Photo courtesy of Tenants United Hyde Park-Woodlawn

Op-Ed: Losing Home

Lessons from the 2008 housing crisis for today

In 2016, the Obama Presidential Library selected Jackson Park as its future location. Many residents of the surrounding neighborhoods were thrilled, but others feared that they would be forced to move due to rising rents and property values. A study on housing commissioned by the Voorhees Center for Neighborhood and Community Improvement at UIC found that in the two-mile radius around Jackson Park, sixty percent of renters were already spending more than thirty percent of their income on rent, the benchmark for affordability. Among low-income renters, the figure jumped to ninety-one percent.

We are in a moment where conventional explanations of housing instability fall short. Assumptions fly around that tenants who cannot pay their rent need to move somewhere cheaper, or that homeowners who default on their mortgages borrowed more than they should have. Yet a cursory review of what’s really happening in our communities reveals that the people facing eviction or foreclosure right now are caught up in circumstances beyond their control. Many restaurants and bars are operating at drastically reduced capacities due to bans on public gatherings; unemployment benefits and federal stimulus funds take weeks or months to arrive; the federal fund intended to bail out small businesses was completely exhausted within days of its creation, before some had the chance to finalize their applications. 

The ongoing COVID-19 crisis is an unprecedented situation. But reports from the National Multifamily Housing Council tell us that well before the pandemic hit, an average of twenty percent of tenants were unable to pay their rent on time. This April’s report of a rise to thirty percent does not announce the arrival of a housing crisis, but rather documents its intensification. Significant housing instability has long been a reality. In fact, the U.S. very recently confronted a massive housing crisis in 2008, when speculative financial instruments created a housing bubble that threw millions of homeowners into foreclosure. In Illinois, foreclosure filings jumped forty-two percent between May 2007 and May 2008; a decade later, economists estimate that more than half of the people who lost homes during the crisis have not purchased another home.

What does 2008 show us? My experience as a tenant organizer and Kelli Dudley’s work as a housing lawyer have educated the two of us on an ugly reality: housing law has been shaped to protect the interests of the wealthy rather than the stability of our communities.

I met Kelli in 2018, when I hired her to defend me against an eviction that originated with my South Shore landlord’s refusal to adhere to building codes. In the sixteen months I fought my landlord, I learned firsthand how the legal system was not designed to protect me. While legal defense was a necessary part of addressing the issue, other strategies—most notably tenant organizing tactics—were more efficient and effective in protecting my legal rights than the judges and courts we assume serve that purpose. Kelli was able to prevent my eviction for six weeks and multiple court hearings but the judicial system’s default favoritism of landlords prevented a resolution; on the other hand, a single demonstration in front of the owner’s Andersonville home won me a commitment to repairs and a lease renewal within a week.

Kelli had learned the frustrations of housing court processes long ago from her work supporting other tenants fighting eviction as well as homeowners fighting foreclosure. She recently wrote about her experience in Iniquity: How Court Systems, Attorneys, and Legal Aid Organizations Cheated Homeowners in Foreclosure.

 As tenants across Chicago grapple with an abrupt inability to pay bills and mortgage holders fret over bank notices, Kelli and I sat down to discuss our experiences with housing instability and what lessons these might offer to our communities as we assess the best responses for the present moment.

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 JH: In April 2020, the percent of tenants nationwide who did not pay rent jumped ten percent. We can assume that the number will jump again in May and that homeowners are facing similar challenges in paying their mortgages. How can people new to housing instability protect themselves if they’re unable to meet their housing costs?

KD: If they do not pay rent, they must be linked in to a strong, consistent rent strike effort. Even then, if the landlord goes to evict when the courts reopen and any stays are lifted, the landlord will claim the full amount due. The courts will support the landlords. 

With foreclosure, if a bank says, “It is okay to skip payments,” homeowners must understand they are doing that to make money. The payments will come due after a certain period, and a lump sum will be required. At best, money may be tacked onto the end of the mortgage, making the mortgage extend further into the future. Either way, interest will be collected and some late fees or some sort of processing fee may be tacked on. The banks are not “being nice.” They are being capitalists. If I (a bank or landlord) can keep you on the hook to pay me more later, that can be a good business decision.

I would add that a favorite game of lenders and their lap dogs [back in 2008] was to collect “temporary modification payments” throughout the foreclosure process. They would not send the borrower any signed agreement, just string them along and tell them by phone to send the “modified” amount. Some collected as much as $60,000 from one homeowner over a period of years before abruptly throwing the case back into foreclosure and taking the home. The client would have been better served by using $60,000 to buy a new home. Homes were taken without hesitation under these facts. I hope as many homeowners and renters as possible can be forewarned this time.

JH: We imagine that homeowners are their own landlords, but they’re also facing monthly bills, whether it is a mortgage or property tax. And then there’s eminent domain, where even those who can pay their bills are forced to abandon their homes—as happened in Englewood during the Norfolk Southern Railway’s railyard expansion, or in Pilsen with UIC’s southward expansion

You and I have frequently discussed the quandary of spending money to hire a lawyer when faced with losing one’s home as a tenant or homeowner. What suggestions do you have for homeowners who are having trouble making their payments and may be facing foreclosure right now?

KD: People have to consider whether they are getting value for the money they pay for a lawyer. [In some cases,] a lawyer may be able to keep the homeowner in their home and even help lower monthly payments. My objection is to lawyers who do nothing. A foreclosure can easily take a year or more just because of the steps in the process. Many lawyers advertise themselves as the “save your home” lawyer, take money on a monthly basis, and never complete any work. In some cases, the “work” done is so incompetent that it hastens the loss of the home.

I do not have as much experience with the excuses around incompetent eviction defense, but I suspect it is much the same as above. [For both homeowners and tenants,] looking at what is being paid for is important. In some cases, it makes more sense to save the money for a move [than hire a lawyer], especially if you can move in with family or have other options. 

JH: Your book is framed in the context of your own family’s history of displacement from their home. Can you say more about that displacement and what it says about the fantasy versus the reality of home ownership in the US? 

KD: While owning a home can be valuable, it is clear governments can take the homes away through eminent domain or for nonpayment of taxes. Eminent domain [resulted in] my own family’s loss of a home to the National Park System [and, on another occasion,] for coal mining. Property tax, about which there is so much current discussion of inequity, is one of the quickest and most permanent ways to lose one’s home. Tax foreclosures and sales have also spawned an entire industry of disingenuous lawyers and other scammers; people who get enmeshed in tax sales often lose money as well as property. And, of course, there are lender foreclosures based on alleged defaults in mortgages.

These are pursued in such an unfair manner, and such unfair methods are endorsed by the courts, that homeownership is illusory. A home can be taken with something like a false allegation that homeowner’s insurance was not maintained by the homeowner. Like the tax sale example above, foreclosures have spawned another industry of vile predators. These attorneys and other mortgage defense rescue scammers drain people’s savings, leaving them homeless and broke.

 JH: The first city-level housing-related responses to the current crisis revealed the extent to which political leaders do not believe people should be able to stay in their homes. Closing eviction court helps no one if there is no plan for waiving the rent that hasn’t been paid. The mayor’s decision to give out housing grants as a lottery was horrifying, but was at least structured to acknowledge that she had no intention of actually addressing the problem; nobody plays the lottery expecting to win! Meanwhile, the city’s TIF fund has over a billion dollars, the Chicago Housing Authority has empty units, and federal money sits unused. 

As the extent of the problem we are facing becomes clearer, I find myself asking the question: What would housing look like if it was not enmeshed in elaborate financial instruments, be they the mortgages of privately owned buildings or the layers of state funding for public housing? Any thoughts?

KD: Our current system—treating housing as a reward for merit—only works to reinforce capitalism. People work for the literal fear of losing housing and are persuaded to make all sorts of unhelpful choices through a system where desperate, commission-paid people constantly up-sell mortgages, home prices, and so on. This creates the bubble nature of the housing market and reinforces structural racism and other inequities. Housing is a human right. There should be some basic level of housing below which no one will fall. Even given basic guaranteed income, housing should be separately guaranteed—otherwise the housing market will constantly bubble around money, assumed increases, [and other factors].

Centro Autonomo de Albany Park has a great model for a true (not bourgeois or statist) housing cooperative model. [Under their vision,] owners would own and contribute to collective expenses for upkeep, insurance, etc., with money and time. The owner could leave the home to heirs, but alienation in the market would mean the collective would have a right of first refusal. People could get the value of their home, but not in the bubble-driven and speculative market as we know it.

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Julian Hendrix is a tenant organizer with Tenants United Hyde Park-Woodlawn. This is his first piece for the Weekly.

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