(Correction of top sentence: Peggy and Alvin Mears, of Fontana, never missed

a payment on their trial loan modification,

and were under consideration for a permanent modification – when their home was

scheduled for foreclosure. Now, Peggy's been arrested.)

Peggy and Alvin Mears, of Fontana, never missed a mortgage payment. Now, Peggy's been arrested.

The couple was paying their monthly $1,299 fee towards a modification loan and were working to secure a permanent loan. They were horrified when lender OneWest (formerly IndyMac), decided to seize their three-bedroom home anyway.

Peggy and 21 other homeowners — including an 85-year-old woman — were

arrested at Chase Bank near 4th and Hope Street about 1:30 pm today, taking to the streets in desperation.

“These banks are terrorists,” said Peggy, who is slated to lose her house three days before Christmas. “They terrorize us by threatening to take our homes.”

Her predicament has caused her so much stress that she dropped all of her holiday plans to focus on saving her home.

“I am definitely not in the (Christmas) spirit,” said the 52-year-old former accounts payable representative.

OneWest spokesperson Diane Henry was not available for comment.

Peggy was one of 200 protestors who joined the social justice group, Alliance of Californians for Community Empowerment, for today's “move in,” where homeowners attempted to move themselves — and their furniture – into Chase Bank downtown, as a way to shed light on the foreclosure crisis.

Peggy, who was arrested with 21 other homeowners, was released later today.

The protest coincided with a recent announcement that the nation's six biggest banks would be paying out $143 million in bonuses this year.

“We bailed the banks and they are the culprits behind the collapse,” Peggy said. “We have to change policy.”

OneWest's decision to foreclose on the Mears' home during a loan modification process may be despicable, but it isn't against the law.

California and other “non-judicial” states allow lenders to foreclose on property without having to go through the court system.

As a result, lenders can circumvent legal tools like affidavits that prove that a borrower's payments and documents are in order before taking their property.

This continues to be the case in hard-hit San Bernadino, Riverside, Stockton and Merced and elsewhere, despite homeowners paying their mortgages on time or showing a stable income.

In 2009, California lawmakers passed Senate Bill 1137, a measure restricting lenders from foreclosing without showing good faith in negotiations, to provide some relief to homeowners.

But without stringent enforcement rules, the Alliance said it did nothing to keep the banks from foreclosing on their homes.

“The modifications continued to not happen,” said Christina Livingston, Deputy Director for the group.

Legislators applied additional pressure on lenders by imposing a foreclosure moratorium that same year.

But she said lenders easily navigated around that too, by simply granting loan modifications that were a dollar less than the original amount.

As a consequence, people have been losing their homes despite “doing everything they were told to do,” she added.

With all of the bad publicity, banks had started to pull back a bit from foreclosing on people's homes last month.

But that will most likely be short lived.

Livingston predicts an upswing in foreclosures, as adjustable mortgage rates are re-set and the economy continues to flounder.

In the meantime, Peggy and other disgruntled homeowners have no plans to let down and will continue to fight to keep their homes.

“We have to stand up,” she said. “Your home is your greatest asset.”

LA Weekly