Six Reasons the Narrative of Complaints Should be Included in the CFPB Complaint Database

Editor’s note: CRC submitted a copy of the letter below in support of the Consumer Financial Protection Bureau adding complaint narratives to the CFPB’s complaint database.

September 22, 2014
The Honorable Richard Cordray
Director, Consumer Financial Protection Bureau
1700 G Street N.W.
Washington, DC 20552

Re: CFPB Complaint Narrative Comments, Docket Number: CFPB-2014-0016

Dear Director Cordray,

The California Reinvestment Coalition represents about 300 community based non-profit and social service agencies across California that serve low and moderate income communities, including communities of color, immigrants, women, and rural communities. While our members work directly with households and small businesses to protect against financial losses such as foreclosure and to build financial capabilities and assets, CRC advocates for reforms among financial services providers and their regulators that will lead to better access to affordable, high quality financial products and practices.

We write today in strong support of the bureau’s proposal in this docket to expand the highly successful Public Consumer Complaint Database to include narrative fields.

Currently, consumers that submit complaints know only that their complaint will be seen by the company about which they are complaining. There is no assurance that anyone at the CFPB will read it, follow up to ensure a meaningful response, or use the consumer’s experience to pursue a regulatory of enforcement action. As a result, companies can freely provide pro forma responses that do not actually address the consumer’s concerns. After all, no one but the complainant is likely to see or respond to the company’s action. An inadequate response to a complaint can leave a consumer completely out to dry, left to pursue the issue outside of the CFPB or any regulatory arena, in favor of other forums where the court of public opinion reigns such as Facebook or Twitter, or, if they have the resources to do so, pursuing private legal action. While that consumer may achieve her goals, all information about that interaction is lost to other consumers and regulators.

We encourage the CFPB to add more detailed information to the database, including complaint narratives, detailed complaint categories and subcategories, complaint resolution details, consumer dispute details, and data regarding membership in classes protected from discrimination by law. We support using technology to both give consumers the right not to provide details, using technology to scrub identifying information, and taking steps to prevent the release of personally-identifiable information or the re-identification of consumers. It is critical that the bureau achieve the disclosure of more individual complaint details while simultaneously making every reasonable effort to protect personal data. Finally, we also support allowing financial institutions to provide a reply narrative and making this available to consumers, researchers and other firms.

By allowing consumers to publish the content of their complaints, and institutions to publish response narratives, the CFPB will dramatically help level the playing field on which consumers engage with financial institutions in several ways:

  1. With access to greater detail about others’ experiences with a financial service provider, consumers can make more informed decisions about which companies to work with.
  2. Consumers that submit complaints will know that they are helping others by publishing their experience, not merely submitting a complaint in hopes of solitary relief or potential enforcement or regulatory action by the CFPB that they may never know about.
  3. The CFPB, consumers, researchers and financial institutions alike will be able to better identify bad practices in need of reform as well as effective responses to complaints and other good practices.
  4. Researchers and regulators will be able to more quickly and accurately identify practices that can lead to system wide crises.
  5. Knowing that complaint information and resolution can be made public, providers are more inclined to provide better responses to complaints submitted rather than pro forma responses that may never be seen by anyone other than the complainant.
  6. More consumers will use the database before, during and after their engagement with a services provider, yielding more data that can help the industry improve products and services.

We also urge the CFPB to expand their proposal to allow consumers to update their complaint narratives. This will ensure that important information is not lost, such as whether the complaint was adequately addressed or if new related issues have come up. Such new information can be identified as dated “updates” to the original complaint.

Sincerely,

Andrea Luquetta, Policy Advocate

 

Learn How Wall Street and Cash Investors Are Outbidding First Time Homebuyers, Displacing Tenants, and Changing Local Communities  

Bloomberg Picture of REO

Cropped version of Bloomberg News graphic of REO to Rental. See the full picture here: http://www.bloomberg.com/infographics/2013-12-20/blackstones-big-bet-on-rental-homes.html

Have you been following the news about the approximately 200,000 homes that Wall Street investors have purchased to create portfolios and then securitized the income and sell bonds?  Does that sound alarmingly familiar to the “create portfolios of mortgages and securitize the payments and sell bonds” profit scheme that brought our economy to its knees?  Are you also worried about the impact this is having on communities?

If so, tune into The Power is Now show on September 23rd at 8:30AM to hear host Eric Lawrence Frazier, MBA as he discusses this issue with two experts.  Click on this link to hear the show and join the conversation.

Maeve Elise Brown is the executive director of Housing and Economic Rights Advocates (HERA), a nonprofit law firm in Oakland, California.  Kevin Stein, associate director of the California Reinvestment Coalition, a nonprofit coalition that advocates for better access to banks.

They will discuss how all-cash investors have elbowed first-time homebuyers out of the market, displaced long-term tenants, and changed the fabric of local communities.

If you’re interested in learning more about this problem and what possible solutions are, check out the resources below.  The letter below was drafted by Maeve Elise Brown at HERA and Kevin Stein at CRC, with input from other allies and CRC members.  The letter outlines the problems created by the REO to Rental scheme, how the government is exacerbating the problem through mass sell-off’s of delinquent mortgages to investors, and how the problem could be addressed by regulators and policymakers.

80 Organizations Ask Federal Gvt. to Address Investor Cash Flooding Into Neighborhoods

Regulators Should Act Now to Protect First-Time Homebuyers, Renters, and Communities

March 4, 2014-California: Eighty organizations are calling on federal regulators to address first-time homebuyers being outbid, tenants being displaced, and neighborhoods undergoing dramatic changes as private equity and investor cash continues flooding into local housing markets, buying up homes. These problems have been worsened by banks withholding REOs from the market and federal housing agencies conducting bulk sales of foreclosed homes and distressed mortgages. One portfolio of single-family rental homes was securitized this fall, though both Fitch Ratings and Standard and Poor’s refused to grant AAA ratings to the securitization, citing numerous uncertainties with this new business model.  Read the rest of the press release here.

 Some more recent press coverage you might be interested in:

Another Shadow in Ferguson as Outside Firms Buy and Rent Out Distressed Homes (NYT: Sept. 3, 2014)

Federal Program Helps Keep Some Delinquent Borrowers in Their Homes (NYT: Sept. 2, 2014)

And press coverage about the letter signed by 80 organizations, urging regulators to act now:

 

Game of Homes The letter sent by 80 organizations expressing concerns about issues with private equity landlords is cited.  Rebecca Burns, Michael Donley, and Carmilla Manzanet. In These Times. March 31, 2014.

Single-family rental home giants form trade group in Washington The letter sent by 80 organizations to federal regulators, including HUD, SEC, CFPB, OCC, Federal Reserve, and FHFA about issues created by private equity and other investors is cited. Tim Logan. Los Angeles Times. March 26, 2014.

Consumer groups seek bond oversight The letter sent to 80 regulators about single family homes being purchased by private equity firms and other investors is cited. Yahoo Finance Australia. March 24, 2014.

Blackstone’s Home Buying Binge Ends as Prices Surge: Mortgages The letter signed by 80 organizations expressing concerns to national housing and bank regulators is cited. John Gittelsohn and Heather Perlberg. Bloomberg. March 14, 2014.

Ninja loans reborn in similar form The concerns outlined by 80 organizations about private equity and investor landlords is cited in this article.  Kevin Stein from the California Reinvestment Coalition is interviewed, as is Maeve Elise Brown, from Housing and Economic Rights Advocates.  Radio New Zealand News. March 10, 2014.

Could a Wall Street firm be your landlord? The letter sent by 80 nonprofit organizations to federal regulators is cited on a show that also includes an interview with Representative Mark Takano about his concerns with the REO to rental model.  A new report from the Center for American Progress about rental securitizatoin is also featured. Ari Melber. The Melissa Harris-Perry Show. March 9, 2014.

First-Time Buyers Being Shut Out In Growing Numbers First-time homebuyers are prevented from purchasing homes when they are forced to compete with all-cash investors. The letter from 80 organizations to the SEC, HUD, CFPB, Federal Reserve, OCC, and FHFA is cited. Mike Wheatley. RealtyBizNews. March 7, 2014.

Want to buy a foreclosure? You may have to compete with a hedge fund Maeve Elise Brown, Executive Director at Housing and Economic Rights Advocates (HERA), outlines the concerns housing advocates have with private equity groups and other investors purchasing large numbers of single family homes.  Brown cites a letter sent by 80 organizations to federal regulators, asking for their assistance in addressing the impacts on tenants, homeowners, and communities. Mark Huffman. ConsumerAffairs. March 6, 2014.

Shut Out of the Housing Market? First-Timers Dwindle The letter sent by 80 organizations to federal regulators is cited. RealtorMag. March 6, 2014.

REAL ESTATE: Where are the boomerang buyers? A letter that 80 organizations sent to the SEC, HUD, CFPB, Federal Reserve, OCC, and FHFA is cited.  The letter calls on regulators to address the impact of private equity firms and other investors flooding into local housing markets and buying up homes. Debra Gruszecki. The Press-Enterprise. March 5, 2014.

Housing Activists: Rental-Property Bonds Might Herald Next Housing Bust The letter outlining concerns by 80 organizations about investor and private equity money pushing out first-time homebuyers, displacing long-term tenants, and changing communities is cited. Dan Weil.MoneyNews. March 5, 2014.

Regulate Wall Street home buying, consumers plead Eighty organizations signed onto a letter, expressing concerns about the impact on first-time homebuyers, long-term tenants, and communities as private equity and investors purchases large numbers of homes with the intention of securitizing the rents from these single family homes. Kim Miller. The Palm Beach Post. March 5, 2014.

78 Groups Urge Scrutiny of Wall Street Cash in Local Housing Markets The letter sent by the California Reinvestment Coalition, Housing and Economic Rights Advocates, and 78 other organizations is cited at approximately 14.25 into the program. Amy Goodman. Democracy Now. March 4, 2014.

California advocates want to put the brakes on REO-to-rental A letter sent by 80 organizations to the SEC, HUD, CFPB, Federal Reserve, OCC, and FHFA outlining concerns about private equity groups and investors buying up homes is cited, as are specific concerns and recommendations to the regulators. Trey Garrison. HousingWire. March 4, 2014.

Wall Street Has Found Its Latest Dangerous Financial Product, Activists Warn A letter sent by the California Reinvestment Coalition, Housing and Economic Rights Advocates, and 78 other organizations is cited.  In the letter, the nonprofit organizations ask federal regulators for help with investor and private equity cash pushing out first-time homebuyers, displacing long-term tenants, and changing communities. Benjamin Hallman and Jillian Berman.HuffingtonPost Business. March 4, 2014.

 

Community Letter to John Thain (CIT Group) and Joseph Otting (OneWest Bank)

Editor’s note: The letter below was sent to the CEOs of OneWest Bank and CIT Group, two banks who have proposed to the Federal Reserve to merge.  The California Reinvestment Coalition and its members and allies are concerned about the proposed merger and outline these concerns in the letter below:

 

September 16, 2014

Joseph Otting

OneWest Bank

 

John Thain

CIT Group

 

Dear Mr. Otting and Mr. Thain:

This letter is meant to suggest a framework for discussing how a combined OneWest/CIT Bank could effectively meet community credit needs by developing a strong and public Community Benefits and Reinvestment Plan with commitments proportional for a bank of its prospective size.

The California Reinvestment Coalition (CRC), based in San Francisco, is a nonprofit membership organization of over three hundred (300) nonprofit organizations and public agencies across the state of California. We work with community-based organizations to promote the economic revitalization of California’s low-income communities and communities of color. CRC promotes increased access to credit for affordable housing and community economic development, and to financial services for these communities.

We believe that strong partnerships with local community organizations, coupled with a strong Community Benefits and Reinvestment Plan that provides a roadmap for the bank’s planned CRA activity specifically geared to Southern California’s low and moderate income communities and communities of color, are essential components to the overall success of the bank’s CRA program and to its acceptance in the community.

We offer the following recommendations in the spirit of CRC and its members working to identify community needs and the appropriate reinvestment benchmarks for a bank of your size.  CRC and its members urge the Bank to agree to a 5 year Community Reinvestment and Benefits Plan that the Bank would file with the Federal Reserve Board as a supplement to your application. Plan components include:

  • The bank will set annual goals for total CRA activity (in the areas of lending, community development investing, contributions and financial services) that exceed 25% of California deposits.
  • The bank will devote at least .30% of deposits annually towards community development investments.  These community development investments could include affordable housing development, small business lending, and equity equivalents to California CDFIs, CDC’s and other non-profit community development funds. No more than half of community development investments should be for tax credits or mortgage backed securities. The bank should set a subgoal for community development investments targeted to affordable projects at or near transit stops that are being developed in LMI communities, and actively provide both residential and commercial loan products that inspire affordable developments.
  • The bank will set aside an initial $30 million philanthropic fund for community and economic development activities that target small businesses and families still hurting from the economic recession. Additionally, starting in year one, the bank will devote at least .030% of deposits annually towards contributions.  Of this amount, 60% or more will be towards housing and economic development activities that support low/moderate income people including organizations providing technical assistance to small businesses, fair housing or mortgage counseling, affordable housing development, and other similar activities.
  • The bank should commit at least 1% of deposits for community development lending that supports the construction and rehabilitation of housing that is deed restricted as to be affordable to very low, and low income households.
  • The bank should develop a one stop construction to permanent loan product for multi-family housing finance.
  • The bank should develop a line of credit for nonprofit housing developers to enable them to acquire properties, including REOs, for the benefit of borrowers, including low to moderate income first time homebuyers.
  • The bank will designate at least one staff person who will work with nonprofit groups representing homeowners seeking to secure loan modifications and/or Keep Your Home California program benefits.
  • The bank will develop a policy to prefer nonprofits and owner occupants in the sale of distressed loans and REO properties.
  • The bank will make available affordable mortgage loan products with flexible underwriting guidelines for families earning less than 120% AMI adjusted for family size. The bank should allow nonprofits, CDFIS and other affordable mortgage loan providers to become brokers through all of its distribution channels.
  • The bank should originate SBA loans to borrowers of color at a percentage that approximates their representation among businesses in the Bank’s assessment or service area, and continue to offer loans in smaller loan sizes.
  • An annual goal of half of the number of CRA-qualified small business loans shall be to businesses with annual revenue of less than $1 million or consist of loans less than $150,000 excluding credit card loans. Small business lending in LMI census tracts should approximate the % of businesses located in LMI census tracts with the bank’s assessment area.
  • The bank should develop a small business loan and technical assistance referral program so that businesses unable to qualify for small business loans from the bank can be referred seamlessly to local CDFIs and other nonprofit providers that may be able to make the loan and/or provide technical assistance in order to help borrowers better prepare themselves to qualify for conventional financing.
  • The bank will participate in the state’s small business Loan Guarantee Program.
  • The bank will develop a strong MWDBE vendor program and set a goal of 30% sourceabale spend, with at least 20% spending with MBE contractors.
  • The bank will ensure that CalWORKs recipients accessing their funds using Electronic Benefits Transfer cards will not be assessed a fee at OneWest/CIT Bank ATM machines.
  • The bank will develop a bank account that complies with CRC’s Safe Money standards.
  • The bank will commit that 30% of new branches established outside of a merger will be located in LMI census tracts.
  • The bank will sign the Plan, make the Plan public and file it with its application to merge.
  • The bank will meet annually with CRC and its members to report on progress in meeting the commitments in its CRA Community Benefit and Reinvestment Plan.
  • The bank will strive to have a diverse workforce that reflects the bank’s customer base.
  • The Bank will commit to having at least one representative from the Latino, Asian American and Pacific Islander, and African-American community on its board of directors within 3 years.

With a strong CRA plan in place, CRC and its members are willing and ready to work with the bank to further the bank’s CRA and overall business objectives.

We look forward to discussing this proposal with you further when we meet in September.  If you have any questions or would like to discuss further, please call Kevin Stein at (415) 864-3980.  We look forward to the ongoing dialogue on behalf of California communities.

Sincerely,

Affordable Housing Clearinghouse

ASIAN Inc.

Asian Pacific Islander Small Business Program

Asian Pacific Policy & Planning Council (A3PCON)

Business Resource Group

California Housing Partnership

California Reinvestment Coalition

California Resources and Training (CARAT)

CAMEO

Community HousingWorks

Community Housing Development Corporation

Community Housing Improvement Program (CHIP)

Consumer Action

East Los Angeles Community Corporation

Fair Housing of Marin

Greenlining Institute

Housing and Economic Rights Advocates

Housing Rights Center

Inland Fair Housing and Mediation Board

Korean Churches for Community Development

LA Voice

Los Angeles Local Development Corporation

Multi-Cultural Real Estate Alliance for Urban Change

Neighborhood Housing Services of Los Angeles County

Neighborhood Housing Services of Silicon Valley

NeighborWorks Orange County

Northbay Family Homes

NPHS, Inc.

Pacific Asian Consortium in Employment (PACE)

Public Counsel

Renaissance Entrepreneurship Center

Sacramento Housing Alliance

Strategic Actions for a Just Economy (SAJE)

Suburban Alternatives Land Institute

Valley Economic Development Corporation

Women’s Economic Ventures

 

Payday Lending Reform Strategy Convening, Los Angeles, 10/10/2014

Los Angeles convening on federal options for reforming payday lending, via the Coalition Against Payday Predators.

Coalition Against Payday Predators

LA Payday Convening invitationPlease join a broad coalition of Southern California-based anti-poverty, Labor, legal services, advocacy, social services, and consumer rights leaders to discuss the achievable local, state-level, and federal options for reforming predatory payday lending.

More information about the Convening here.

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New Study Finds Banks Maintain Foreclosed Homes Worse in Communities of Color

Oakland Picture

A bank-owned home in Oakland that was photographed as part of new study.

Fair Housing of Marin (FHOM), the National Fair Housing Alliance (NFHA), and 16 fair housing centers released a report earlier this week detailing racial disparities in maintenance of bank-owned and Fannie Mae-owned foreclosures in 30 metro areas nationwide. FHOM investigated the Vallejo area and FHOM and NFHA investigated the Richmond and Oakland areas.

The investigations took into account over 30 different aspects of the maintenance and marketing of each property. REOs in communities of color were 2.6 times more likely to have 10 or more deficiencies than REOs in White neighborhoods (32.0% vs. 12.4%).

In the areas that FHOM investigated, REOs in communities of color were

  • 2 to 3 times more likely to have trash accumulated on the premises than REOs in White neighborhoods;
  • about 2.5 times more likely to have unsecured, broken, or boarded windows or have a trespassing or warning sign than REOs in White neighborhoods;
  • about 2.5 times more likely to have a trespassing or warning sign versus REOs in White communities.

To read the full press release about the report and its troubling findings, visit the Fair Housing of Marin website: Investigations of Bank-Owned Properties Uncovers Discrimination

To read the full report, visit this link: http://bit.ly/reo2014

 

 

Banc of California Announces Community Benefit Plan

The California Reinvestment Coalition is happy to announce that Banc of California has developed a community benefit plan as part of its acquisition of the 20 Banco Popular branches in Los Angeles and Orange Counties.  To view the plan, visit this link: Banc of California Community Benefit Plan.

To view a press release about the plan, visit CRC’s website: Press Release: Banc of California Community Benefit Plan

To stay up to date on financial justice issues in California, especially as they relate to low income communities and communities of color, you can follow the California Reinvestment Coalition on our Facebook page, via TwitterGoogle+, watch our movies on our YouTube Channelsign up to receive our newsletter and action alerts, and of course, visit our website.