The United States is in the midst of a homelessness epidemic, with nearly 3.5 million Americans living on the streets every year. Exacerbating the problem is the more than 3.4 million foreclosures that have taken place since the financial crisis of 2008, the largest economic meltdown since the Great Depression.

State legislators have an opportunity to stem the rising numbers of homeless Americans by following a set of reforms put forth by the state of California, where elected officials passed a Homeowner Bill of Rights in early 2013. Since its passage, home foreclosures have dropped by 63 percent across the state, allowing individuals to defend their homes.

Housing crisis

“It is an urgent matter, we have to act now,” said Becky Dernbach, a representative of Occupy Homes Minnesota to Mint Press News. Working as a community defense organization, the group of activists in the Twin Cities has staved off foreclosure proceedings for 10 families since 2011.

Proponents of foreclosure reform note that the problem is much larger, forcing families to make tough choices between homelessness, or even death, when banks begin foreclosure proceedings. “I saw blood on the wall. I lifted up the comforter a little and then I lost it,” said Oriane Rousseau after finding her husband Norman’s corpse in May 2012.

Despite making regular payments, the Rousseau family received a statement in May 2009 from Wachovia indicating missed payments.

After seeking legal help, their lawyer reported numerous irregularities in their mortgage agreement, including a vastly inflated estimate of the Rousseau’s earnings that had been made erroneously by a Wachovia loan salesman.

After exhausting personal savings and every legal avenue to save their California home, Norman Rousseau committed suicide. The economic calamity is one not limited to the Rousseau’s, as millions of fraudulent loans known as “liar’s loans” sold in the years leading up to the 2006 housing bubble threaten to put millions on the street, homeless.

Contributing to an epidemic of homelessness

According to the National Coalition for the Homeless, roughly 3.5 million U.S. citizens will be homeless over the course of a year. For some, homelessness is brief, lasting only a few days. For the vast majority, losing a home can begin a cycle of poverty and homelessness.

The economic recovery in the United States remains anemic, with unemployment hovering around 8 percent, according to the U.S. Department of Labor statistics. Unemployment is likely much higher because of people who have dropped out of the job market and stopped looking for work.

Making matters worse for families are imminent sequestration cuts of $1.2 trillion over the next 10 years — resembling conditions of economic austerity in Europe. The Department of Defense is expecting cuts of $500 billion over this period, but the vast majority of cuts will come at the expense of average Americans with lower allocations for national parks, food inspections and housing aid.

In many cases, banks inexplicably continue to foreclose upon individuals who remain current with their payments. Bank of America, Citigroup, JPMorgan Chase and Wells Fargo have foreclosed on more than 700 active members of the military during the housing crisis and seized homes from about two dozen other borrowers who were current on their mortgage payments. The cases were revealed in 2013.

Foreclosures against active servicemen are banned, according to the Servicemembers Civil Relief Act (SCRA). The SCRA requires banks to seek court permission before foreclosing on active-duty military personnel’s housing. JPMorgan Chase, Wells Fargo and Bank of America each foreclosed on about 200 servicemen in violation of the SCRA and Citigroup had 100 such violations.

The data was revealed by the Office of the Comptroller of the Currency in 2011 and later revised to include up to 5,000 foreclosures of homes belonging to active-duty service members.

State legislatures have the ability to reign in these types of illegal home foreclosures by passing a comprehensive homeowner’s bill of rights. “The homeowner bill of rights is really important in Minnesota because foreclosures are three times the rate of before the crisis,” Dernbach said.

A homeowner bill of rights fails

Homeowners and housing advocates claim that greater regulation is needed to prevent predatory foreclosures and unjust lending practices that led to the onslaught of home foreclosures across the state, more than 14,000 since 2008.

Standing in the way of these reforms are Democratic senators, led by Jim Metzen, the chair of the Minnesota State Senate Commerce Committee. “What happened was the chair of the Senate Commerce Committee refused to give the bill a hearing since the banks did not agree to discuss the issue,” Dernbach said.

“I think it’s unacceptable that the Senate Democrats won’t hear a bill until banks agree to it. I think it’s absolutely unacceptable to hold Minnesotans hostage to bank policies.”

State Senator Jim Metzen (D-Minn.), chair of the senate commerce committee in South St. Paul, effectively killed the Homeowner Bill of Rights this week after requiring all the stakeholders, including big banks to agree to the protections. After a bevy of banks, including Wells Fargo refused to capitulate, Metzen blocked any discussion on the proposal.

The proposal put forth earlier this year by housing reform advocates in Minnesota would require mandatory mediation, which would require banks to meet face-to-face with the homeowner and a mediator to discuss alternatives to foreclosure. Also included were protections for tenants renting from landlords in foreclosure and additional protections for military service members facing foreclosure.

A similar set of policies enacted in California have been successful, resulting in a 60 percent decrease in new foreclosure filings since January.

This has contributed to an overall national decrease in home foreclosures in 2013. According to a report released by RealtyTrac Inc. last week, the number of U.S. home foreclosures fell 11 percent from January and declined 29 percent from February last year, a sign that the housing market is improving. Although there have been overall decreases in home foreclosures, some states including Washington, Wisconsin and Iowa recorded increases in bank repossessions last month.

Martin Michaels is a Mint Press News staff writer. Follow him on Twitter at @MMichaelsMPN.