Senate Blocks Confirmation of Mel Watt- 97 California Orgs Likely Disappointed in Today’s Vote

Fannie and Freddie

The Wall Street Journal reports that Mel Watt’s confirmation to lead the FHFA was blocked by Republican Senators today.

This vote was important because of the considerable market space occupied by Fannie and Freddie (overseen by FHFA), and the current director’s stance against helping homeowners.

To learn more about why homeowners, housing counselors, and housing advocates have been calling for new leadership at the FHFA, read CRC’s March 2012 letter to Acting Director Ed DeMarco:  97 California Organizations Demand Immediate Foreclosure Policy Changes from FHFA 

Lessons from Past Mortgage Settlements Should Guide Department of Justice Settlement with JP Morgan Chase

October 22, 2013– Amid reports of Department of Justice negotiations of a multi-billion dollar settlement with JP Morgan Chase for securitizing faulty mortgages, 18 California organizations are calling for all future mortgage and foreclosure settlements to meet the needs of local communities and consumers most affected by unscrupulous practices.

Past agreements — especially the Independent Foreclosure Review — and their implementation have left behind homeowners and communities bearing the greatest losses from bank wrongdoing.

“The mortgage and foreclosure crisis have devastated families and communities,” said Kevin Stein, Associate Director of the California Reinvestment Coalition. “Banks must be held accountable to provide meaningful relief to those hardest hit by bad practices, to halt all preventable foreclosures, and to help stabilize neighborhoods.”Although a substantial portion of the settlement with JP Morgan Chase will go to investors harmed by Chase’s alleged misdeeds in packaging and selling mortgage-backed securities, meaningful homeowner relief is possible. As such, these 18 community groups call for all future settlement agreements, including any agreement with JP Morgan Chase, to include:

1. Relief commensurate with harm caused. Financial institutions have yet to be forced to pay for the total harm caused by predatory mortgage lending and improper foreclosure practices that have drained wealth from working families and their neighborhoods. Only counting 2012, over $192 billion in housing wealth was lost due to foreclosures, with the highest concentration of losses in pre-dominantly minority communities, according to a report by the Alliance for a Just Society.

2. A priority on keeping people in their homes and first lien principal reduction.Countless predatory and unsustainable mortgage loans were made over the last several years, leading to hundreds of thousands of unnecessary foreclosures as servicers failed to follow federal and state rules designed to encourage loan modifications. Banks entering into settlement agreements must halt all foreclosure activity to ensure that no improper foreclosure is processed before impacted borrowers can claim settlement relief or servicing protections to which they are entitled. Likewise, Californians need first-lien principal reduction loan modifications so they can return to being above water and sustain homeownership. While the National Mortgage Settlement (NMS) provides significant first-lien principal reduction relief, a greater amount of relief was provided via short sales where homeowners must leave their homes.

Maeve Elise Brown, Executive Director of Housing and Economic Rights Advocates, explained, “In designing this settlement, the Department of Justice should remember the Independent Foreclosure Review with its $2 billion consultant price-tag but only $300 or $500 for homeowners. The Department of Justice must prioritize reducing principal on first-lien mortgages, a strategy that is most effective at keeping people in their homes.”

3. Support for housing counselors and legal service lawyers. Nonprofit advocates have helped California families navigate a Byzantine loan modification process and keep their homes. But funding for these groups is dwindling and consequently they can serve fewer people. These groups, whose sole focus is on their clients, are the only real competition for the steady stream of loan modification scam artists who gladly charge families thousands of dollars while doing nothing to save their homes. The National Mortgage Settlement was scheduled to deliver over $400 million to the state of California, much of that potentially going to support nonprofit housing counselors. But, almost all of these funds were taken by the Legislature and Governor to back-fill a budget deficit.

4. Best practices and strong standards going forward. Stronger servicing standards have been put in place by the California Homeowner Bill of Rights (HBOR), the National Mortgage Settlement, and the soon to be effective rules of the Consumer Financial Protection Bureau. But an April 2013 CRC survey of over 80 housing counselors in California found that large servicers were routinely violating key provisions of HBOR and NMS. The NMS Monitor found some of the same issues; almost half of the nearly 90,000 complaints made to his office were related to problems with a bank not providing a responsive, capable Single-Point-of-Contact or apparent dual track violations. Besides compensating victims, settlements must end harmful practices.

5. Support for affordable housing. The foreclosure crisis has not only harmed homeowners, it has exacerbated an already desperate affordable housing crisis. Families displaced from their homes by foreclosure are now competing for housing with tenants in a heated rental housing market. These families are also competing with Wall Street investors who pay all-cash for homes, beating out first-time homebuyers and then renting the houses back to some of the same people originally displaced by the Wall Street-generated economic crisis.

During the Savings and Loan crisis, banks were required to support the development of affordable housing through programs such as the Affordable Housing Program (AHP). Tying a percentage of settlement dollars to providing a source of funding for affordable housing is a logical mechanism to help mitigate the broader harm caused by improper mortgage and foreclosure practices, and can begin to address a growing need as the loss of redevelopment agencies in California and other factors have created a new crisis in affordable housing finance.

Amie Fishman, Executive Director of the East Bay Housing Organizations explains, “We’ve had a triple whammy in California of the foreclosure crisis which contributed to pushing rents sky high, alongside the draconian cuts to funding for affordable housing with the elimination of redevelopment agencies and federal sequestration cuts. As a result, too many California families are doubling up with relatives and using half or more of their paychecks to try and keep a roof over their heads. Targeting some of this funding to affordable housing would be a necessary step to addressing this crisis.”

6. Transparency and data reporting to ensure relief is distributed fairly. Most of the recent settlement agreements have for the most part allowed the offending parties to determine how to distribute relief. This has contributed to a feeling that the hardest hit communities have been ignored. The California Attorney General did well to negotiate a separate California agreement as part of the NMS that created incentives for servicers to provide relief in hard hit counties. But even this provision didn’t ensure that relief reached the hardest hit communities. And the National Mortgage Settlement agreement did not require that servicers report the race, ethnicity, gender and income of borrowers and neighborhoods where relief was provided. All future agreements must require this level of transparency to ensure fair housing and fair lending laws are honored.

7. Strong enforcement and monitoring. A settlement agreement is not worth the paper it is written on if the terms are not clear and meaningful, and if the oversight and enforcement is lax to the point of inviting banks to ignore their obligations. The California Monitor (oversees the National Mortgage Settlement in CA) has been a positive force in resolving homeowner complaints and changing servicer behavior, but subsequent reports from the Monitor indicate there is still room for improvement.

Similarly, the ability for victimized homeowners to sue their bank, included in California’s Homeowner Bill of Rights, is a good step forward, but more needs to be done to protect homeowners from unnecessary foreclosures and to protect tenants from illegal evictions. Any settlement agreement must put in place both a credible and strong monitor empowered to ensure banks honor the settlement, as well as a mechanism for affected families to secure relief and assert their rights.

The following organizations signed onto this statement:

Alliance of Californians for Community Empowerment
California Coalition for Rural Housing
California Reinvestment Coalition
Courage Campaign
East Bay Housing Organizations
HomeStrong USA
Housing and Economic Rights Advocates
Korean Churches for Community Development
Law Foundation of Silicon Valley
Montebello Housing and Development Corporation
Neighborhood Housing Services of the Inland Empire
Neighborhood Housing Services of Los Angeles County
Neighborhood Housing Services of Silicon Valley
Public Counsel
Rural Community Assistance Corporation
Shalom Center for T.R.E.E. of Life
Thai CDC
Unity Council

Additional Background:
Wasted Wealth Report (May 2013): LINK
CRC Survey of 84 Housing Counselors and Nonprofit Attorneys (April 2013): LINK
National Mortgage Settlement Monitor Complaints (through June 2013): LINK

Bank of America May Drop Overdraft Fees for ATM and Automated Bill Payments

Bank Fees have pushed many customers away

Bank fees have pushed many customers away, sometimes to costly financial services like prepaid cards, payday lenders, or check cashers.- photo credit: Wasserman, Boston Globe

Great news!  Reuters reports that Bank of America is considering a new checking account that will not allow customers to overdraft their accounts when making an ATM withdrawl or with automated bill payments:  Reuters “BofA considers new checking account that prevents overdraft: WSJ” 

CRC supports greater transparency and fewer fees in checking accounts.  In our September 2012 report, Checking out: How Big Banks are Pushing Consumers Out of Basic Bank Accounts”, CRC found that the five largest banks were charging fees that cost the average American anywhere from $84 to $144 a year.

In the “Checking Out” report, CRC outlined its “SafeMoney™ standards” which are account features we believe should be standard in all bank accounts:

  • Safe and affordable mechanisms to store money (such as accounts that provide FDIC, anti-fraud and theft insurance);
  • Safe and affordable ways to pay for purchases (such as through debit cards); and
  • Safe and affordable ways to build their capacity to finance large goals.

A more recent guide published by CRC, compares the checking accounts offered in California and how well they meet SafeMoney™ standards:  CRC Checking Account Guide  (updated June 20, 2013).

The industry for prepaid cards is also growing rapidly, unfortunately without much transparency for customers around fees, and also without some of the protections against fraud or theft that regular debit cards enjoy.  To read a brief explanation of prepaid cards and why CRC is concerned about the lack of consumer safeguards, visit our “Prepaid Cards” page.

To support the SafeMoney™ standards or to learn more, please contact Andrea Luquetta: aluquetta@calreinvest.org.

Teaching California Youth About Predatory Payday Loans

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.

 

BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.

PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.

payday lending truth in lendingThis weekend, Liana Molina, CRC’s payday campaign organizer, will be presenting at the School for Economic Justice about payday loans and why they are so destructive to California families.

The theme for this weekend is “Access to Fair Financial Services,” and it is sponsored by the Youth Leadership Institute and Mission SF Community Financial Center.

Over the course of the weekend, the youth participants will learn how predatory financial services and products have targeted low-income communities, immigrants, and minorities.  Participants will also learn how grassroots organizing on issues like payday lending can lead to positive policy changes.

Activities will include 

At the conclusion of the retreat, the youth participants, in groups, will present action plans to address payday lending.

Liana explains, “This weekend is important for two reasons.  First, the more people that know about the payday loan debt trap, including youth, the less likely they are to fall into it.  Second, by learning about this industry and how it targets low income communities, youth are able to organize and work together to restrict payday lending- like we saw recently in Daly City: “Youth Take A Stand On Payday Lending’s Crippling Affect on Daly City”   Other successes this fall in Sunnyvale and Long Beach are helping to create more momentum to restrict harmful payday lenders and other fringe lenders.”

Are you a Californian who has used a payday loan and would like to share your story? Do you want to get involved in local efforts to restrict payday lending in our communities? If so, please contact Liana Molina, CRC’s Payday Campaign Organizer: Liana@calreinvest.org  or 415-864-3980.

Man Tries To Buy House, Finds Out He’s Dead & Married To A Woman He Never Met

As a reminder, the CFPB is now taking complaints on credit reporting agencies!   (Complaint form) A September report by the CFPB found that about 20% of the time, consumers and lenders are seeing different credit scores: “The study compared credit scores sold to creditors and those sold to consumers. The study found that about one in five consumers would likely receive a different score than the score provided to a lender.” (Link to CFPB release)

Consumerist

We always recommend that you take advantage of your right to check your three credit reports once a year just because you never know what you might find. Like the California man who learned from Equifax that he’s been dead for a few years and also that he had a widow living 20 miles away.

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Celebrating Community Heroes in Sacramento

Celebrate Sacramento long picture

On the lovely evening of September 26, CRC members and friends gathered to celebrate Sacramento Valley Reinvestment. Almost one hundred filled the Firehouse Restaurant in old Sacramento to honor the important work of community heroes, networking and enjoying fine food and drink.

Alan Fisher, CRC Executive Director, welcomed the crowd and thanked those present for supporting CRC and reinvestment in the Sacramento Valley. Every year, CRC honors individuals and groups who have made a significant impact in the communities they serve with CRA Panther awards. CRC presented three CRA Panther awards at the event.

Honorary Host Committee members Pam Canada, Rachel Iskow, Stanley Keasling, Bill Powers, Shamus Roller, Greg Sparks and Rob Wiener were in attendance. The many sponsors were thanked for their generous support for the Sacramento area and CRC.

Stephan Daues and Shamus Roller

Shamus Roller and Stephan Daues

Stephan Daues
Shamus Roller of Housing California gave the CRA Panther Award to Stephan Daues, Regional Director of Housing Development for Mercy Housing. Stephan led the effort to create 7th and H, a mixed-use mid-rise building with 150 apartments, including 75 formerly homeless, and a full time health clinic. The project broke new ground in delivering the highest quality supportive and workforce housing, with cutting edge sustainable design, deep and wide affordability, and intensive onsite services. Construction was completed in January and reached full occupancy in June.

Noah Harris and Clarence Williams

Noah Harris and Clarence Williams

Noah Harris  
Noah Harris, Director of the Veterans Business Outreach Center (VBOC) was given the CRA Panther Award by CRC Board member and President of California Capital, Clarence Williams. Under the leadership of Mr. Harris, the VBOC has been an aggressive advocate for veteran entrepreneurs. The VBOC provides entrepreneurial services including: business training, counseling and mentoring, and referrals for eligible veterans considering starting a small business. One out of twenty Californian veterans lives in Sacramento County and many of them are seeking to start a business. VBOC is dramatically reaching out and offering opportunities for them.

Paul Ainger and Steve Toal

Paul Ainger and Steve Toal

Lao Khmu Association
Paul Ainger, CRC Board member from the Rural Community Assistance Corporation gave the CRA Panther Award to Steve Toal, Director of the Center for Employment Opportunity at the Lao Khmu Association (LKA). LKA has been serving San Joaquin County for more than a quarter century. It grew from a volunteer association of Lao and Khmu residents that banded together to address the needs of their small community in Stockton, to a center for all Southeast Asians. LKA recently opened its Refugee Resource Center to provide translation, mediation, and advocacy programs for refugees. LKA is a critical provider of social services for Southeast Asians through empowerment, capacity building, social work, and community health programs.

Lao Khmu Association

Lao Khmu Association

Thanks to all those who turned out and all those who sponsored the event for making it a wonderful evening and celebration of community.

Clarence Williams, Selma Taylor, Stephon Taylor

Clarence Williams, Selma Taylor, Stephon Taylor

Thomas Kingsley and Ilene Jacobs

Thomas Kingsley and Ilene Jacobs

Kevin Stein with guests, including Al Rowlett, Renee McRae and others

Kevin Stein, Al Rowlett, Renee McRae, Cynthia Doeve, Marva Martin and others

Visionary HomeBuilders Crew, including Kristine Williams, Myla Manzo, Chris Ramirez. Also, Tom White from Bank of the West

Visionary HomeBuilders Crew, including Mellody Lock, Kristine Williams, Myla Manzo, and Chris Ramirez. Also, Tom White from Bank of the West

CRC Staff

PacWest Acquisition of CapitalSource: California Community Groups Urge Federal Reserve and FDIC to Hold Hearings

CapitalSource Being Acquired by PacWest

California- October 4, 2013–A group of community organizations, led by the California Reinvestment Coalition (CRC), has requested that the Federal Deposition Insurance Corporation (FDIC) and Federal Reserve postpone Pacific Western Bank’s (PacWest) acquisition of CapitalSource Bank. Citing a long list of concerns, the organizations are pressing regulators to hold hearings about the acquisition, extend the public comment period, and impose CRA conditions before the merger can move forward. If the acquisition is approved, the new bank would be the 9th largest in the state, with over $15 billion in assets, and 96 branches in 14 counties stretching from San Francisco to San Diego.

However, community leaders cited a number of concerns to regulators during the comment period which ended on September 24 (FDIC) and September 30 (Federal Reserve).

PacWest’s Poor Community Reinvestment Act (CRA) Evaluations: PacWest’s CRA activities are well below CRC benchmarks for what constitutes good CRA performance. While it is rare for regulators to give a “Low Satisfactory rating,” PacWest received a “Low Satisfactory” rating for each of the Lending, Investment and Service tests in its most recent CRA evaluation. In contrast to other large California banks, the bank does not have Minority-Owned, Women-Owned, or Disability-Owned Business Enterprise program that would create opportunities for these businesses.

Sharon Kinlaw, Interim Director of the Fair Housing Council of San Fernando Valley, urged regulators to give their full attention to the merger: “It appears that CRA activities aren’t a priority for PacWest, which is why we’re urging the FDIC and Federal Reserve to seek community input and make their approval contingent on a plan for the bank to improve its CRA activities.”

In comparison to PacWest, CapitalSource (the bank potentially being acquired) has received “Outstanding” CRA evaluations. Community leaders are concerned that CapitalSource’s strong tradition of investing in communities could be stopped if the bank acquisition is approved.

Glenn Hayes, President and CEO of NeighborWorks Orange County, explained that CapitalSource has been a leader in the communities where the bank is located: “CapitalSource is a consistent community partner, with staff members serving on boards of local nonprofits, providing grants to local organizations, and being a CRA leader at the local level. Unless the regulators require PacWest to strengthen its CRA activities, we’re deeply concerned the bank may end the strong partnerships that CapitalSource worked to create in our communities.”

Allen Baldwin, Executive Director of the Orange County Community Housing Corporation, suggested that regulators consider the impact of the new, larger bank on communities. “For me, this is a no-brainer. If you want to do business in our communities, then it’s important that you reinvest in neighborhoods, for example by providing capital for affordable housing, or lending to small businesses. Based on what we’ve seen from other banks, PacWest has a ways to go before we’d consider them a strong community partner, which is why we’re asking regulators to hold hearings. PacWest has seen value in CapitalSource and some of that value has been created by its very strong CRA programs; programs that should be cloned by PacWest.”

Pac West Bank either doesn’t have plans to improve its CRA performance or won’t disclose it: The California Reinvestment Coalition and ten of its member organizations met with bank leaders in September 2013 to discuss the bank’s plans to meet requirements under the CRA. However, PacWest representatives balked at offering any public plans on how the newly merged bank would meet CRA requirements.

Kevin Stein, Associate Director at the California Reinvestment Coalition, explained: “Instead of rubber-stamping this deal, we think federal regulators should put CRA conditions on this merger so that the newly merged bank doesn’t leave low and middle income communities behind.”

CRC’s additional concerns about the merger include:

• Overlapping branches: PacWest has identified 15 “overlapping” branches, which could lead to bank closures.
• Fresno, Kern, Kings and Tulare counties would be included in the new bank’s assessment area, yet it remains unclear how and if the bank would serve these rural areas.
• PacWest has traditionally relied on making small business loans to businesses with over $1 million in revenue, leaving smaller businesses without access to these loans.

Additional Materials:PacWest 2010 CRA Community Reinvestment Act Performance: LINK
Letter submitted by CRC to Regulators: LINK