C.J. Holmes, a Bay Area real estate broker, campaigns to inform others about home foreclosures. Photo by Chelsea McKeown

The American mortgage crisis is perhaps the most widespread effect of the 2008 financial meltdown. In coastal California, it keeps getting worse.

Foreclosures on the rise are a principal rallying point for Occupy Santa Cruz, and now community members are off the streets and inside doing their homework. On May 15, the Occupy Foreclosures Working Group (OFWG) and the Santa Cruz chapter of the Women’s International League for Peace and Freedom (WILPF) sponsored a workshop on foreclosure fraud at the Quaker Center.

C.J. Holmes, a Bay Area realtor, presented the conclusions of her five years of research on foreclosures at the workshop. She said banks have been using electronic mortgage practices to cheat homeowners and are turning the United States into a “nation of renters.”

“We’re trying to figure out how we can weasel what we need to stop ‘fraudclosures’—and I call them that because every last one of them is fraudulent,” Holmes said. “Not every foreclosure is fraudulent, but every foreclosure on a securitized loan that has been held in MERS is definitely fraudulent.”

MERS, or Mortgage Electronic Registration Systems, is a company that tracks ownership of U.S. real estate loans. According to their website, “MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked.”

The complexity of mortgage-backed securities — pools of loans rated at varying degrees of risk to sell to investors in bulk — prompted the electronic restructuring of real estate finance and, hence, MERS. But Holmes ultimately found that land titles can be lost in MERS’ database, and that county recorders’ offices around the state have allowed foreclosures to go through without banks’guarantees of home ownership.

Holmes also said that, according to the website Foreclosure Radar, 609 foreclosed home auctions are scheduled in Santa Cruz County for the next two and half months, with 192 remaining in May alone.

“The injustice that’s happening because of [the mortgage crisis] is so personal and close to the heart of our families, affecting the well-being of our communities and families at so many levels,” said Jeri Bodemar, a member of WILPF. “It’s a prime example of what is actually happening in our nation — the theft of our common property.”

Joy Hinz, who has worked with OFWG since its beginning, said they have pressured local government to take action, but found that, in many respects, the county’s hands are legally tied.

“There are many federal and state laws that preempt our county from doing much of anything to stop foreclosures,” she said. “It’s very, very frustrating, because if you try to do something and you’re not allowed to, you’re going to get sued.”

Despite limitations, the county supervisors are onboard with fighting local foreclosures, Hinz said.

On May 15, the morning before the workshop, the supervisors received an extensive report detailing county foreclosures and allegedly fraudulent mortgage practices. The supervisors then passed a resolution calling for banks to suspend foreclosures. However, it will be difficult to enforce because foreclosure law is mandated by the state, not the county board of supervisors.

Fourth-year feminist studies and psychology major at UCSC Jacqueline Seydel is spearheading student efforts to unite with the Santa Cruz community in combating foreclosures.

“The foreclosure crisis is really important because it connects and relates to everyone. It doesn’t matter if you’re without a home, renting, have multiple properties, or are in the pursuit of one,” she said. “You’ll be able to relate to that sort of struggle and be able to see the crisis … the fraud that’s happening.”

Seydel and other students will be making a TED Talks–style video outlining how the mortgage and financial crises intersect, and what communities can do to counteract foreclosures. Holmes is continuing to work with OFWG and WILPF to create a citizen fraud investigation training program, in hopes of teaching community members to identify mortgage fraud and work to prosecute it.

More information can be found at Occupy Foreclosures Working Group’s website or CJ Holmes’website, Homeowners for Justice.

Illustration by Matt Boblet.

People across Santa Cruz voted with their wallets on Saturday, closing their checking and savings accounts and transferring their money to new accounts at local credit unions and community banks.Elizabeth Carr, CEO of Santa Cruz Community Credit Union (SCCU), said that “credit unions nationwide have opened up 650,000 new accounts from Sept. 29 to Oct. 29, and in California that’s about 92,000.”

Rick Hofstetter, President and CEO of Lighthouse Bank, a community bank in Santa Cruz, made sure that his bank, which is usually closed Saturdays, made a special exception for Bank Transfer Day. From  9 a.m. to 1 p.m., their doors were open to people who wanted to transfer their money to Lighthouse Bank.

“Most people who had come in had closed their accounts at Bank of America,” Hofstetter said.

Bank Transfer Day, which took place last Saturday, was taken up by many of the Occupy movement’s protesters, although the event is not officially related to it. However, the event has remained popular with the movement because many protesters see national banks as part of the 1 percent. Protesters feel that the banks on Wall Street have stolen tax dollars from the American people and blame Wall Street for many of the nation’s economic problems.

Protesters and non-protesters alike are calling for more regulation on Wall Street and a separation between investment banking and retail banking. Bank Transfer Day was intended to inspire people to go through the hassle of changing their bank and opening a new account for a cause: to support their communities and take away investment power from the national banks.

By Tuesday morning, people were still going into Lighthouse Bank to open new accounts with the money they had pulled out of the larger banks, Hofstetter said.

In October alone, Lighthouse Bank opened 70 new accounts.

That’s the “biggest month we’ve had since we’ve opened,” Hofstetter said. “We opened half a dozen new accounts, but they were large accounts … between a half and three-fourths of $1 million.”

Hofstetter said large national banks pushed their customers too far. Speaking about the monthly debit card fees that banks like Bank of America, Chase and Wells Fargo were going to charge their customers, Hofstetter said, “I think that’s the straw that broke the camel’s back.”

In September, Bank of America announced a plan to charge customers $5 a month for debit card usage.

“It got to the point where they were feeling bad for not having done so,” Hofstetter said as he described how his new clients felt. He said customers remarked that banking local was better for their community, but they did not want to go through the hassle of closing and opening accounts.

Bank of America, Chase and Wells Fargo dropped their plans of implementing a debit card fee, but some of their customers still closed accounts Saturday.

Santa Cruz community members who closed their accounts at the national banks on Saturday joined hundreds of thousands of people who have taken the same action over the past five weeks. According to the Credit Union National Association (CUNA), a Washington, D.C. based advocacy group, Americans have moved $4.5 billion into the nation’s 7,000 credit unions.

Bank Transfer Day began when a 27-year-old small business owner in Los Angeles, Kristen Christian, made an event page on Facebook for “Bank Transfer Day.” Three days after Christian created the page, 8,000 people had clicked the “attend” button, and within a month’s time almost 80,000 people had indicated they would do the same.

Reports from across the country of people lining up at banks and standing in line for hours to open accounts at their local credit unions and community banks have flooded the Internet. Exact tallies on how many new accounts were opened and how much money was transferred into local banks are not currently available, but one thing is clear: More people are finding alternatives for where they put their money.

In Santa Cruz, protesters marched to Wells Fargo, Chase, Citibank and Bank of America. Casey Livingood, a former account holder who closed his account with the bank, said he closed his account at Wells Fargo a month before Saturday, but did not open an account anywhere else until Saturday’s Bank Transfer Day.

“I went to Wells Fargo [to close the account],” Livingood said, “and opened an account at the credit union.”

SCCU CEO Carr is ecstatic about the people-powered movement. On Saturday, SCCU stayed open until everyone who came to open an account was taken care of, Carr said. She explained that 35 new accounts were opened for customers who had been planning to switch to a credit union for a long time.

“[It was a] tremendous amount for us in one day,” Carr said. “That’s not at all typical. It’s probably five to 10 times what we would normally see. I have to say that I was amazed [by] the power of this movement … started by somebody here in California on Facebook… [It has] created this incredible change.”