How will AB 244 Help Widowed Homeowners in California?

foreclosure-home.gi.topWhy do widowed homeowners need help talking to their mortgage servicers, and how will SB 1150 help?

Explanation: Widows, orphans and other successor homeowners (hereinafter, “widows and orphans”, or, “successors in interest”) who were not listed on the original loan documents are losing their homes unnecessarily upon the death of their spouses and other family members, as servicers fail to work with them or give them a reasonable opportunity to seek a loan modification for which they may qualify.  Some servicers still refuse to talk to these residents.  Other servicers force successors to go through unnecessary and costly procedures, such as probate, which are not needed in every instance.  To see a recent, egregious example, read this Daily Kos post:  Bank of America tries to seize widow’s home while forgetting to mention that her loan was insured

New legislation introduced by Mark Leno and Cathleen Galgiani provides critical protections for widowed spouses and other survivors who assume home ownership responsibilities when the primary mortgage holder passes away. The Homeowner Survivor Bill of Rights, (Senate Bill 1150) closes a loophole in California law that fails to provide surviving spouses and children important protections against foreclosure that are available to other homeowners.  

Visit www.survivorbillofrights.org to learn more about this important new bill.

Need for SB 1150 is seen across the state by housing counselors: In 2013, 80% of California housing counselors responding to a CRC survey indicated that they were seeing widows and orphans clients.  In 2014, 87% of counselors responding to the most recent CRC survey indicated that CFPB rules intended to address the widows and orphans issue failed to fix the problem.  Nonprofit housing counselors and legal service lawyers report continuing problems faced by successors in interest.  As our population ages, we expect to see this problem increase in scope.

Servicers are not complying with existing obligations to better protect widows and orphans.  This proposal is neither entirely new, nor extraordinary.  Servicers are supposed to already have policies in place to prevent these abuses.  Yet the abuses continue.  This bill is needed.

UPDATE: To see how servicers are not complying, see press release from FTC and CFPB this week about a $63 million settlement with Green Tree Servicing.  The FTC and CFPB allege that Green Tree Servicing LLC made illegal and abusive debt collection calls to consumers, misrepresented the amounts people owed, and failed to honor loan modification agreements between consumers and their prior servicers, among other charges.

To see how Green Tree Servicing treated this California widow, read her story: 

“ELK GROVE (CBS13) —The mortgage was in her late husband George’s name. The decorated war veteran died in 2007.  Daughter, April, says she sent Green Tree his death certificate and the grant deed with her mother’s name on it, but says Green Tree will not work with them.”   Call Kurtis Investigates: Surviving Family Members Losing Homes Left By Loved Ones (CBS Sacramento, 11/1/2013)

 

AB244 bill: California legislators want to require mortgage servicers to speak to widowed homeowners but Chamber of Commerce, bank industry oppose

Thanks for the coverage Justice League!

Justice League

Hat tip from CAReinvestCoalition!

As Capital & Mainexplained: “It happens every spring: The start of baseball season and the Chamber of Commerce’s assault on legislation designed to improve the lives of Californians – many of them our most vulnerable residents.”

This time, The California Chamber of Commerce put Assembly Bill 244 on their “Jobs Killer” list. AB 244 is a bill that would help even the playing field for grieving spouses who are trying to speak to their mortgage servicer about keeping their family home.

If a spouse, partner, or parent, passes away and they were the only person listed on the mortgage, then it can create huge headaches for the surviving family member, in what has been called the “widows and orphan problem.” Despite having a legal interest in the home (many are on the title to the home), they are hitting a brick wall when they…

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Kevin Stein Testimony at OneWest and CIT Group Proposer Merger Hearing in Los Angeles

The testimony of Kevin Stein, associate director of the California Reinvestment Coalition, 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.

Kevin Stein Testimony

Thank you to the Federal Reserve and the OCC for holding this hearing and for the opportunity to testify.  My name is Kevin Stein, I work at the California Reinvestment Coalition  (CRC). I have been at CRC for 15 years, and I have seen many mergers, but this is the most problematic and outrageous merger I have seen

The last time we were here for a merger was in 2008 when Bank of America purchased Countrywide. We opposed that merger and argued that Bank of America would be left processing numerous foreclosures and harming families without any meaningful commitment to the community.

The regulators approved that merger with no significant conditions. Nothing changed. Bank of America kept foreclosing on Countrywide loans, and inadequate reinvestment failed to mitigate harms.  Six years from now, people will look back on this hearing and this merger to see if the regulators got it right this time.

Here, there is much private gain, much public subsidy, but no public benefit.

Based on the limited data provided by OneWest, our analysis finds they are towards the bottom of the pack, and below their peers, in meeting community credit needs and reinvesting in neighborhoods.

The Bank’s CRA performance has been poor, and its promises not much better.

As one example, according to the Bank’s own CRA strategic plan, which the bank sought to keep confidential, affordable housing is identified as a critical need.

But what has the Bank done to address this need? It has devoted little of its already small pool of contributions for affordable housing, its home lending record is weak and disparate, it does not offer a multi-family loan product, and it may participate only in a limited way in the Low Income Housing Tax Credits program

With such strong nonprofit capacity in its assessment area, the bank’s performance is shameful, and represents a wasted opportunity to address critical housing needs.  The Bank appears not to have met all of the goals it set for itself in its secret, Strategic Plan. Without a clear, public and strong CRA Plan, how can communities hold the bank accountable, and why would we expect things to be any different this time?

Foreclosures are also deeply concerning.  It would be bad enough if OneWest Bank (OWB) merely did a poor job meeting community credit needs.

But in fact, OWB helped create community credit needs through mass foreclosures that inflicted great harm on families and communities. We estimate that OWB has processed over 35,000 foreclosures in California alone. In addition, the Bank has foreclosed on 2,000 reverse mortgage borrowing seniors, their widows and heirs in our state, and continues to do so, as you will hear more about later today.

In fact, the main way in which OneWest engages with LMI communities is through foreclosure.

OWB has been a “terrible” servicer. In our surveys of housing counselors over the years, OWB was frequently cited as among the worst:

  • In 2010, OWB was the deemed the worst at offering loan mods
  • In 2011, OWB got the most votes for being a “terrible” servicer
  • In 2012, OWB got the 2nd most votes for worst servicer
  • In addition, there are over 1,000 CFPB consumer complaints against OWB, including 150 complaints about its reverse mortgage servicing, about 12% of all reverse mortgage complaints

In his testimony, Joseph Otting talks as if OneWest foreclosures are a passive endeavor, that OneWest fell into a number of loans that are subject to rules he wishes were different. But this exactly what OneWest signed up for. They bought a foreclosure machine, negotiating a sweetheart loss share agreement with the FDIC. And they have profited handsomely from this foreclosure machine

We are urging the regulators that:

  • OneWest’s foreclosure practices need to be reviewed and improved.
  • OneWest should not be allowed to foreclose on borrowers without 3rd party review,
  • OneWest should stop arguing it need not comply with our state’s Homeowner Bill of Rights
  • OneWest and Financial Freedom should cease all foreclosures on surviving spouses until the law on this issue is settled
  • No decision on this merger should be reached until an audit is done on OneWest’s servicing practices. In fact, we know that the FDIC is conducting a loss share audit of OneWest in May. There should be no decision on this merger until after the results of that audit have been made public.
  • Further, the Fed and the OCC should not approve this merger without substantial conditions imposed requiring the bank to first develop a clear, strong Plan to meet the affordable housing and economic development needs of its communities, with clear benchmarks established, and significant resources devoted to achieve that purpose

The Bank has shown its unwillingness to do this on its own. Without this, the merger provides immense private gain, outrageous amounts of public subsidy, greater systemic risk, but no public benefit, and the merger should be denied.

Thank you

Paulina Gonzalez Testimony Against OneWest and CIT Group Bank Merger

CRC opposition to OneWest CIT Group bank merger

Paulina Gonzalez speaking at OneWest Bank Merger Rally

Paulina Gonzalez’s testimony 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.

When discussing the proposed CIT and OneWest merger, the LA Times quoted a banking consultant who said:  “The Federal Reserve has never met a merger it didn’t like.”   Here we are, with this merger poised to create a “Too Big to Fail” bank before you for your consideration, in which the public benefit is questionable, and the public subsidy unprecedented to the tune of $5 billion, including $2.3 billion in never to be repaid TARP funds (tax payer dollars).

The public subsidy dwarfs the measly CRA plan offered by the bank, and dwarfs the public benefit of this merger.

We are looking to the Federal Reserve and OCC and asking, will you merely rubber stamp this merger after today’s hearing?

Or will you require, as the Bank Holding Act and Dodd Frank requires you to do, a REAL and TRUE Public Benefit that outweighs the risk of a new Too Big to Fail bank?

OneWest has been around for 5 years in Southern California, yet it was only after the merger with CIT was announced last year that the bank has shown any interest in community outreach.

OneWest’s dismal 5 year record in serving the credit, investment, and lending needs of the low and moderate income communities of Southern California, and CIT’s failure to meet the goals of its own CRA Strategic Plan tell us more than we need to know about where LMI communities rank in the bank’s list of priorities.

Some might say, but the bank is promising to do more.  To that I say, ramped up CRA activity, grantmaking and vague promises to do more at the time of a merger DOES NOT add up to meet the regulatory requirement for public benefit.  Past experience has shown us that when the media spotlight dims and the regulators turn their attention to the next bank and the next merger, banks tend to fall bank to their old habits.  And despite their promises made under the pressures of a merger, we are all too familiar with OneWest’s old habits.

So today we are asking, where has OneWest been for the last five years? What you will hear loud and clear today, from Southern California practitioners who oppose this merger, that the bank has been largely absent from LMI communities.

What all the recent promises and ramped up activity amount to is an effort by the bank, in the face of unprecedented opposition, to garner support at the time of a contentious merger application.

Lastly, CIT Group and OneWest’s current CRA Plan, as proposed, does not meet the public benefit test the Federal Reserve is bound to measure this application by.   Its plan to reinvest $5 billion over 4 years amounts to a mere 5% of its deposits, putting it at the bottom half of all California banks in overall CRA activity.  In comparison, during a request acquisition Banc of California committed to 20% of its deposits for overall CRA activity.  Mechanics Bank, a bank that like OneWest originates very few mortgages, recently signed a CRA Plan with CRC that committed to 15% of its deposits to overall CRA activity.

OneWest is at least 10x the size of these two banks, and stands before you and all of us trying to convince us that it meets the public benefit test having only committed 1/3 to 1/4 of what these much smaller banks have committed.

Not only does this merger not meet the public benefit test, but I’m not even sure it meets the laugh test.

We ask you today to prove to a wary public that long gone are the days of regulatory rubber stamps.

The CIT Group OneWest proposed merger doesn’t pass the public benefit test, and therefore should not be approved.

CRC Reminds IndyMac, OneWest Bank, and Financial Freedom Customers and Former Customers about Public Hearing on Feb 26th in Los Angeles

Earlier today, CRC released an  important reminder for people whose mortgage was originated by IndyMac Bank, and later serviced by OneWest Bank, or for customers who have a reverse mortgage that is serviced by Financial Freedom.

We want the general public, but especially people with direct experiences with OneWest or Financial Freedom to know that they have an opportunity to share their experiences with the two bank regulators who are reviewing the proposed merger of OneWest with CIT Group,” explained Kevin Stein, associate director of the California Reinvestment Coalition (CRC). CRC, along with 100 other organizations, and over 15,000 people who signed a Daily Kos petition, are opposing the merger, citing a long list of concerns.

The Federal Reserve and Office of the Comptroller of the Currency are hosting a public hearing next week, on Thursday, February 26, from 8:00AM to 5:00PM in Los Angeles at the Federal Reserve building (located at 90 South Grand Ave, Los Angeles, CA 90015), and the general public is invited to attend.

Stein explains: “If you’re unable to attend the hearing, we suggest sending your comments about this proposed merger to the Federal Reserve and the Office of the Comptroller of the Currency. The deadline for comments is February 26, 2015. We have directions on how to send your comments to the Federal Reserve on our website:http://www.calreinvest.org.

Organizations opposing this merger have cited a long list of concerns, including:

1) Corporate subsidies: According to CNN (Nov 1, 2009) , CIT Group received $2.3 billion in TARP funds it never repaid, and the FDIC estimates it will pay OneWest Bank a total of $2.4 billion for costs related to soured loans, under a controversial “shared loss agreement” the FDIC has with the billionaire owners of OneWest Bank. The banks also plan to use CIT Group’s 2009 bankruptcy to further reduce their taxes if the merger is approved.

2) OneWest Bank’s troubling foreclosure record: Legal settlements, surveys of housing counselors, and rankings from J.D. Power and Associates all suggest that customers seeking help with their mortgage from OneWest Bank have encountered numerous obstacles, run-arounds, red-tape, and delays that may have pushed people into foreclosure instead of keeping their homes.

3) Outsized compensation for bank officers: According to the LA Times(Oct 14, 2014) if this merger is approved, the CEO of the bank is expected to receive an annual salary of $4.5 million, plus restricted stock options worth $12.5 million. The Chairman of the board is also expected to receive an annual salary of $4.5 million, but this is for part-time work, since he would also be allowed to continue running his hedge fund.

4) Weak Community Reinvestment Plan: Under the Community Reinvestment Act (CRA), banks are required to reinvest in the communities where they do business. Unfortunately, the CRA record for both banks is mediocre, and the bank’s future reinvestment plans (if the merger were approved) also would rank the bank near the bottom of its peer banks in California.

To read more about this merger, CRC encourages people to visit our CIT Group and OneWest Bank Merger Resource Center, where they can see in-depth analysis of the merger, why it matters to communities, and how to get involved.

Community Leaders Hold Press Conference at OneWest Bank Headquarters

OneWest Protest Picture (3)

A large group turned out for press conference and rally today

Earlier today, Los Angeles Community leaders gathered in front of the headquarters of OneWest Bank to share new information about the amount of corporate subsidy OneWest has received from the FDIC.

We want a strong CRA plan

Namoch Sokhom from PACE

Community leaders and affected homeowners called on bank regulators to hold public hearings about the proposed merger of OneWest and CIT Group, and urged the bank leadership to implement a moratorium on foreclosing on widowed homeowners whose deceased spouses had reverse mortgages.

TARP bailout Checks

$2.3 billion in TARP for CIT + $2.4 billion in FDIC subsidy for OneWest. Almost $5 billion in subsidy for the two banks!

Kevin Stein, associate director of the California Reinvestment Coalition, comments: “Now we know why the bank CEOs refused to tell us how much they’ve received from the FDIC. This is an embarrassing amount of subsidy for the FDIC to give to the billionaire owners of this bank, especially when the bank leadership refuses to create a strong community reinvestment plan. Given this new information, the Federal Reserve must hold public hearings in Los Angeles. The community deserves an opportunity to give input on the outsized corporate subsidies, the ongoing enrichment of billionaire investors, and the lack of public benefit with this proposed merger.”

Don't be a grinch OneWest (Sandy)

Sandy Jolley speaks about reverse mortgage foreclosures

Sandy Jolley, a reverse mortgage consumer advocate who has worked with senior homeowners and their families who have been harmed by reverse mortgages, including some whose mortgages were serviced by Financial Freedom, a OneWest subsidiary. She spoke at the conference today, explaining: “It’s been a busy holiday season for OneWest Bank, with at least three different cases of the bank moving to foreclose on seniors and widows, including a 103-year-old. Today, we’re calling on the bank CEOs to stop playing Grinch and to implement a moratorium on foreclosing on widowed homeowners.”

Stop foreclosing on seniors

Paulina Gonzalez, executive director at CRC

Paulina Gonzalez, executive director at the California Reinvestment Coalition commented: “An estimated 35,000 California families have been hurt by OneWest foreclosing on them during the past six years. As these middle class and working class families lose their homes, the FDIC has been writing checks to the billionaire investors who own OneWest. Is this really how it’s supposed to work?”

Greenlining

Orson Aguilar, executive director at Greenlining Institute

“The last thing California needs is yet another too-big-to-fail bank for the one percent, but that’s exactly what we’re going to get if this merger goes through as planned. Our diverse state deserves better” said Orson Aguilar, executive director of the Greenlining Institute.

Santa delivers message

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Additional Background: Representatives from the following organizations attended the press conference and rally:

  • The California Reinvestment Coalition,
  • Valley Economic Development Center (VEDC),
  • East LA Community Corporation (ELACC),
  • Montebello Housing Development Corporation,
  • Greenlining Institute,
  • ACCE,
  • PACE,
  • Affordable Housing Services,
  • Occupy Our Homes,
  • Occupy Fights Foreclosure, and
  • The Multi-Cultural Real Estate Alliance for Urban Change

A CIT Group/OneWest Proposed Merger Resource Page on the California Reinvestment Coalition website includes additional information about the proposed merger and why over fifty organizations are currently opposing the merger, urging the Federal Reserve and Office of the Comptroller of the Currency to hold hearings, and calling on the bank to stop foreclosing on widowed homeowners.

California Reinvestment Coalition Asks Regulators “Is There Community Benefit in Too Big To Fail Merger of OneWest and CIT Group?

OneWest Bank MergerCapping a five-day awareness public awareness campaign, the California Reinvestment Coalition focused on the community benefits (or lack thereof) of a merger between OneWest Bank (former IndyMac) and CIT Group.

Both banks have already received considerable financial support and subsidy from taxpayers and bank regulators. Under the Bank Holding Company Act, regulators are required to consider the public benefit of a proposed bank merger.
CIT Group Merger

One way regulators can measure public benefit is through a bank’s Community Reinvestment Act (CRA) Plan,  a written commitment outlining how the bank will serve the community in the future.

Thus far, the draft plan offered by the leadership at CIT Group and OneWest appears to have been created without community input, commiting the bank to very little in the way of reinvesting in California communities.

CRC, and 37 other organizations have sent letters to bank regulators, opposing the merger in its current form.

According to Kevin Stein, associate director at the California Reinvestment Coalition, the community benefit is lacking from the proposed merger: “Right now, this merger doesn’t pass muster. Investors and the CEOs will benefit greatly, but what about California communities, especially those that were already harmed by OneWest through thousands of foreclosures and inadequate reinvestment? This merger will create the newest Too Big To Fail Bank, facilitate investor and bank officer windfalls, and provide for ongoing public subsidy. Yet the merger offers no public or community benefit. The regulators should reject this merger until a strong public benefit is guaranteed through a Community Reinvestment Plan to ensure communities don’t lose out again.”

CIT Group Merger with OneWest Bank

Roberto Barragan, president of Valley Economic Development Corporation, comments: “Here’s two banks that wouldn’t be alive without the support of taxpayers and bank regulators, and yet, they’re not willing to outline a strong plan of reinvesting in the communities where they do business? Until they are willing to come to the table with the community, this is a no-brainer for regulators. No public benefit means no merger approval.”

Regulators can also assess whether a bank is meeting the community’s credit needs by examining a bank’s history of reinvestment in the community. 

OneWest’s Community Reinvestment Record:

1) Bank Branches: 15% of OneWest’s branches are located in low and moderate-income census tracts, as compared to a statewide average of 30% of bank branches being located in LMI tracts.  Only two of the bank’s 73 branches are located in low-income tracts, according to research by the LA Local Development Corporation.

2) Small Business Lending: The majority of “small-business” loans originated by OneWest bank are to businesses with revenue of over $1 million, leaving smaller businesses behind.

3) Foreclosures: 35,000 Californians have lost their homes due to foreclosures by OneWest and its subsidiary, Financial Freedom.

4) CRA Grades: The Bank earned a “Low Satisfactory” on its last Performance Evaluation for its investments in the community

5) Contracting with MWDBE: The Bank hesitates in setting goals to hire businesses owned by Minorities, Women, and Disabled Persons (MWDBE).

6) Philanthropy: It appears OneWest’s historical charitable contributions are below the level of its peers.

7) Reinvesting Consumer Deposits: The Bank currently takes $14 billion in deposits via the Internet from throughout the country, but only reinvests these deposits back into its Salt Lake City assessment area, frustrating the purposes of the Community Reinvestment Act. It has no meaningful plans to reinvest Internet deposits back into communities where its Internet customers reside.

Additional Background on other Banks Creating Community Benefit and Reinvestment Plans as Part of Mergers
There is a precedent for banks committing to the communities they serve through the development of Community Benefit and Reinvestment Plan. Recent examples include:

1) Banc of California: After opposition from the California Reinvestment Coalition and 46 other organizations, in September 2014, leadership at Banc of California negotiated a five-year, public Community Benefit and Reinvestment Plan as part of its acquisition of 20 Banco Popular branches. Under the plan, Banc of California (which about one-tenth the size of the proposed CIT/OneWest merger) is devoting an amount equal to or greater than 20% of its annual deposits to community reinvestment activities.

2) Pacific Western Bank acquired CapitalSource, which was also opposed by the California Reinvestment Coalition, citing a record of “low satisfactory” CRA ratings and a lack of a public CRA plan. After an FDIC-facilitated meeting with CRC and the Greenlining Institute, PacWest Bank agreed to develop a CRA plan with input from the community.

3) Umpqua Bank applied to purchase Sterling Bank, but did not have a CRA plan. CRC opposed the merger, and the Federal Reserve later made its approval of the merger contingent on Umpqua developing a CRA plan.

To see the previous four issues highlighted in this week’s campaign:

Day 1: Bank Merger Would Benefit Investors, But What About Communities?

Day 2: Advocates Question If FDIC Loss-Share Agreements Should Continue As Part of Bank Merger

Day 3: Community Groups Question OneWest’s Foreclosure Record

Day 4: How Much Government Welfare Can One Bank Accept?

CRC’s detailed letter to the Federal Reserve Bank of New York includes an analysis of the merger and a long list of concerns and unanswered questions about the proposed merger.