I was proud of the Council's passage on February 27, 2008 of Rob Consalvo's ordinance giving the City a set of tools to assure that their owners do not leave properties in an abandoned state. This legislation is critically important given the fact that banks and financial institutions are precipitously emptying the growing number of foreclosed properties in Boston. However, while I am proud of this legislation, I am working on the development of home rule petitions (would have to be approved by Mayor, Massachusetts legislature, and Governor) that would also focus on the growing foreclosure crisis.

One of the home rule petitions would create a moratorium on foreclosures until passage of a law requiring court review of foreclosures. While passage of such a moratorium coupled with the development of judicial review is politically difficult, I believe it is the only approach that can give some assurance that justice will take place.

After meeting and talking with scores of subprime borrowers and reading reports from around the country, I am convinced that the escalation of foreclosures is a result not just of personal irresponsibility but rather deceptive, manipulative, and sometimes fraudulent practices of a financial services industry "gone mad". A Massachusetts judge lent weight recently to the argument of fraudulent industry practices when he barred Fremont Bank from foreclosing on any of its mortgagees until the Attorney General Coakley’s case against Fremont for illegal practices is heard.

Thirty-one states at this time have judicial review legislation. This means that before a property can be foreclosed in these states, a judge has to hear the arguments for and against moving forward with the foreclosures. This gives the mortgagee an opportunity to present any information that would suggest that the financial institutions behaved inappropriately. Anecdotal evidence suggests that while the foreclosure crisis is national in scope, states with judicial review seem to be managing the "crisis" more effectively than states like Massachusetts, which does not have such a review process.

Thus from a justice perspective, Boston as well as Massachusetts needs to halt foreclosures and develop judicial review. One argument that will be made against such action is that the recently passed state foreclosure legislation gives a three-month moratorium on foreclosures (beginning in May). This moratorium is to give owners of properties entering the foreclosure process during this period to renegotiate with the banks. However, anecdotal evidence is suggesting that banks and financial institutions are very slow to restructure the loans.

Another argument will be the state can't absorb the cost of judicial review. However, a calculation that added up the varieties of costs that mount during these foreclosure crises, I believe, would suggest that a financial argument against judicial review is "penny wise and pound foolish". However, while these and other arguments will be presented to fight against a moratorium with eventual court review, this is the only strategy that will assure that there will be an appropriate separation of the cases of those mortgagees who behaved inappropriately from those who were scammed by the institutions. Since I believe that the vast majority of those being foreclosed fall into the later category, I see a moratorium with court review as the only just way to proceed.

Another argument will be the state can't absorb the cost of judicial review. However, a calculation that added up the varieties of costs that mount during these foreclosure crises, I believe, would suggest that a financial arguments against judicial review is "penny wise and pound foolish". However, while these and other arguments will be presented to fight against a moratorium with eventual court review, this is the only strategy that will assure that there will be an appropriate separation of the cases of those mortgagees who behaved inappropriately from those who were scammed by the institutions. Since I believe that the vast majority of those being foreclosed fall into the later category, I see a moratorium with court review as the only just way to proceed.

I am working on a second home rule petition that would prevent financial institutions from emptying properties after foreclosure if they are paying their rents. The financial institutions say that since they are not in the business of managing properties, the best way to deal with the situation is to empty the properties until they can be sold. However, given the realty of the present market, it is highly unlikely that these properties are going to be sold in the short run. Thus industry practice is not only depriving Boston of housing that is desperately needed but also putting people into the streets whose only fault is that they happen to live in a building that is being foreclosed. Where is the justice in that?

Passage of a just cause eviction home rule petition will enable tenants and former homeowners in foreclosed properties to remain as tenants as long as they pay the rent and follow all the other rules that are required by the owners. Such action would not only maintain Boston’s housing stock, particularly in the low to moderate income areas where subprime lending and foreclosures are high, but also would assure that tenants who have acted responsibly would not be endangered. I also believe that if the banks know that they are not able to empty the building after foreclosure, they will have more motivation to work out terms with the homeowners that would be affordable and avoid foreclosure.

The legislation described above is designed to lessen the negative impact of the foreclosure crisis. However, I think that it is also important that we find ways to curb the nature of the boom bust cycle that the housing industry follows in this country. In the last twenty years in Massachusetts we have had two major foreclosures crisis, which had negative implications nationally and locally. The negative consequences of the foreclosure crisis in the late 1890s in the South End continued into the sixties until the beginning of the next boom. Obviously, these boom bust cycles create wealth for some and havoc for others, including the society in general. These cycles make the rich richer and put those who are struggling for financial growth and stability in a more difficult situation. Isn’t a housing policy that focuses on housing as a commodity rather than a utility inevitably going to create such recurring crises? If so, is such a policy appropriate for a democracy?