Folks on Humphrey Hill Drive were still waking up on the icy Saturday morning the shark hunters came to town. They rounded the suburban traffic circle in a pair of rented school buses after a half-hour ride from far more modest neighborhoods, rumbling to a stop at the Garmone family's driveway. Forty-two caffeinated Clevelanders piled out, their leaders carrying bullhorns.
Their quarry, Mike Garmone — a regional vice president at Countrywide Financial Corp., the nation's largest mortgage lender — didn't answer his door. So they deployed, ringing bells at the big homes with three-car garages, handing out accusatory fliers and lambasting Garmone and his company's loans. Before departing, they left their calling card — thousands of 2 1/2-inch plastic sharks flung across Garmone's frozen flower beds, up into the gutters, littering the doorstep.
The commotion was the work of an in-your-face activist group called the East Side Organizing Project, with a paid staff then of just two, mobilized to battle Cleveland's mortgage "loan sharks." Years before the rest of the country was rocked by the fallout from aggressive lending, their neighborhoods were already home to the nation's highest concentration of foreclosures — and they were fed up.
ESOP's people are proudly loud and abrasive, and they've long reveled in needling people with pull. But could they get a distant behemoth like Countrywide to the table?
On that morning in February 2006, ESOP executive director Mark Seifert had his doubts. For starters, he wasn't sure his group's research on Garmone even had the family's correct address.
Until two evenings later, when Seifert checked his e-mail and found a message from a top public relations executive at Countrywide's California headquarters.
We need to talk, it said.
Seifert broke into a wide grin.
Now that David had Goliath's ear, he wasn't about to let go.
Cleveland's punishing crisis
The foreclosure epidemic that has infected Cleveland's neighborhoods started earlier and has been even more punishing than the crisis much of the rest of the country is enduring. It's a symptom of the lax lending that became widely common, without the run-up in home prices that long camouflaged it.
"The problems that exist everywhere now ... showed themselves earlier here because there was no getting out of them," says Zach Schiller of Policy Matters Ohio, a Cleveland nonprofit focused on the state's economy.
The problem is well documented — Cleveland and the surrounding county saw more than 15,000 foreclosures last year. But to grasp its impact, walk with Nita Gardner down the block of East 113th Street where she raised two boys.
When Gardner, a retired machinist, bought the gray wood-frame house 33 years ago, this part of the Mt. Pleasant neighborhood was filled with families. Their homes on small lots were modest, but maintained with pride.
Have a look at what's left.
The white house on the opposite corner — its front porch ripped away by scavengers — fell to foreclosure last year. The home behind it — blue with plank-covered windows — went soon after.
A few doors down from Gardner, three homes in a row are abandoned. Three of the four across from them are vacant, too. It's not like some manicured suburban neighborhood, where it's a guess if a house is empty. Here, shredded curtains flap from holes where windows used to be. The silver fringes of insulation hang from walls where aluminum siding has been stripped for resale.
In early 2006, Gardner's adult sons — who had bought the house from her — fell behind on their mortgage and the lender, Countrywide, began foreclosure.
Gardner stepped in to fight, although looking at the home's drab exterior and the surrounding neighborhood, it's not immediately clear why.
Until, that is, Gardner opens the front door and light spills over the floor to a mural of an Egyptian pharaoh she painted in gold and azure across the living room wall. Upstairs, a closet door still bears the markings in pen where her sons charted their heights, year after year.
"I just feel like I'm a whole person with this house," says Gardner, explaining her battle to save it. "Because this is not just a house. It's me."
When ESOP held its annual meeting in 1999, organizers were surprised to see empty chairs. They called the missing and found many phones had been disconnected. They knocked on doors and found empty homes.
It was the first sign, Seifert recalls, that people in some of Cleveland's poorest neighborhoods were losing their homes to foreclosure.
ESOP's organizers, until then working with parents on safety around public schools, knew nothing about mortgage lending. But they did know how to raise hell.
That was clear in the mid-1990s, when ESOP demanded that Cleveland officials give money seized in drug busts to struggling city schools.
When Mayor Michael White put them off, ESOP members picketed White's church and ask the pastor to excommunicate him. They set up outside the house of the mayor's father, demanding he talk with his son. To drive the message home, ESOP activists figured out the married mayor had a girlfriend and went to her door with a letter demanding the cash.
The tactics came back to bite them.
"We lost about 90 percent of our funding overnight," Seifert recalls.
The nonprofit staggered. If it was going to be confrontational, it needed to keep the foundations that fed its budget in the loop.
Fighting foreclosures became their new cause. But they brought along old tactics — a brand of confrontation honed by Saul Alinsky, the legendarily radical Chicago organizer.
"Power is not only what you have," Alinsky schooled his followers, "but what the enemy thinks you have."
ESOP was banking on anger. Clevelanders were losing their homes, organizers concluded, because aggressive lenders had put people in mortgages they couldn't possibly afford.
In 2002, the group began going after lenders, servicers and mortgage brokers.
At one protest outside a branch of Charter One Financial Inc., a police officer confronted an ESOP volunteer in a shark suit.
"Are those your sharks?" the officer demanded, scooping plastic predators from the ground.
"No," protester Christine Regula replied. "I had my tubes tied."
They also pressed public officials to stall foreclosures proceedings. One, Steven Bucha, chief magistrate in charge of foreclosures in Cleveland's courts, recalls being invited by ESOP to a public forum. More than 200 people packed a church basement. Bucha was seated as far as possible from the door.
"A woman gave a fiery speech about how the system had done her wrong, how the system was in collusion with the court — and here's the guy responsible! And she pointed at me. I really couldn't get a word out," Bucha says. "It was like nothing else I've ever experienced in my life."
Rescue program begins to work
Bucha and others say the "guerrilla warfare" approach was counterproductive.
"Nobody likes our tactics, which is precisely why we use them," Seifert says.
One after another, the group squeezed and cajoled eight companies and their subsidiaries into signing pacts giving it direct access to a single executive with the authority to restructure problem loans. The companies have agreed to cut interest rates and waive penalty fees and past-due balances.
Last year, ESOP — one of four groups that counsel homeowners referred by Cuyahoga County's foreclosure rescue program — says it got mortgages reworked for about 1,500 homeowners, most already in foreclosure.
"You know, there's a fine line," says Rocky Ortiz, the local director of the Catholic Campaign for Human Development, which provides part of ESOP's funding. "Mark and his people have learned to walk it."
Maybe, but in early going, some of ESOP's targets were local or relatively small. Even some of the biggest were vulnerable, or at least open to discussion.
Could ESOP take on the biggest lender in the country? It was time to find out.
It's called a "rank 'em and spank 'em."
Nominally, it's a meeting. But that sounds too polite, longtime ESOP volunteer Barbara Anderson says. It's a venting session, about as calm as a trading pit. At a rank 'em in January 2006, ESOP organizers declared Countrywide their villain of choice.
A month later, they "hit" Garmone's house in suburban Painesville.
"Please call Mike at home ... and tell him to do the right thing: produce his boss to a meeting with ESOP!" the group urged its followers.
ESOP didn't want just any boss. They demanded Angelo Mozilo, Countrywide's chairman and CEO.
They got a meeting with a pair of executives at the Cleveland office of the NAACP, in May 2006. After 20 minutes, ESOP negotiators walked out because Countrywide's representatives would not sign a pledge to negotiate.
Countrywide will not answer questions about its dealings with ESOP.
"We want that relationship (with ESOP) to continue to improve so together we can help more borrowers," Rick Simon, a company spokesman, said. "Going back to the past doesn't help those borrowers."
But letters Countrywide executives sent to ESOP make clear the company's sharp disagreement with the activists' criticism and its irritation with their tactics.
ESOP organizers and Countrywide executives met again in the fall of 2006. The activists also sat down with officials from the federal agencies that oversee housing, trade and banking to voice concerns about Countrywide.
But the group was having trouble convincing local officials that Countrywide was the villain they said it was, Seifert says. The campaign moved to the back burner as ESOP negotiated an agreement with another lending firm.
The standdown, though, was temporary.
ESOP organizers got Mozilo's personal phone number and instructed homeowners to call him in the middle of the night.
They flooded faxes at Countrywide offices with hundreds of copies of identical forms detailing Cleveland homeowners' problem loans.
They posted signs on the front of abandoned homes owned by the lender: "Countrywide's idea of the American Dream! Tell their executives what you think!"
Agreements to a point
In April 2007, ESOP ferried two dozen volunteers to a Countrywide office in suburban Woodmere. They walked into the tiny office, located on the town's main shopping strip, throwing plastic sharks, handing out mock foreclosure notices and demanding a meeting with Mozilo, then left when local police arrived.
"We strongly believe that confrontational tactics and deliberate misinformation are not the way to build productive relationships that help Cleveland's homeowners," a Countrywide executive wrote afterward.
In June, a pair of Countrywide executives came to ESOP's offices to meet with borrowers, promising to work with individual borrowers but again refusing to sign the memorandum.
Nine days later, ESOP showed up at a Countrywide office in the University Circle neighborhood, sharks in hand.
In late July, an ESOP regiment headed to Hudson, an outlying suburb, and tried to shove their way into the office of the lawyer representing Countrywide in its Cleveland foreclosures. The company that had been selling the group its plastic sharks heard about their tactics and cut off the supply.
Countrywide, too, was taking notice and it was not happy.
"During efforts to physically force your way into the office, one of the firm employees was actually bitten by an ESOP member," Countrywide's chief counsel, Sandor Samuels, wrote afterward. "We will not enter into relationships with organizations that desire to subject our employees, contractors and Chief Executive Officer to harassment."
Hopeful to move forward
Countrywide insisted it was cooperating, saying it had restructured dozens of loans ESOP had brought to its attention.
But the activists said that was not nearly enough, that it was seeking more than piecemeal solutions.
Then, in October, a letter on gold-embossed stationery arrived.
"I am hopeful, for the sake of these families, that ESOP and Countrywide will move forward and work together in a constructive manner to find workable solutions to our customers' issues," it said.
It offered a meeting with the lender's senior management. It was signed: "Sincerely, Angelo R. Mozilo."
On a Wednesday in December, Samuels led a Countrywide delegation to Cleveland. ESOP rented a trolley, seated the executives in the front row for a neighborhood tour and filled the rest with homeowners.
Two rows back sat Lisa Pass, who stood to tell the story of her father-in-law's loan and the home it had put in jeopardy. She was surprised to find the executives were much nicer than she'd imagined. And they were listening.
Nita Gardner was there, too, and she laid out the paper trail she'd assembled chronicling her efforts to hold on to the house. The papers, she says, showed she had repeatedly made the payments Countrywide demanded, but the company still rejected her offers to buy back the house.
Afterward, one of the executives asked her how far she was willing to go to keep the house.
"Do you know what obese is?" Gardner says she answered. "Well I'm the medical standard of obese ... and I'm willing to walk the double yellow line of the Shoreway buck naked to get that house back."
When the tour ended and lunch was served, ESOP President Inez Killingsworth turned to Countrywide's Samuels. Would he sign a promise to negotiate? It was the same memorandum the lender had rejected for nearly two years.
Samuels paused. Then he reached for a pen.
Rising from their seats, ESOP's army cheered.
Sides reach agreement
A few days after New Year's, Nita Gardner's phone rang. If she had money, Countrywide was prepared to sell her her house back.
When real estate agent Jeff Swiecicki, dispatched by the lender, arrived soon after, Gardner was still skeptical. But she signed a contract and handed over a check.
"I signed the paper and I cried," she says. "I told him, you can't go back on this."
Countrywide's decision is one of 50 to 60 loan workouts it has agreed to with homeowners represented by ESOP since December, Seifert says.
In December, the activists expected to reach a comprehensive agreement with Countrywide within four months. A few weeks later, Countrywide agreed to a $4 billion deal that will see it bought and merged into Bank of America Corp. But it has continued to negotiate.
That has the activists looking ahead. The foreclosure problem isn't going away anytime soon. They're changing their name to Empowering & Strengthening Ohio's People, to reach beyond the Cleveland area.
And they're already talking about the next lender they want to go after. They've even got the home phone number for a certain CEO.
Now, Seifert says, all they need is a new supply of plastic sharks.