California Car Title Lender Hall of Shame

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.

Car Title report

Similar to payday loans, car title loans also generate a LOT of complaints- and create a lot of financial damage for consumers who use them.  In fact, new research from the Consumer Financial Protection Bureau finds that 1 in 5 car title loans will ultimately result in the borrower having their car repossessed. As Liana Molina, director of Community Engagement at the California Reinvestment Coalition commented: “At least car thieves don’t take half your income before stealing your car.”

The compilation below is similar to our Payday Lender Hall of Shame. We’ll be adding in stories about predatory car title lending below.

If you haven’t yet, you’ll want to weigh in on the CFPB’s new proposal to more strongly regulate payday, car title, and installment lenders. We have a website where you can do it: CFPB Comments.   We know the industry will be submitting a lot of comments about protecting their profits (at the expense of consumers), so it’s important the CFPB hear from you!

Beware of Payday Loan Wolves My husband and I scrambled to call banks, lawyers, and anyone we thought could help save this family’s house. Unfortunately, we were too late. The home had been foreclosed on and sold, and now she was about to lose her car, which she needed to get to work every day. We decided to go with her to the store to see if we could help, but there was nothing to be done. The lender that offered her help in her time of need set her up to fail.  June 30, 2016.

Borrowing with auto title loan puts vehicle at risk Liana Molina explains that in comparison to shady car title lenders, at least car thieves don’t take half your income before stealing your car. Newsday. Sheryl Nance-Nash.June 11, 2016.

“A few days later, this headline appeared in Utah: Pleasant Grove woman dies in crash while fleeing repo man, police say. The article explains: “Ashleigh Holloway Best, 35, was estimated to be traveling at least 70 mph on a 35 mph road when she smashed into a tree about 12:20 a.m. at 682 N. 100 East. She had to be extricated from the vehicle and was pronounced dead at the scene, said Pleasant Grove Police Lt. Britt Smith.” Why was she travelling this fast? She was being pursued by a repo man, who was trying to repossess her car on behalf of TitleMax, a car title lender.” Daily Kos: Predatory Lending is Literally Killing People (May 26, 2016)

“Like the idea of paying triple-digit interest rates on a loan, forking out more dough in additional fees and watching the repo man tow away your car? Auto title lenders have got just the thing.” CBS MoneyWatch: Another loan to steer clear of (May 18, 2016)

How does the debt trap work?  Watch this PBS NewsHour episode about T.J. McLaughlin, who had to take some time off work after a medical problem.  Short on money for bills, he borrowed $1,200 from a car title lender (North American Title Loans), at 300% interest rate.  But when he lost his job and was unable to make the payments on this loan, they took his car.

Inside One Family’s Financial Freedom Reverse Mortgage Nightmare

The testimony of Julie Cheney, a surviving family member of a OneWest reverse mortgage borrower, 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 of the rally against the merger are available here.

TESTIMONY OF JULIE CHENEY

PUBLIC MEETING FEBRUARY 26, 2015, 8 AM to 4 PM

FEDERAL RESERVE BANK, LOS ANGELES BRANCH

My name is Julie Cheney, I live in Simi Valley California and I am a computer programmer.

Thank you for the opportunity to testify today.  My testimony is in opposition to the proposed merger of OneWest Bank (OWB) and CIT Financial.

I was a Successor Trustee of my parents Trust when they were sold a Financial Freedom reverse mortgage they didn’t need, while my dad was in the last month of his life, with terminal cancer, on narcotic pain medication, and my mother had Alzheimer’s disease and could not complete a sentence.

A month after dad’s death we found the Financial Freedom loan docs and learned my parents received a lump sum of $80,000 that sat untouched in their bank account.

The nightmare began when we tried to give the money back to OneWest Bank 3 times over the course of a year after dad’s death.  OWB refused each time.

OneWest Bank knowingly and wrongfully foreclosed on our property 3 times.

The 1st Notice of Default (NOD) in 2010 falsely claimed mom didn’t occupy the property as her primary residence when OneWest Bank had verified evidence she did.  This NOD was rescinded with HUD intervention.

The 2nd NOD in 2012 cited the same 2010 occupancy default letter.

On the 2nd defective NOD we appealed to the court for an injunction and OneWest Bank voluntarily agreed to rescind the 2nd NOD.

The day the 2nd NOD was rescinded a third NOD was recorded concurrently.  OneWest Bank cut off all communication with us.

Finally, we received a letter from Gail Balettie Sr. VP of Reverser Mortgage Operations acknowledging our intention to retain the property but demanding certified funds within the 2 business days before the scheduled auction.  The payoff included an unverified loan balance, unauthorized legal fees and other foreclosure related fees for OWB’s 3 wrongful foreclosures.

Our property was wrongfully auctioned by OneWest Bank April 2, 2013

Over 8 years from 2005 to 2013 OneWest Bank:

Recorded false documents with the county recorder

Refused to accept annual occupancy certificates because they were not “certified” by a notary

Violated our HUD rights & all attempts to retain the property

Failed to provide a Single point of contact

Inflated an appraisal in order to prevent us from exercising the 95% option

Charged unauthorized legal, service and foreclosure related fees to the loan payoff

Wrongfully auctioned our property

All violations of federal regulations, consumer rights and protections were knowingly directed from the Senior Vice President level or higher.

 

Why Are Advocates Opposing the OneWest and CIT Group Merger?

Editor’s note: When the Federal Reserve and Office of the Comptroller of the Currency announced they were holding a public hearing on the proposed merger of OneWest Bank and CIT Group, the regulators also extended the comment period on this merger.  CRC’s fifth letter, outlining why CRC continues to oppose this merger, is included below.  For earlier letters, visit our Merger Resource page.  To see pictures from a rally held during the hearing, click here.

February 24, 2015

Re: CRC’s 5th comment letter: Continuing opposition to CIT Group application to acquire IMB and OneWest Bank and to merge OneWest and CIT Bank

 Dear Chairs Yellen and Gruenberg, Directors Watt and Cordray, Comptroller Curry, and Secretary Castro,

The California Reinvestment Coalition writes this fifth comment letter expressing our continuing opposition to the proposed acquisition of IMB and OneWest Bank (OWB) by CIT Group. OneWest has not met, and will not meet, community credit needs, and the Applicants have not established that this merger will provide a public benefit.

This letter is written to provide additional information for the public record, to inform the deliberations of the FRB and OCC, and to raise continuing concerns about the negative impacts of OneWest Bank on California communities.

The California Reinvestment Coalition (CRC), based in San Francisco, is a non-profit membership organization of community based non-profit 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 through access to equitable and low cost financial services. CRC promotes increased access to credit for affordable housing and community economic development, and to financial services for these communities.

Continuing unanswered questions: HUD FOIA Request

As noted previously, there are still many unanswered questions regarding this merger and these institutions. CRC still awaits a substantive response to our FOIA request to HUD to gather information about HUD’s oversight and policies relating to reverse mortgages, and the servicing practices of Financial Freedom in particular.

Specifically, we have sought basic information about the number, nature and resolution of complaints filed by consumers with HUD against Financial Freedom. We have also sought data on the number of foreclosures processed by Financial Freedom since OneWest took over ownership, including the number of such foreclosures processed against non-borrower surviving spouses, as well as the number of loans being serviced by Financial Freedom where a younger spouse was not listed on the loan and is therefore at risk of foreclosure.

If the FDIC, OCC, or Federal Reserve consumer complaint departments would like to share data on complaints they’ve received (as consumers aren’t always aware which regulator to turn to), then we would welcome that transparency.  We note that in the cases of Michelle Ayers and her sister Mary Dambacher, from North Fort Meyers, Florida- (surviving family members who encountered a host of servicing issues with Financial Freedom), they report being sent on a wild goose chase- not just by Financial Freedom, but also by the regulatory agencies where they sought help.  They started at HUD, where they were referred to a housing counseling agency, which couldn’t help because the loan was a reverse mortgage, then referred to the Florida Office of Financial Regulation which referred them to the OCC, which then directed them to the CFPB.

This FOIA request seeks information that must be considered by the banking regulators in order to determine whether OneWest bank is meeting the credit needs, and the convenience and needs, of its communities. How can the Federal Reserve and the OCC determine that OneWest is meeting the needs of its communities if it does not know how many foreclosures were processed by OneWest and its affiliates? This information should be part of the public record.

And yet, our FOIA request has been stalled as HUD has chosen to deny our request for a fee waiver on the grounds that CRC has a “commercial interest” in the information. This is difficult for our nonprofit organization to understand and accept. This denial and the delay in releasing the FOIA requested data merely add to the sense that with regard to this merger, there is something to hide, and the regulators, rather than increasing transparency for communities, are making details of this merger more opaque.

Bank supporters and opponents

 CRC wishes to supplement the public record to reflect that OneWest’s CEO has sought support from his Wall Street contacts and business partners in order to tout his message regarding his own management performance and desire not to have public hearings.

A few weeks ago, Bloomberg reported that OneWest CEO Joseph Otting had emailed community groups and Wall Street contacts, urging recipients to support the bank’s application by sending a letter to Fed Chair Janet Yellen.[1]

The draft letter of support found on the OneWest website and presumably drafted under the direction of CEO Joseph Otting reads as follows:

Dear Chair Yellen, President Dudley and Comptroller Curry,

I am writing to offer my support for the pending OneWest and CIT merger. OneWest serves as a strong source of capital and banking services to the Southern California community. This merger will retain and create new jobs in California. I believe the management team and OneWest have demonstrated its commitment to our community and to serving the needs of not only their clients but the community at large and due to this, I do not believe there is a need for a public hearing.

The draft email indicates that proposed commenters “believe the management team and OneWest have demonstrated its commitment to our community and to serving the needs of not only their clients but the community at large…”

As Bloomberg reports this email went out to Wall Street contacts, CRC wonders how knowledgeable about community needs these commenters will be, and how much weight the regulators will give these comments.

Further, CRC understands that several of the “supporters” are actual business partners and employees of OneWest. How objectively can these “supporters” speak to the bank’s service to the community, and how much weight will the bank regulators give to these comments?

Similarly, certain community groups are supporting the bank in its application, and have indicated they are developing partnerships with the bank.

In the application by Banc of California to purchase Banco Popular branches, the OCC requested and Banc of California provided a public list of grants to non-profit organizations over the prior two (2) years by month, organization and amount. The regulators should request the same of OneWest Bank – that it identify, by month, the level of support to all organizations receiving grants or investments or contracts, and for what purpose, for the last 2 years. Applicant submitted somewhat similar information in a letter dated October 2014, but the information appears to be incomplete, is broken out only by year and not month, and it is unclear how far into 2014 the data go. OneWest should be required to complete this exercise through February 2015, providing, by month through February 2015, a list of all groups with which it has a funding, investing or contractual relationship since the time it began to promote this proposed merger.

And for the record, CRC notes that approximately 100 organizations from California and from around the country are opposing this merger, as well as over 21,000 individuals and counting, making this, most likely, the most opposed bank merger in history.

CRC thanks the regulators for agreeing to hold one public hearing on this merger, which we believe reflects a recognition of the extent of the opposition to this merger and the many serious issues at play.

Financial Freedom: New complaint data and continuing concerns

CRC review of CFPB consumer complaint data reveals that approximately 150 complaints were filed against OneWest noting concerns with the sub product “reverse mortgage”. This represents roughly 12% of the number of reverse mortgage complaints that CFPB analyzed in its recent study on reverse mortgages.[2] Again, these CFPB complaints are likely completely independent of any complaints field against Financial Freedom with HUD, a more logical place for consumers to complain given HUD’s oversight of HECMs. We look forward to understanding how many complaints against Financial Freedom have been filed with HUD, though given the story cited earlier in this letter, we also suspect that the number of complaints actually filed is lower than the number of people who would like to complain if they had the time, capacity, and knowledge of where to complain, and if they were directed to the correct regulator.

(Further, a recent visit to the CFPB consumer complaint database now reveals a total of 1,226 complaints filed against OneWest, significantly more than we had noted in earlier comment letters.)

OneWest’s Financial Freedom reverse mortgage servicer affiliate continues to be the subject of reports suggesting potential abuses and community harm. On January 8, 2015, Fox 4 in North Fort Meyers, Florida,  reported on the case of Mary Damacher, who chained her sister Michelle Ayers to a pipe in the home that was first purchased by their grandparents, then passed down to her mother, until Financial Freedom foreclosed on them. The sisters attempted to purchase the home, but were reportedly rebuffed in their efforts by Financial Freedom.

“I’ve been preapproved for a mortgage and had all the paperwork taken care of to repurchase the home, and basically Financial Freedom and One West Bank has refused me the right to purchase my home,” Mary said.[3]

This case, and the others cited in prior letters, raise serious questions and concerns about how well Financial Freedom is complying with existing obligations to serve reverse mortgage borrowers, surviving spouses AND, as here, heirs who have certain rights to purchase the home.

Specifically:

  • What is HUD doing to oversee Financial Freedom foreclosures with regard to borrowers, surviving spouses, and heirs?
  • Will OneWest submit any losses from this foreclosure for reimbursement under the loss share agreement? How does the FDIC determine whether loss share reimbursement submissions by OneWest reflect losses suffered only after OneWest did all it could to mitigate them, and certainly only after OneWest followed existing laws and regulations? Is the FDIC aware of any situations or cases where OneWest Bank submitted a claim for costs related to a foreclosure, but then due to legal action or legal settlements, OneWest Bank later returned the reimbursement to the FDIC, or should have reimbursed the FDIC? As an example, consider the story of the San Luis Obispo couple, where OneWest eventually offered to settle for what was reported as a “seven figure sum.”  Had OneWest already requested reimbursement for any losses on this mortgage from the FDIC?  Is the FDIC fully confident it never paid out shared loss reimbursements for faulty foreclosures like this one?
  • How does the OCC, as OneWest’s primary regulator, oversee compliance issues with regard to Financial Freedom, and how do improper foreclosures via OneWest or Financial Freedom, impacting borrowers, surviving spouses, heirs and other family members impact (if at all) the OCC’s determination as to whether OneWest is servicing its communities under the Community Reinvestment Act?
  • How will the OCC and the Fed investigate and consider improper foreclosures by OneWest and Financial Freedom in determining whether this merger, absent any substantial conditions imposed, will provide a public benefit, as required?

An audit of Financial Freedom foreclosures and other non-home retention loss mitigation outcomes is necessary. In the meantime, Financial Freedom should not be allowed to process further foreclosures without going through a “notice and objection” process whereby an independent third party can confirm that proposed foreclosures are proper. A similar structure was created by the Massachusetts Attorney General in enforcing servicing obligations by Fremont Investment and Loan.[4]

Merger Decision Should Await Next FDIC Loss Share Compliance Review:

In a letter to CRC dated February 5, 2015, the FDIC reiterates that it believes it has no authority in the approval process relating to this merger, that estimates of future payments under the Loss Share Agreement are projections and subject to change, and that OneWest “is not out of compliance” with the loss share agreement.[5]

Importantly, the letter also indicates the next compliance review is scheduled to commence in May of 2015, in approximately three months.

We urge the FDIC to conduct an extensive audit of OneWest’s performance under the loss share agreement, and to make the results of this audit public, including providing a description of the extent to which the FDIC is able to verify that all OneWest foreclosures for which OneWest seeks reimbursement under the loss share agreement could not have been avoided through the provision of a loan modification or otherwise and were the result of OneWest and affiliates fully complying with all relevant loss mitigation and foreclosure prevention laws and rules, including importantly, provisions within the California Homeowners Bill of Rights that address dual-tracking, Single Point of Contact, and other servicer practices that push people into foreclosure.

CRC continues to believe that the FDIC audit and compliance review process does not provide sufficient due diligence to ensure that all OWB foreclosures were proper and unavoidable. This is most likely also true for the foreclosure oversight currently provided by the Federal Reserve and OCC for its regulated servicers and trustees.

Further, we strongly urge the Federal Reserve and the OCC to await the results of the FDIC audit before deciding on this Application. With all of the concern that has been raised about OneWest’s foreclosure practices, including testimony that will be presented at the public hearing on February 26, awaiting the FDIC audit (and response from HUD to our FOIA request) is the only prudent course.

        Systemic Risk and lobbying

CRC has maintained that the potential failure of CIT and OneWest poses a systemic risk to the financial system under current standards.

In 2008, another entity expressed concerned about CIT failing, saying, “CIT, … its demise poses a systemic danger because that would jeopardize 760 of its manufacturing customers and cause serious harm to more than 300,000 retailers, according to Bloomberg.”[6]

The entity that held that view in 2008 was none other than CIT Group itself as it sought a rescue from the federal government. This request was turned down and $2.3 billion in TARP funds was not enough to save CIT from declaring bankruptcy and wiping out its obligation to repay TARP. Is CIT truly LESS interconnected now than it was in 2008 when its interconnectedness led to bankruptcy?  If CIT were allowed to merge with OneWest, the resulting institution would be even larger, as would the risks created for communities, and possibly taxpayers as well.

Perhaps that was then and this is now, and CIT is no longer worried about systemic risk.

But according to Center for Responsive Politics, CIT Group spent $4,920,000 over the last two years on lobbying, or more than $6,400 a day. And one of the issues CIT lobbied on most heavily was – systemic risk.[7]

We urge the regulators to tread carefully in deciding whether to approve a new SIFI comprised of two institutions that failed in the recent past, and which rely on significant public subsidy.

Circumvention of CRA: NOT reinvesting where depositors reside

CRC has long argued that depository financial institutions must reinvest where their depositors live and are sending in deposits. The CRA has been circumvented and communities have suffered from a lack of investment by institutions like Capital One, ING, Countrywide Bank, Charles Schwab Bank, H&R Block Bank, etc.

CIT Bank similarly collects deposits from throughout the country, but reinvests primarily in its Salt Lake City assessment area. It would be interesting to know what percentage of CIT Bank’s billions in deposits actually originate from Salt Lake City, and how many communities are sending in more deposits to CIT Bank than are coming from the Bank’s lone assessment area.

The proposed CITBNA’s CRA Plan went from bad to worse when it determined that ALL of its deposits, including internet deposits originating from throughout the country, would be assigned to the Los Angeles MSA.

While this might seem like a good thing for Los Angeles, such circumvention of the CRA has only hurt Los Angeles and our state in the past and will likely do so in the future.

CITBNA must reinvest in its top deposit markets, even if outside of California, and the regulators should make this so. This issue is all the more pressing in that OneWest maintains a poor branch presence in LMI communities (its 15% of branches in LMI neighborhoods is HALF the industry average in California), and promises to move towards mobile banking as a way of serving LMI communities. We do not believe this will be a successful approach, and if all mobile banking deposits are assigned to one assessment area, we do not believe this will be consistent with the CRA. A recent report by the FDIC notes that, “…there is little evidence that the emergence of new electronic channels for delivering banking services has substantially diminished the need for traditional branch offices where banking relationships are built.”[8]

One Los Angeles based leader who runs a community based organization that would stand to benefit from the Bank’s proposal to reinvest mainly in Los Angeles had the following to say about the Bank’s plan to reinvest deposits from other communities into Los Angeles:

“While we’d love the $$$ for southern California, I’m reminded of how Dorothy Richardson and her neighbors in Pittsburgh first staged a series of “sit-ins” at local banks because of the redlining in their neighborhood.  Every neighborhood matters.  Every family matters.  Out of the strength of her convictions, Dorothy succeeded and the Neighborhood Reinvestment Corporation and NeighborWorks Network were formed.  We must stand for what is right on behalf of all of our neighbors to ensure justice for everyone.  Seems fitting during Black History Month.”

Additionally, the Applicant’s proposed CRA Plan notes that it will designate only one CRA assessment area for full scope review. We note that City National Bank and East West Bank, two banks that have been identified as peers of OneWest, have three and two full scope review assessment areas, respectively. A bank as big as the proposed CITBNA should have more than one full scope review assessment area.

       Conclusion

The regulators must properly weigh the comments of supporters and opponents, scrutinize the foreclosure practices of OneWest Bank and Financial Freedom, fully analyze the extent to which this merger threatens financial stability, and require the bank to negotiate and develop a CRA Plan commensurate with its size and national deposit base, before rubber stamping this proposed merger. We believe this transaction represents a threat to financial stability with huge costs and subsidies, and no public benefit.

Thank you for your consideration of these views. Please feel free to contact me at (415) 864-3980 if you wish to discuss this matter further.

Very Truly Yours,

Kevin Stein

Paulina Gonzalez

cc:           Jan Owen, Commissioner, California Department of Business Oversight

Ivan J. Hurwitz, Vice President, FRB NY, comments.applications@ny.frb.org

David Finnegan, Office of the Comptroller of the Currency, WE.Licensing@occ.treas.gov

All COMMENTERS

[1] Matthew Monks and Elizabeth Dexheimer, “OneWest Seeks Wall Street’s Help Lobbying Yellen on CIT,” Bloomberg, January 8, 2015.

[2] The CFPB study reviewed approximately 1200 reverse mortgage complaints that were filed on its website from December 2011 through December 2104. See, Office of Older Americans, “Snapshot of reverse mortgage complaints: December 2011 – December 2014,” Consumer Financial Protection Bureau, February 2014.

[3] Lisa Greenberg, “NFM sisters chained to home to protest reverse mortgage,” Fox4, January 8, 2015, at http://www.jrn.com/fox4now/news/NFM-sisters-chained-to-home-to-protest-reverse-mortgage-287977331.html

[4] Press release, “Attorney General Martha Coakley Reaches $10 Million Settlement with Subprime Lender Fremont Investment and Loan,” June 9, 2009.

[5] FDIC Letter to CRC Re: Application by CIT Group (CIT) to purchase IMB, the parent company of OneWest Bank, National Association (OWB), and to merger CIT Bank into OWB,” February 5, 2015.

[6] Alain Sherter, “CIT Group: Too Small to Save – Or Not,” MONEYWATCH, July 15, 2009.

[7] Open Secretes, “CIT Group,” Center for Responsive Politics, at: http://www.opensecrets.org/orgs/summary.php?id=D000024786

[8] Press release, “Branch Banking Remains Prevalent Despite Growth of Online and Mobile Banking,“ FDIC, February 19, 2015.

Sandy Jolley Testimony on Abuses by Financial Freedom Reverse Mortgage Servicer, Owned by OneWest Bank

The testimony of Sandy Jolley, a reverse mortgage suitability and abuse consultant, 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.

TESTIMONY OF SANDY JOLLEY

FEDERAL RESERVE BANK, LOS ANGELES BRANCH

My name is Sandy Jolley.  I am a Reverse Mortgage Suitability and Abuse Consultant and Certified HUD Counselor. 

Reverse Mortgage servicing provides billions of dollars in revenue to OneWest Bank (OWB).  Of the 6 major loan servicers OWB holds position 1 through 5 as the worst servicer by far.

My testimony illustrates OneWest Bank’s consistent and deliberate failure to comply with Federal Regulations, State Laws, and Consumer Protections in the servicing and foreclosure practices of Reverse Mortgages.

Repayment and Single Point of Contact

The most common maturity event is the death of the borrower. The family is grieving when they get a repayment letter that is confusing, contradictory, deceptive, and frankly no consumer could understand what this letter says.

The repayment letter makes it critical to have a Single Point of Contact and Customer Support Staff trained in:

a) the regulatory requirements,

b) the maturity/foreclosure process,

c) to provide guidance, and

d) to help the consumer understand and exercise their rights and options.

All OWB documentation states a Single Point of Contact (SPOC) will guide the consumer through the process, yet as you will hear today, that is not happening.

In addition, the “customer support” representatives at Financial Freedom also:

  • Obstruct consumer efforts to repay the loan balance or the 95% option;
  • Refuse to grant HUD authorized time extensions;

Financial Freedom also:

  • Makes a legal determination on the validity of consumer documents
  • Refuse to speak to heirs without proof of legal authority.
  • Require the consumer to record their Trust – a violation of consumer privacy rights, state laws and federal regulations.

Accelerates foreclosure and auction

  • Initiate foreclosure as soon as 60 to 90 days after the death of the borrower:
  • Use State laws to violate HUD regulations to accelerate foreclosure.
  • Auction property when consumer has provided proof funding or contract for sale.
  • Charge unauthorized legal and foreclosure related fees caused by acceleration of foreclosure;
  • Claim Non-borrowing spouses have fewer rights than other heirs.

NON-BORROWING SPOUSE

The non-borrowing spouse issue is a mess and not because of the consumer.

We have all heard the commercials “A reverse mortgage is a safe government insured loan used to supplement retirement and allows seniors to stay in their homes until they die”.

No couple thinks on their own “let’s get a reverse mortgage and take one of us off title so when the other dies the survivor can be evicted.” 

This is a problem caused by HUD, by the Lender at origination and made worse by the OWB practice of accelerating foreclosure.  ML 2015-03 excludes virtually all surviving spouses from relief as evidenced by Secretary Castro’s letter in my supplemental documentation.

I urge regulators, HUD and OWB to come together in a responsible way.

Put a moratorium on foreclosures for Non-Borrowing Spouses until HUD has a policy that is a clear solution for Surviving Spouses. 

  1. I urge regulators to deny the application of OWB and Cit Financial.
  2. Investigate, audit, and review individual OWB Reverse Mortgage Loan Files:
    • for the servicing and foreclosure deficiencies I have put forward
    • to ensure compliance with existing laws and regulations and especially consumer rights.

The supplemental documentation submitted with my testimony supports the facts of my testimony.

Impacted Homeowners, LA Community Leaders Speak Out Against Proposed Merger of OneWest Bank and CIT Group at Federal Reserve Hearing 

LA Community leaders, harmed homeowners, and advocates all called on the Federal Reserve and OCC to deny the merger unless substanial improvements are made.

LA Community leaders, harmed homeowners, and advocates all called on the Federal Reserve and OCC to deny the merger unless substantial improvements are made.


Feb 27, 2015- Los Angeles- Yesterday, community reinvestment advocates spoke against the proposed merger of CIT Group and OneWest Bank during a day-long hearing hosted by the Federal Reserve and Office of the Comptroller of the Currency. Some believe the hearing was held in response to the over 21,000 individuals who signed petitions opposing the merger, in addition to 100 California and national organizations who are opposing the merger. CRC live-tweeted the hearing.

Critics raised concerns at the hearing that can be claified into three main categories.

First, the history of OneWest Bank and CIT Group raises serious questions about how communities would fare if the merger is approved.

Second, promises to help individual nonprofits may be helpful for those nonprofits (especially in the short-term) but they do not constitute a comprehensive, robust, Community Reinvestment Act plan.

Third, communities who have already been harmed, and continued to be harmed by OneWest Bank, are watching the Federal Reserve and Office of the Comptroller of the Currency to see what actions the two regulators take with this merger, and how the regulators will assess the “public benefit” or lack thereof from the merger- something the regulators are required to do.

Troubled History 

Kevin Stein, associate director of the California Reinvestment Coalition, explained that the billionaire investors who bought IndyMac from the FDIC knew they were buying a foreclosure machine.  “Foreclosure is how the majority of Californians know this bank.  And, the owners of OneWest knew they were buying a foreclosure machine because they negotiated a sweetheart deal with the FDIC to get reimbursed for their costs of foreclosing on Californians– to the tune of $1 billion already received, plus another $1.4 billion expected before 2019.”

Roberto Barragan, president and CEO of VEDC, questioned why OneWest bank officials only began reaching out to the community when the merger was announced.  As the Los Angeles Times reported, critics like Barragan believe the recent outreach by OneWest Bank has merely been conducted to “grease the skids” for regulatory approval.

Isela Gracian, Vice President of Operations for East LA Community Corporation raised the $2.3 billion in TARP funds that CIT Group received and never paid back: “OneWest and CIT were saved by US taxpayer subsidies and they have failed to return the investment to the communities they are required to serve.”

Robert Villarreal, Senior Vice President of Community Development for CDC Small Business Finance (the largest SBA 504 and 7(a) Community Advantage lender in the country) also expressed concerns about OneWest’s dismal small business lending record in his testimony:  “In 2013 OneWest made zero loans; that is zero loans for under $100,000 in California (FFIEC website). In that same year here in Los Angeles, only 8 loans were made under $250,000 and less than half the dollars funded were made to businesses located in LMI neighborhoods.”

Promises made to non-profits do not constitute a CRA plan

A number of people from organizations who received grants or promises of grants from OneWest also testified at the hearing to express gratitude for grants they had received from OneWest, for promises that OneWest would do more if the merger was approved, or that a bank official had met with them.

Paulina Gonzalez, executive director of the California Reinvestment Coalition, reminded the audience that individual grants, while helpful for individual nonprofits, are not a replacement for a comprehensive, public, and robust Community Reinvestment Plan.

Gonzalez also pointed out that much smaller banks, like Banc of California, have already committed to stronger reinvestment plans than the current proposal by OneWest and CIT Group.  (See Banc of California’s plan here).

Michael Chan, the president of Asian Inc, raised that CIT Bank is able to track which communities it receives its deposits from, and questioned why the bank wouldn’t use that information to reinvest those deposits in the communities where it receives the money, which is the goal of the Community Reinvestment Act.

Communities Look to Regulators

Consumer attorneys, widowed homeowners, and LA community leaders reminded the Federal Reserve and Office of the Comptroller of the Currency that the regulators ultimately have a responsibility to look out for communities in the merger and to see if there truly is a “public benefit” to the merger.

Cynthia Amador reminded regulators that OneWest has previously closed branches in predominantly Latino communities.

Rachel Mehlak, an attorney from Bet Tzedek, shared the story of an elderly, disabled client, who lives on Social Security and supports her daughter and four grandchildren. She had difficulty keeping up with her property taxes, and despite multiple pleas from her attorney, OneWest’s reverse mortgage subsidiary, Financial Freedom ultimately foreclosed on her: “Three generations of my client’s family were kicked out of their home for less than $1300 owed to Financial Freedom.”

Pictures from the event are available here, and testimony from individual speakers are available upon request, and affected homeowners are also available to speak.  

Do You Have an IndyMac or OneWest Mortgage, or Financial Freedom Reverse Mortgage? Weigh in on this merger please!

OneWest Protest Picture (3)

Did you hear the news?  After months of opposition to the proposed merger of CIT Group and OneWest Bank, the Federal Reserve and Office of the Comptroller of the Currency announced late last Friday that the regulators will host a public hearing on the merger in Los Angeles on February 26th.

If you are a homeowner whose mortgage was or is serviced by OneWest Bank, or a reverse mortgage serviced by Financial Freedom, you should STRONGLY consider sharing your experience with the Federal Reserve and OCC.  The deadline to provide comments was extended until February 26th, and it’s important regulators hear from Main Street as they make their decisions.

Housing counselors rated OneWest Bank as one of the most difficult mortgage servicers to work with in helping homeowners to avoid foreclosure, and if this was your experience, the Federal Reserve and OCC should know about it.

In addition, you may have heard about the controversial “shared loss” agreement the FDIC extended to the billionaire owners of OneWest bank.  Under this agreement, the FDIC is reimbursing OneWest for costs related to foreclosing on IndyMac mortgages.  You can read more about the $1 billion that’s already been paid out, as well as the expected $1.4 billion expected to be paid out before 2019 by reading CRC’s Fact Sheet on this topic.

Did we mention that we had to submit a FOIA request to find out how much the FDIC had paid out?

Financial Freedom, a subsidiary of OneWest who services mortgages, has also been in the news a lot recently for its foreclosure practices, especially as they relate to surviving spouses of deceased reverse mortgage borrowers.  If you have encountered problems in trying to work with Financial Freedom/OneWest after the death of a loved one, CRC would like to hear from you.  Please email: scoffey AT calreinvest.org

It is VITAL that regulators hear from Main Street about this merger.  If you need help submitting comments, please let us know.

You can send an email to these two addresses, and let them know you’re writing about the CIT Group merger with OneWest Bank.  The deadline is February 26, so get those comments in soon!

comments.applications@ny.frb.org and WE.Licensing@occ.treas.gov.

 

PS: If you’d like to learn more about this merger, we are including a few resources below:

Prezi Presentation: The Too Big To Fail Merger of CIT Group and OneWest Bank: What you need to know

The CIT Group/OneWest Bank Merger Resource Center

15,000 Americans Tell Federal Reserve “No Thanks” to CIT Group and OneWest proposed merger

 

Seven Important Updates on Payday Lending in California and Nationally

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.

This has been a busy summer for the payday loan industry!  We’re including seven important updates below.  While you’re here, consider signing our petition, calling on the CFPB to include STRONG consumer safeguards as it designs new rules for payday loans:  Petition to CFPB Director Richard Cordray

ACE Cash Express

How Ace Cash Express  staff were trained to encourage customers to continue renewing their payday loans. (From Ace Cash Express training manual)

1) On July 10, the CFPB announced a settlement with Ace Cash Express which has 1,600 locations nationwide and 200 in California. As part of the settlement for illegal debt collection tactics, the payday lender will pay $5 million to the CFPB, and will return $5 million to customers. One of the “smoking guns” from the settlement is a graphic from a 2011 training manual for the company. The picture spelled out how Ace Cash Express employees should encourage customers to renew their payday loans if they couldn’t afford to pay them back.(See graphic here). In other words, advocate concerns about the “payday loan debt trap” keeping people in a constant cycle of taking out new loans and paying high fees are well-founded.

Local momentum continues to build, with California cities moving policies to protect communities from the saturation of payday lenders.

2) In Fresno, the city council unanimously voted for a new ordinance that requires a new permit application and a “buffer zone” of at least a quarter mile between locations and limits areas where new stores can open.

3) Daly City adopted similar location restrictions.

4) In Victorville, the town council passed a 45 day moratorium on approving permits for money service businesses, including payday lenders, check cashers, and car title lenders.

5) Local leaders are also working on payday lending restrictions in San Mateo and Menlo Park.

6) At the federal level, House Republicans have recently attacked “Operation Choke Point” which is the DOJ’s initiative to prevent banks from enabling illegal online payday lending, among other things. Four Oaks Bank, the first settlement under Operation Choke Point, allegedly facilitated $2.4 billion in illegal transactions, and later settled with the DOJ.

7) The Protecting Consumers from Unreasonable Credit Rates Act was recently introduced in the House. The bill would extend existing protections for servicemembers, and caps interest rates at 36% for all consumers at 36% for products including payday and car title loans. The Senate version of this bill is co-sponsored by Senator Barbara Boxer.

Most promising is the Consumer Financial Protection Bureau’s upcoming rule-making process, which has the potential to instill significant industry reforms to end the payday loan debt trap for consumers. While the CFPB cannot impose an interest rate cap, CRC and our allies are calling for the Bureau to issue the strongest proposal feasible, including a limit on the payday loan cycle, a determination of the borrower’s ability to repay the loan and a prohibition of the lender’s direct access to consumers’ bank accounts.

This is a critical moment, now is the time to push for a strong rule as it is  developed over the next several months.

Please join CRC, advocates and consumers from across the country in sending a message to the CFPB urging them to craft a strong rule to end the debt trap. Sign our petition to Director Richard Cordray and make sure the new rules end abusive practices!

Sign petition here and please share with your networks: Payday Loan Petition to Richard Cordray

Thank you for your support!

Liana Molina

Payday Campaign Organizer

California Reinvestment Coalition