "was a stabilizing force" during the crisis "trying to make up for" the failures of others. "Not all bankers are the same, yet I hear this constant refrain: bankers, bankers, bankers … It's really unproductive and unfair. We try to do the best we can every day."
I'm sure you do, Mr. Dimon. Still, I have two questions:
What about all those walk-aways? And what about the Martinez family?