Since the start of the foreclosure crisis, CRC has publicly voiced concerns that assistance provided by banks and servicers is not reaching all communities equally. In other words, some of the communities that were targeted for some of the worst, most predatory mortgages, are the least likely to get the help they need (including sustainable, affordable modifications that keep them in their homes). CRC has worked with housing counselors across California including 10 surveys we’ve conducted with them about their first-hand experience trying to help people to avoid foreclosure.
In our most recent survey, published in May 2014, over half of the housing counselors and legal aid attorneys said they believe that communities of color and homeowners who aren’t proficient in English are receiving worse outcomes when they seek help.
This may be due in part to banks and servicers not translating written materials they send the homeowners. Homeowners have also shared with us that some servicers lack adequate and competent translators when homeowners call to speak to their servicer.
Our concerns were reaffirmed when the GAO released a report in February 2014 that analyzed data from the government’s main anti-foreclosure program, the Home Affordable Modification Program (HAMP). The GAO found statistically significant differences in the rate of denials and cancellations of trial modifications and in the potential for re-default for homeowners who are protected by fair lending laws.
Unfortunately, the GAO did not report which four banks provided data that the GAO analyzed to reach these troubling conclusions. So, we filed a Freedom of Information Act request to the GAO to find out which four banks were included. We also asked the US Department of Treasury if the Department took any action to address the potential fair lending violations identified in the GAO report. You can read Treasury’s response here.
In December, the GAO informed us that they would NOT be providing us the data that we requested, and CRC has subsequently filed an appeal of this decision. Stay tuned!
Why does transparency in mortgage modification data matter?
We’re glad you asked!
In our recent comments to the Consumer Financial Protection Bureau, we weighed in with seven suggestions on the CFPB’s update to the Home Mortgage Disclosure Act and outlined the importance of transparent reporting on mortgage modifications:
The performance of financial institutions in modifying loans is and will continue to be a major factor in determining whether they are meeting local housing needs and complying with fair housing and fair lending laws. We urge the CFPB to include in its final rule the requirement that financial institutions report data on all loan modification applications, denials, and modification terms, broken out by race, ethnicity, gender and age of applicants and census tract; and that this data be publicly disclosed.
Part of our recommendations are based on our concerns about access to relief not reaching all communities equally. Based on the City of San Francisco’s recent RFP for banking services, we also know that banks like Bank of America, have the capacity to report on this data, even if they have resisted providing it.
Click here to view BOA’s responses to the City of San Francisco’s banking RFP. BOA’s response includes demographic data for homeowners who sought help from the bank, so we know this is possible to do.
CRC isn’t the only organization concerned about the transparency and access to relief issue. In March 2013, CRC, Americans for Financial Reform, and about 100 other organizations asked Joseph Smith, the National Mortgage Settlement Monitor, to provide this data. However, he declined, stating that he didn’t believe he had the authority. (See letter here).
Bottom line: The CFPB should incorporate transparent mortgage modification data requirements so the public can see who is getting access to mortgage relief (and who isn’t), the GAO should release the data on which four banks it looked at, and more cities should follow San Francisco’s lead in asking banks to be transparent about their mortgage modification practices.