Shelterforce began as a tenants' rights newspaper, and our early years were full of accounts of rent strikes—a powerful weapon to get reluctant landlords to make repairs or otherwise improve conditions. Now Empowering and Strengthening Ohio's People, a combination housing counseling agency and organizing group, is launching a mortgage strike.
It works like a rent strike—the participants, underwater homeowners who have failed to get banks to modify their mortgages, will send their full payments to a third-party escrow fund until the banks come to the table to discuss what ESOP calls “mortgage principal correction.” Says ESOP:
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.
And they are getting some mainstream media coverage, albeit hesitant and uncertain in its tone.
Given the long-simmering resentment against banks that got bailed out either resisting or botching the process of modifying loans, and dragging their feet on principal reduction despite mounting evidence that it is likely to be in their best interests, it seems only surprising this hasn't happened before now. It will be interesting to see if it spreads beyond Ohio and becomes a national movement.
(Map of underwater mortgage concentrations from ESOP.)