Payments will go into escrow as they urge banks to discuss principal correction for underwater mortgages.
CLEVELAND, OH – Many underwater homeowners are fed up with paying over-valued mortgages on homes with declining value. They are giving notice to mortgage lenders of their intent to divert mortgage payments to an escrow account until the banks are willing to discuss provisions for mortgage principal correction.
Hear from homeowners why they’ve decided to take this bold move to make a statement to the banks.
WHAT: Press Conference
WHEN: Monday, October 1, 2012 @ Noon
WHERE: 9617 Easton Avenue
Cleveland, Ohio 44104
WHO: George Robinson, Homeowner
Sally Fluker, Homeowner
***Teleconference to follow at 2:00 p.m. EST
Call-in phone number: 1-605-475-4700
Access code: 827188#
Why hold a mortgage strike?
Tens of thousands of Cuyahoga County homeowners are “underwater” on their mortgages. They owe more on their mortgage than their home is worth. Sometimes it’s called “negative equity,” or being “upside down.” No matter what it’s called, it is a crippling problem for affected families. Nationally over 10 million families are underwater on their mortgages and effectively stuck in extended debt servitude. These families don’t own their homes because they have no equity and in severe cases will remain that way for years to come. In many lower income communities of color, the gap between the mortgage balance and the home’s value is so great that borrowers will probably never own their home. But underwater “homeowners” must pay taxes and maintain the property as if was theirs.
Advocates, economists, housing specialists, many public officials and even some bankers have called upon the country’s largest mortgage investors, Fannie Mae and Freddie Mac, to allow loan modifications with principal correction, reducing mortgage balances. Yet the acting director of the mortgage agencies refuses to use principal correction to fix the problem.
This mortgage strike will provide recourse to these abandoned former homeowners to regain equity in their homes and a modicum of control over their lives and their neighborhoods.
How does it work?
The strike is modeled after a court supervised process used in Ohio to resolve tenant complaints about a landlord. In this mortgage strike participating homeowners will send money orders, covering their regular principal and interest payments, to a local attorney to hold in escrow until the homeowner instructs lawyer/escrow agent when and how to release it. The attorney, who is only providing an escrow service, has agreed to verify the monthly payments of interest and principal for the mortgage servicer.
This arrangement means that the servicers and investors are “secured” by the escrowed payments while the strike is underway. However, the monthly payments will only be released to them when they come to terms with the severely underwater homeowners. This process, a form of civil disobedience, will shift the balance of power between mortgagor-mortgagee, returning bargaining power to debtors in a flawed, creditor-favoring system.
Who can become a striker?
We do not feel that everyone could, or should, participate as an active striker. There is a complicated process of reviewing the facts of a homeowner’s situation before they can become involved in the strike. It also requires a deep personal commitment.
To Qualify As A Participating Mortgage Striker You:
•Must make full payments into an escrow account on the Mortgage, and cover the taxes and insurance
•Must be “Underwater”
•Must comply with Strike Rules for handling monthly payments into escrow
•Must understand and accept the Risks involved in participating as a Mortgage Striker:
- Possible Impaired Credit Profile
- Possible Decrease in FICO Credit Score
- Possible “Universal Default” Problems
- Possible Foreclosure and other Litigation
How others can support the strike
There are many other important ways to support this strike:
- Getting the word out about the strike on social media
- Explaining the strike to friends and neighbors
- Put a Mortgage Strike lawn signs in your front yard
Anyone interested in joining the strike or obtaining a yard sign can call ESOP at 216-361-0718 for more information.