Activists, neighbors hope to block Detroiter’s eviction
Lela Whitfield of Detroit fights against reverse mortgage foreclosure eviction with the help of Detroit Eviction Defense volunteers by building a foreclosure eviction free zone around her home in Detroit. Kimberly P. Mitchell/Detroit Free Press
When her mom died in 2010, this Detroiter inherited a financial timebomb called a reverse mortgage. Now, five years later, she could lose her house — except for activists itching to block the bailiff.
On Detroit’s east side is a weather-beaten 1921 bungalow flanked by weedy lots and three abandoned houses.
The bungalow has long been occupied by a woman who wants to buy it and fix it up — just the kind of person any neighborhood wants. But any day now, a judge could order her out.
Lela Whitfield doesn’t plan on moving. Her mission is to stay rooted to her childhood home on Manistique and to keep trying to buy it. And that has drawn activists, church leaders, lawyers and neighbors, all trying to stop not only her eviction but the incessant tide of foreclosures and evictions across Detroit.
As soon as they get word that a bailiff is on the way to remove Whitfield’s possessions from the house, activists from Detroit Eviction Defense pledge they will crowd Whitfield’s curbside on Manistique, creating a human curtain of protection. At the risk of being arrested for trespassing on bank-owned property, the activists will try to block the bailiff, other members of the eviction crew and the roll-off trash bin that will be sent to Whitfield’s house.
“Dawn to dusk, we’ll have people in front of that house,” said David Mitchell, 34, of Detroit. To mark the battle zone, Mitchell and other volunteers have erected fencing on weedy lots next to Whitfield’s house, covering it with kids’ murals and slogans: “Justice, Not Eviction.” “Foreclosure-Free Zone.” “Black Homes Matter.” “Black Women Matter.”
They predict that if a bank puts Whitfield out, the house will be stripped and perhaps burned within days, setting the city another step back in trying to revive its declining neighborhoods. Neighbors can vouch for that.
“If they evict her at noon, by midnight that house will be stripped,” said Michelle Dexter, 48, who lives across the street from Whitfield.
Whether the contention rises to a noisy showdown or dissolves into a sad, silent uprooting of Dexter’s longtime neighbor, Whitfield’s saga is a drama of loss all around — of federal regulations that a giant lender says tie its hands; of consumer protections that Whitfield now realizes she failed to use; and of a city where the average house suddenly rendered vacant, for whatever reason, is probably doomed.
Dexter has been Whitfield’s friend since childhood. Her dour prediction that the home will be quickly stripped is supported by a recent study of 2,400 bank-owned homes in 29 cities nationwide. In minority neighborhoods like Detroit’s east side, unoccupied bank-owned homes are as much as nine times more likely to be trashed and damaged as homes in mostly white communities in part because financial institutions failed to secure and maintain them, the National Fair Housing Alliance found.
The irony is that Whitfield, 56, missed an opportunity to purchase the house. But she has a steady job and has since twice offered to buy the property. Trying to buy a home valued at $9,000, Whitfield has repeatedly been to court and faced the same mortgage financing giant that American taxpayers spent billions of dollars bailing out just a few years ago.
The Manistique property’s mortgage, issued in 2005 to Whitfield’s now-deceased mother, is held by government-chartered Fannie Mae. On June 24, Fannie Mae — officially, the Federal National Mortgage Association — won an eviction judgment against Whitfield in Detroit’s 36th District Court, all legal and aboveboard.
Across most of Michigan and the nation, economists say the Great Recession of 2008-12 is largely over, and with it, the foreclosure crisis. Since then, the crisis has ebbed across much of the country.
Yet, it continues apace in Detroit, said Steve Babson, a retired instructor of labor studies at Wayne State University. Since 2008, there have been about 140,000 foreclosures in Detroit, “starting with a hurricane of 70,000 mortgage foreclosures, followed by a storm surge of another 70,000 tax foreclosures, and it’s still going on,” Babson said.
“I use those terms because the outcome has been not unlike what you found in New Orleans after Hurricane Katrina,” said Babson, 67, of Detroit.
Katrina, considered the most destructive natural disaster in U.S. history, destroyed 134,000 homes and seriously damaged about 200,000 more in 2005, according to federal agency estimates.
Actually, Babson’s figures are low. Since 2008, there have been about 94,000 property-tax foreclosures in Detroit, said David Szymanski, chief deputy treasurer for Wayne County. As for mortgage foreclosures, Detroit’s rate topped the nation in 2007 and 2008, then ebbed in the years since as the city’s population and stock of owner-occupied houses dwindled, according to Realty Trak.
Caring for mother
After growing up and moving away, Whitfield moved back to the house on Manistique about 15 years ago to care for her elderly mother, who died in 2010, she said. After that, she tried to buy the house from the reverse mortgage lender at roughly its appraised value of $9,000. But Fannie Mae and a previous lender spent much of the last five years refusing to sell and instead going to court to demand possession, according to court documents.
Whitfield’s case stymied her lawyer. The mortgage-financing giant, excoriated a few years ago in congressional hearings for the multimillion-dollar salaries paid to its executives, has won the court fight against Whitfield.
Whitfield’s problem actually began in 2005, when her mother fell prey to one of the mortgage industry’s most notorious types of loan — the reverse mortgage — typically advertised on late-night infomercials and endorsed by national celebrities.
“I was living with her and I didn’t even know my mother did this,” said Whitfield, a dialysis technician with the Henry Ford Health System.
A reverse mortgage starts when a homeowner receives a loan that gives the lender an ownership stake in the property. But not just any loan: A reverse mortgage requires no repayments while the borrower is alive. That’s usually a senior citizen on a low income and needing cash to make repairs on the house, cover medical expenses, pay off accumulated taxes or a conventional mortgage that’s demanding monthly payments. The homeowner makes no payments, but interest rapidly, ominously mounts on the loan balance. When the homeowner dies and the lender gets the house, that outstanding balance can turn out to be far more than the value of the house.
Documents from legal filings show that Whitfield’s mother, Betty Cook, then 71, borrowed from Financial Freedom, a reverse mortgage marketer based in Austin, Texas. She received $18,633 to pay off the outstanding mortgage on the house, relieving her of making any more house payments during her lifetime, and she received a check for $6,386 in cash, according to legal filings. But the lender immediately tacked on up-front fees, pushing the total that Cook owed to nearly $38,000. By the time she died five years later and the lender moved to foreclose, the amount owed had ballooned with interest to almost $60,000.
“I believe she was a victim of predatory lending. The seniors are sucked into this crap,” Whitfield said, seated on crumbling concrete steps to the house she calls home. So, what did her mom do with the $6,386 in cash?
“I have no idea,” she said, speculating that it might have gone toward repairs on the house.
Reverse mortgages grew popular when housing values skyrocketed a decade ago, and mortgage companies turned to marketing them aggressively — on television and in magazines — when home buying slowed and with it the conventional mortgage industry. But consumer watchdogs, including AARP and the Michigan Attorney General, have issued strong warnings about them. Reverse mortgages do help some seniors get out of financial binds, but such loans come with heavy fees and the risk that a borrower’s heirs will someday forfeit the house.
Whitfield’s mother died in October 2010. She soon began receiving mail that said “you gotta get out of that house,” she recalled. She tried to understand the language of the foreclosure letters, and she tried calling phone numbers on the mailings, she said. By law she had the right to buy the house from the lender at 95% of its appraised value.
“No one ever told me I had the right to buy the property back. By the time I figured it out, it was too late. So that’s how they got me,” Whitfield said.
Unaware of court procedures and real-estate law, frightened by a year of letters saying the balance due on the reverse mortgage was $57,468.26, unaware of how to find a lawyer she could afford, Whitfield said she finally scraped her savings together and made a purchase offer in 2011 of $2,500. It was rejected, court records show.
Legal fight begins
Two years went by.
Whitfield missed deadline after deadline for buying her mother’s house, she later learned. By fall 2013, Whitfield was summoned to 36th District Court in Detroit; she was told to come back with a lawyer. That’s when she heard about Detroit Eviction Defense, a group of activists who meet at 6 p.m. on Thursday nights at St. John and St. Luke United Church of Christ, near Detroit’s Eastern Market. There, in December 2013, Whitfield met lawyer and activist Matthew Clark, who took her case for a nominal fee, Clark said.
“I’m part of the legal arm of Detroit Eviction Defense. Lela and I have been fighting this thing together for two years. She’s been living there a long time, and it would be very difficult for her to move,” he said.
Clark soon ran afoul of two of the most entrenched powers in mortgage banking — lending giant Fannie Mae, headquartered in Washington, D.C., which had taken over Whitfield’s reverse mortgage; and Trott & Trott, a Farmington Hills-based law firm known for handling foreclosures on behalf of big banks. Clark said he was astounded at the number of court appearances.
“We’ve had many hours in court, sometimes five hours in one day. I don’t know how much Trott & Trott charges, but I don’t imagine it’s cheap.
“I would imagine their fees have accumulated to much more than the home is worth. Fannie Mae is spending all these resources to contribute to the destruction of this neighborhood,” he said.
Trott & Trott’s attorney on Whitfield’s case, Kevin Hammons, said he was unable to comment and would ask senior partners to respond. Despite receiving several calls from the Free Press since mid-July, none did. Hammons could only say, “I think you’ll find that even bank attorneys have a heart.”
Once Clark began giving legal advice to Whitfield, he noted that Fannie Mae had indeed offered his client a chance to buy her mother’s house. The deal would’ve been reasonable because it was for 95% of the home’s appraised value of $9,000. That’s the formula that a lender must extend to heirs when a reverse mortgage is guaranteed by the Federal Housing Administration, Clark said.
Whitfield had a nearly three-year window in which to make such an offer, ending in September 2013, but she failed to do so.
“I don’t know if she understood how that works,” Clark said. Whitfield, who did not yet have a lawyer at the time, said she’d been confused and frightened by letters about her case. Many people facing financial difficulty feel ashamed and put off reaching out for help until it’s too late, Clark said.
Once Clark became her lawyer, even though she’d missed the deadline, he tried again. In January 2014, Clark appealed to Trott & Trott, and to the firm’s client Fannie Mae, to sell Whitfield the house. To fund the deal, he enlisted the United Community Housing Coalition, a Detroit-based nonprofit organization, which agreed to pool its funds with Whitfield’s money to make an offer on her behalf of $8,850, amounting to 95% of the $9,000 appraisal. There was no response, Clark said.
“We didn’t even get back a ‘no’ ” or a counteroffer, Clark said. Finally, nearing the end of two years of litigating Fannie Mae’s complaint to evict, the mortgage-financing giant’s lawyers told Clark that Fannie Mae “was just not interested,” Clark said. On June 24, Clark and Whitfield attended one last court date in Detroit’s 36th District Court. Whitfield was ordered to vacate by July 24.
“The other side can apply for an eviction order, any day now,” Clark said last week.
Hands tied by rules
But Fannie Mae also has its hands tied by lending regulations. It must gain full possession of the house to take advantage of an insurance program from the U.S. Department of Housing and Urban Development. Once that is completed, Fannie Mae will have much of its liability erased by the federal government, Fannie Mae communications director Andrew Wilson said.
“But we must follow HUD’s guidelines to get that back,” Wilson said.
He would not disclose how much Fannie Mae expects to receive of the nearly $60,000 outstanding balance of the reverse mortgage. He also said he could not disclose the legal fees that Fannie Mae has paid to Trott & Trott to evict Whitfield.
Although Fannie Mae was rescued by a bailout during the housing meltdown and taken under conservatorship by federal authorities, it is not a government agency, and thus it has no obligation to reveal anything to the media, Wilson said.
“I can tell you that we’ve been in touch with Ms. Whitfield to try to help her transition to a new living situation. We’ve offered relocation assistance. She has not accepted that offer, but it remains on the table. I’m not going to get into the specifics.
“She had the opportunity to purchase the property after the passing of her mother, but unfortunately she was not able to do that. Those time lines have passed, so we have no other options” but eviction, Wilson said.
“We want to prevent foreclosures and we certainly don’t want to be in the position that we’re in with this case. We work very hard with borrowers or, in cases like this, with heirs, to try to avoid being in this situation,” he added.
Whitfield’s lawyer Clark, hearing from the Free Press of Wilson’s official response from Washington, D.C., said that “Fannie Mae only offered relocation assistance after finding out that you were doing a news story — they have never offered any type of settlement during the entire lawsuit.”
Clark added last week: “And for what it’s worth, the relocation assistance offer is no longer on the table.”
Neighbors feel her pain
In Whitfield’s neighborhood, real-estate listings by Zillow show a nearby house in fair condition for sale on Algonquin for $10,000, and one on Drexel for $9,900. Other houses that were vacant and damaged, however, sold at auction last year by the Detroit Land Bank Authority for as little as $1,000.
“You have a paradigm shift here on this block,” said another of Whitfield’s neighbors — Wayne Curtis, 67, who lives across the street from her and maintains a large community garden. The foreclosure crisis, together with the movement of jobs to suburbia, “have stripped our neighborhood not just of housing, but schools and jobs,” Curtis said.
Sitting on his front porch last week, eying the colorful sloganeering and makeshift murals taking shape beside Whitfield’s house, Curtis recalled when there were occupied houses on every lot. He said he planned to join the crowd that will become a human fortress should bailiffs come to evict Whitfield.
“Fannie Mae is not listening. This is forcing us to come together,” he said. A few blocks away at Hope Community Church, Senior Pastor Kevin Butcher said he has known Whitfield and her son Millard Whitfield, 30, for nearly a decade.
“I talked to her attorney and, to my satisfaction, I got to the bottom of the story. Her situation is not only unjust, it’s ridiculous,” Butcher said.
A glimmer of hope
There is one dim ray of hope. According to officials of HUD, Fannie Mae’s mortgage interest in Whitfield’s house is insured by HUD. So, once Fannie Mae collects on the insurance, the house almost inevitably will fall into HUD’s lap.
That is, “it will be conveyed to us” — legally speaking, said HUD Field Office Director Mike Polsinelli, who is based in Detroit.
“We may have some wiggle room” to arrange a low-cost sale of the house to Whitfield, Polsinelli said.
Still, that likely would require moving her, her possessions, and her son and his stuff, out of the house while Fannie Mae boards it up and tries to keep it from being stripped — or worse.
Only then, after more court motions and legal fees, ultimately paid by U.S. taxpayers, would Whitfield possibly get to make an offer, subject to appraisals and city inspections, and then possibly buy the house and move back. The process could take all fall and part of next year.
Whitfield said she worries and wonders what will happen this month — perhaps a standoff on her sidewalk between her supporters and those hired by the mortgage-banking system.
“My mother’s house has a lot of memories for me. I’m really nostalgic about it,” Whitfield said last week.
“This whole thing has been stressful, very stressful — high blood pressure, depression, anxiety to the max,” she said.
“I look around this neighborhood and see all the empty houses, houses that have been stripped. And I think, ‘Why not sell me this house?’ I don’t want that happening to my mother’s house.”
Contact Bill Laitner: email@example.com or 313-223-4485.
How to get help
Reverse mortgages — These are popular among homeowners, especially seniors, who own their homes and want money for unexpected medical costs, home repairs or helping relatives in need. The lure is that a reverse mortgage needs no repayments until the borrower dies. But then, any heirs will lose the house to the lender unless they can afford to buy it back. Fees and interest mount quickly, so this is not a good way to finance vacations or investments. If you or someone you know is considering a reverse mortgage, get free advice from the Michigan Attorney General toll-free at 877-765-8388, 8:30-4:30 weekdays; write to Consumer Protection Division, Box 30213, Lansing 48909; or go to www.seniorbrigade.com and enter “reverse mortgage” in the search box.
Foreclosures — Property-tax foreclosures are covered by a new state law that reduces interest and penalties on unpaid taxes. Lenders in mortgage foreclosures are required to give homeowners several options for redeeming a house. Homeowners concerned about property-tax foreclosure should visit their county treasurer’s office and bring a recent tax bill. Those concerned about mortgage foreclosure can call the Michigan State Housing Development Authority, 8:30-4:30 weekdays, at 855-646-7432, ext. 1. And for advice in Detroit on either type of foreclosure, residents can call the United Community Housing Coalition at 313-963-3310 or visit the office at 220 Bagley, Suite 224, in Detroit.