Banks including BofA, Chase, Citi, PNC and Fifth Third have all issued PR statements announcing a moratorium on evictions from December 17 through January 2 — widely regarded as the heart of the Christmas season. Some, like Wells Fargo have chosen December 19 through January 2 for their suspension period.
Fannie Mae also joined the chorus of financial institutions extending a Christmas reprieve. Similarly, Freddie Mac will suspend “eviction lockouts” on homes for two full weeks, also effective December 17. But that won’t affect people who were locked out of their homes immediately prior to the freeze.
Key Question: Can you imagine how you’d feel if you were one of those unlucky enough to be evicted on December 16, before the eviction embargo took effect? Ugh…
According to Joseph Pigg, VP and Senior Counsel of Mortgage Finance with the American Bankers Association, the suspension of evictions for the Christmas holiday period has become a more common practice among retail financial institutions nationwide. Indeed the temporary truce on Christmas evictions began saw widespread uptake by financial institutions starting around 2010 as effects of the mortgage meltdown began to manifest in the U.S.
Josh Dunn, Corporate Communications Manager at Wells Fargo’s Charlotte office, said that Wells Fargo has suspended evictions during Christmas for a few years now. The bank doesn’t know how many people the suspension of evictions may assist. Wells Fargo will also suspend sales on foreclosed homes nationwide.
Some lenders are also temporarily pausing repossession of cars.
PR Spin: It’s A Wonderful Life
Banks want the story to spin like George Bailey in Frank Capra’s “It’s A Wonderful Life,” but they could just as easily be seen as Mr. Potter, the film’s ruthless monopolistic villain.
Fifth Third said they are suspending evictions “to help our customers who are experiencing financial hardships find relief this holiday season.”
PNC said pretty much the same thing.
“We’re taking this step in support of families who have faced financial challenges and gone through a foreclosure,” said Terry Edwards, EVP of Credit Portfolio Management at Fannie Mae. “The holidays are a chance to be with loved ones and we want to relieve some stress at this time of year.”
Wells Fargo said its decision reflects the “values and the spirit of the holiday season.”
Bah humbug. The stories sound wonderful, but it’s PR spin. Singing praises about “empathy,” “generosity” and “Christmas spirit” sugar coats some uncomfortable truths:
Negative Publicity. It’s not kindness in the hearts of bankers that keep them from evicting mortgage defaulters during Christmas. It’s the fear of a front page story with a picture of a little 6-year old girl standing in the freezing snow while crying in front of the house she was just kicked out of. No bank wants a big PR black eye like that during the holidays.
While this perspective may seem a bit cynical, it certainly doesn’t make it any less true. If a bank chucked someone out of their home a week before Christmas, the media would have an absolute field day. It would be an epic setup, allowing journalists to demonize banks with all-too-common populist gusto. Throw reporters a lob like that and they’ll smash it back in your face. The headlines practically write themselves: “Scrooged: Local Families Kicked to Curb on Christmas Eve” or “Bah Humbug Banks Evict Homeowners for the Holidays.”
The mainstream media would devour the opportunity to rile up readers with more bad press about big, bad banks, especially stories about their eagerness to “take everything away” during the “season of giving.” Bitter ironies like this are staples of modern media: “Merry Christmas… Now Get Out!” Shock journalism has gone mainstream. Don’t feed the beast.
Foreclosure Glut. What bank really needs to foreclose on more homes right now? The market is still glutted with hundreds of thousands of empty foreclosed homes, so what’s the rush? It can wait a couple weeks, right? Heck, these days it seems like banks are almost looking for an excuse to hit the pause button on foreclosures.
Employee Safety & Morale. It sucks to evict someone during the holidays, so for employee morale, banks don’t mind giving them a break. Foreclosure teams can enjoy their Christmas vacations, then get back to work feeling refreshed and energized vs. depressed and battered. And it’s not like a normal eviction isn’t already a potentially explosive situation. Imagine how the safety risks skyrocket during the holidays.
The Process Doesn’t Stop. It’s not like these financial institutions are halting the foreclosure process entirely; only the step involving the ugly and uncomfortable eviction will be suspended. The gears in the rest of the foreclosure machine will keep grinding M-F, 9-5 all way through the holiday season. For instance, those handling legal filings will continue to file their paperwork. Just because the physical process of evictions has been paused does not mean a borrower in foreclosure won’t see an eviction notice nailed to their door sometime in December.
For those who have seen Michael Moore’s “Roger & Me,” you might recall images of homeowners in Flint, Michigan getting Christmastime evictions –powerful imagery forever linking GM with cruel corporate indifference. No bank wants that brand baggage.
Should banks and credit unions permanently institutionalize the holiday hiatus on evictions. Yes, it’s a nice thing to do. But don’t confuse motives. There is a huge difference between the “good reasons” financial marketers publicly state as the rationale behind an eviction armistice, and the unspoken “real reasons.” (See “The Good Reason vs. The Real Reason” by The Financial Brand for a deeper examination of the underlying psychology at play here.)
Should banks and credit unions try to make PR hay from a holiday eviction hiatus? Probably not. Consumers have become so jaded towards financial institutions that any attempt to capitalize on “bank benevolence” during Christmas will likely backfire. This Wall Street Journal article should give you a good sense for how bragging along these lines can blow up in your face:
“Some companies like to erect a Christmas tree outside their headquarters or make a donation to the needy, but Fannie Mae has another way of letting its customers know it cares during the holiday season: it will temporarily stop kicking them out of their homes.”
At the very least, it raises some uncomfortable questions. How many foreclosures are we talking about here? Why did you make so many bad loans? Why aren’t you working with more borrowers to keep them in their homes? Good luck trying to find any mainstream journalist who is willing to take the bank’s side in a story about foreclosures. Even with seemingly feel-good Christmas stories, it isn’t likely to happen.
If your bank or credit union decides to forgo evictions during Christmas, just send private correspondence only to those whom it affects. Otherwise, shut up and keep it quiet. The free press you might gain in a PR push isn’t worth the gamble.
And don’t forget: The people who enjoyed this so-called “temporary foreclosure relief” will still get evicted January 2 (or shortly thereafter).