Bet Tzedek Testimony at OneWest CIT Group Merger Federal Reserve Hearing

The testimony of Rachel Mehlsak, attorney with Bet Tzedek, about the proposed OneWest and CIT Group merger is featured in its entirety below. If you were unable to attend the hearing, CRC live-blogged it here and you may also find our CIT Group/OneWest Merger resource page helpful as well. Pictures are available here.

CIT Group/OneWest

JOINT PUBLIC MEETING

Held by the Federal Reserve and the Office of the Comptroller of the Currency

February 26, 2015

Good morning.  My name is Rachel Mehlsak, and I’m an attorney at Bet Tzedek Legal Services in Los Angeles.  Bet Tzedek pursues equal justice for all by providing free legal services to low-income, disabled and elderly people of all racial and religious backgrounds. We use direct legal services, impact litigation, community outreach and legislative advocacy in the areas of consumer rights, employment rights, elder law, Holocaust reparations, housing, public benefits and real estate to serve more than 20,000 people every year.

Bet Tzedek is also the lead agency of the California Consumer Justice Coalition – a group of five legal aid agencies in Southern California funded by the California Attorney General with proceeds from the National Mortgage Settlement.  The Coalition provides legal services and housing counseling to individuals facing foreclosure and other consumer debt issues.

As part of my work in Bet Tzedek’s real estate unit and through the Coalition’s foreclosure prevention efforts, I’ve worked with many homeowners, mostly seniors, trying to save their homes from foreclosure.

My colleagues and I have seen firsthand the distress caused by OneWest Bank in its rush to pursue foreclosure, particularly against elderly clients with reverse mortgages serviced by its Financial Freedom division.  One elderly Bet Tzedek client was threatened with foreclosure by Financial Freedom for not making repairs to her home.  But the client’s original lender, IndyMac, had refused to release the funds that were set aside for the repairs, effectively preventing the client from making the repairs and then punishing her for not doing it.  Moreover, Financial Freedom had let the client’s affordable hazard insurance lapse, and then force-placed her with a OneWest-affiliated company at an exorbitantly higher rate.

Another client I worked with had lived in her home for over 40 years.  She is elderly, disabled, and supports her daughter and four minor grandchildren on just her monthly Social Security income.  After her husband died, she had trouble maintaining her property tax payments, and OneWest, the parent company of her reverse mortgage lender, Financial Freedom, threatened to foreclose.

Eventually, OneWest initiated foreclosure against the client’s home one month sooner than HUD guidelines required.  OneWest did so even though HUD had just announced a 60-day extension of its foreclosure timeframes for surviving spouses like my client and even though I had asked Financial Freedom multiple times to postpone the foreclosure proceedings.  I was able to help the client obtain a one-month extension of the foreclosure – an outcome she wouldn’t have received without representation – but ultimately OneWest went through with the foreclosure sale.  Three generations of my client’s family were kicked out of their home for less than $1300 owed to Financial Freedom.

Bet Tzedek’s name is a reflection of its mission – the pursuit of justice.  We think it would be particularly unjust to the clients and communities we serve to permit the CIT/OneWest merger to proceed without a much stronger, comprehensive, and public CRA commitment.  These banks are receiving tremendous financial support through public subsidies and guarantees.  It is only just that they make a substantial reinvestment commitment to the communities from whom they’ve already taken so much before they are allowed to grow even bigger and take even more.

Thank you.

One thought on “Bet Tzedek Testimony at OneWest CIT Group Merger Federal Reserve Hearing

  1. Pingback: California Reinvestment Coalition | Surviving Heirs Testify About Their Experiences with Financial Freedom and OneWest Bank Foreclosures

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