We Submitted A FOIA Request About Mortgage Servicers: Here’s the GAO’s Response

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.

FOIA to GAO

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. 

 

What you didn’t hear at today’s Senate Hearing on Bank Regulator Capture: Bank Mergers

Greenspan Explains

 

Editor’s note: We just added a petition urging regulators that we DO need a cop on the beat when it comes to regulating Wall Street.  Add your name and share with your networks! New Petition

This morning, the Federal Reserve Board of New York President, William Dudley, testified to the Senate Committee on Banking, Housing & Urban Affairs.

The hearing was called after disturbing reports about bank regulator capture.  You can see them here , herehere and here.  One of the key takeaways from the hearing is that the American people have lost their faith that bank regulators are doing their job and protecting consumers and communities over the banks.  This is due not only to the foreclosure crisis that erupted in 2007, but also to the many ongoing bank scandals, like LIBOR rigging, the $6 billion London Whale escapade, the BNP Paribas settlement, and others.

At one point, in response to a question from Senator Elizabeth Warren, NY Fed President William Dudley explained that he viewed his role more as a fireman than a “cop on the street.”  So, if the New York Fed is the firefighter, then who is the cop on the street?

One of the issues that wasn’t discussed- but should have been-is the role that bank regulators like the NY Fed also play in approving bank mergers.  When a bank prepares to merge or acquire other banks, it has to request permission from its bank regulator to do so.  Bank regulators will then consider a few factors about the merger, such as:

  • What are the additional risks created by this merger?
  • Is there public benefit to this merger?
  • Is the bank properly capitalized?

A bank merger that has been recently proposed in California is especially relevant to this conversation.  When IndyMac Bank failed, it was purchased by a group of billionaire investors who renamed it OneWest, and secured a lucrative “shared loss” agreement from the FDIC.

Under this agreement, the FDIC agreed to help cover the cost of losses from a $13 billion portfolio of mortgages that IndyMac had originated.  OneWest also agreed to modify mortgages when possible, using the FDIC’s mortgage modification program, and later the HAMP program.

Unfortunately, as CRC pointed out in an American Banker blog post earlier this week (Is the FDIC Subsidizing a ‘Too Big to Fail’ Merger?), OneWest’s foreclosure track record suggests that the bank did NOT modify mortgages where possible.  Worse, outside of one 2011 audit, we still don’t know if the FDIC conducted any other audits of OneWest bank’s compliance with its obligation to modify mortgages where possible.

Fast forward to 2014, and OneWest bank is proposing to merge with CIT Group.

CIT Group unpaid TARP $2.3 billion

Does that name sound familiar?  Talk about corporate welfare!  CIT Group received $2.3 billion from the US taxpayers, via TARP.  A little while later, CIT Group filed bankruptcy, and eliminated its obligation to repay the government.  Yep, $2.3 billion in free money from Uncle Sam.  How many homeowners might have been able to keep their homes if that money had gone to modifications instead?

Commode

Did we mention that the current CEO of CIT Group, John Thain, is the same John Thain that spent $1 million redecorating his office in the middle of the financial crisis?   What’s it like to own a $35,000 commode?

Now, these two banks, with very troubled histories, are assuring the bank regulators that they are equipped to merge. You won’t find this in most of the financial media reporting on this merger, but one of the interesting aspect of this merger is that the leadership of the banks are both expecting the FDIC to allow OneWest to transfer the shared loss agreement to CIT Group, and that it will be continued at this new, Too Big To Fail bank.  This apparently is key to the merger, as investors have asked the bank about it, and they’ve assured them it will continue.

OneWest Bank Merger

Yes, you heard that right.  The bank leadership is claiming it’s ready to take on the Systemically Important Financial Institution designation, but also holding out its other hand for an ongoing subsidy from the FDIC.  Any contradictions there?

California communities, who are reeling from the thousands of foreclosures by OneWest bank, including on seniors and their surviving spouses (American Banker earlier this week: HECM Non-Borrowing Spouses Renew Class Certification Attempts) , are rightfully concerned about whether bank regulators will approve of this Too Big To Fail bank merger.

What YOU can do about it:

If you are one of those Californians, might we suggest you get in touch with your bank regulators and let them know about your concerns? CRC and our members are asking the Federal Reserve to hold hearings in Los Angeles about this merger, and you may also want to let your bank regulators know that you support the transparency and public dialogue about this proposed merger. They’d also likely be interested to hear if you’ve had any experiences with OneWest or its subsidiary, Freedom Financial.

Here’s their contact information, and be sure to email both regulators: comments.applications@ny.frb.org andWE.Licensing@occ.treas.gov

 

If you’d like to learn more about this merger, a few resources we might suggest:

Can We Have Bank and Regulator Hearings in California Too? California Progress Report Op-Ed

Is the FDIC Subsidizing a ‘Too Big to Fail’ Merger?  American Banker Op-Ed

Groups oppose CIT’s planned acquisition of OneWest Bank Fifty organizations are opposing the CIT Group and OneWest Bank merger, and this article quotes CRC members and allies about why they are opposing the merger. Kevin Smith. Pasadena Star News. Oct 27, 2014.

 

Activists’ Protests On the Money  Paulina Gonzalez, executive director at CRC, is interviewed about CRC member’s successful negotiations with Banc of California that resulted in a strong Community Benefit and Reinvestment Plan. Gonzalez also discusses CIT Group and OneWest bank merger that would result in a Systemically Important Financial Institution (SIFI), otherwise known as “Too Big To Fail.” Matthew Pressberg. Los Angeles Business Journal. Oct 20-26, 2014. (Subscription required)
 
Groups urge U.S. to reject CIT takeover of OneWest Bank CRC and Greenlining Institute’s opposition to the creation of a Too Big To Fail bank merger of CIT Group and OneWest Bank is cited in this article. E. Scott ReckardLos Angeles Times. October 14, 2014.
 
Are Regulators About to Let Another Bank Get Too Big to Fail? The many unanswered questions about the CIT Group and OneWest bank merger are highlighted in this article. David Dayen.The Fiscal Times. October 10, 2014.

 

You may also be interested in our 5 Days of Questions about the CIT Group and OneWest Merger:

 

 

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

 

New Resource for Widowed Homeowners Facing Foreclosure

2016  Update: 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.

Last week, the California Reinvestment Coalition released our 10th Survey of housing counselors and legal aid lawyers to measure how well banks and mortgage servicers are helping homeowners who request assistance in avoiding foreclosure.

As part of the survey, 11 homeowner stories and declarations were also included in the report from homeowners who had worked with attorneys at Housing and Economic Rights Advocates.  Even working with attorneys, homeowners still faced unreasonable delays, requests for the same paperwork on multiple occasions, incorrect loan modification denials, wrong information about investors, and more.

While there were a number of troubling trends in the report, 87% of respondents said they felt that the “widows and orphans” problem still exists, despite federal guidelines released by various agencies in 2013.  The “widows and orphans” problem refers to the fact that many widows, orphans, and others who inherit or have an ownership interest in property have faced foreclosure upon the death of a loved one because they were not listed on the loan, and the servicer would not work with them so that they could keep the family home.

While the CFPB, Fannie Mae, Freddie Mac, and Treasury Department released updated guidelines in 2013, (see the full report for citations) housing counselors report that mortgage servicing staff aren’t always aware of the rules.

To shed further light on this issues, Housing and Economic Rights Advocates (HERA) has created an email address.  For widowed homeowners, or other heirs in similar situations, they can contact HERA via email at: familyhome@heraca.org.  HERA staff will make contact with each person that submits a story to that email address.

July 8, 2014 update: The CFPB issued additional guidance today to banks and mortgage servicers about working with widows and other heirs who are trying to keep their family homes.  You can read it here: CFPB Clarifies Mortgage Lending Rules to Assist Surviving Family Members

A few media stories illustrate the very human impact of bank and mortgage servicer red tape on surviving family members:

1)     Bank might foreclose on home because late husband isn’t residing there

“WASHINGTON — Billions of dollars in foreclosure settlements between big banks and government regulators haven’t helped Laura Biggs. The California woman is scheduled to lose her home nine days before Christmas because her mortgage company concluded that the house is no longer the primary residence of her husband, who’s been dead since 2003.”   Read complete story here: “Bank might foreclose on home because late husband isn’t residing there” (Kevin Hall, McClatchy Washington Bureau, December 9, 2013).

2)     Mortgage Catch Pushes Widows Into Foreclosure

“Ms. Bates, 70, is caught in a foreclosure trap that is ensnaring widows across America: she cannot get help lowering her payments until her name is added to the mortgage note, but the lender says she must be current on payments before that can happen.”  Read complete story here: Mortgage Catch Pushes Widows Into Foreclosure (Jessica Silver-Greenberg, New York Times, 12/1/2012)

3)     Call Kurtis Investigates: Surviving Family Members Losing Homes Left By Loved Ones

“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.”  Read complete story here:  Call Kurtis Investigates: Surviving Family Members Losing Homes Left By Loved Ones (CBS Sacramento, 11/1/2013)

 

California Advocates Attend National Community Reinvestment Conference in Washington, DC

Representatives from member organizations of the California Reinvestment Coalition traveled to Washington DC last week to attend the National Community Reinvestment Coalition conference.  The theme of the conference was “A Just Economy: Ideas, Action, Impact.”

The conference is a gathering of NCRC’s diverse membership base from around the US, including CDFI’s, fair housing organizations, housing counseling organizations, consumer advocates, credit counselors, small business lenders, community organizing and civil rights groups, and more.

Speakers at the conference included Shaun Donovan, the Secretary of Housing and Urban Development (HUD),Thomas Curry, Comptroller of the Currency, Steven Antonakes from the Consumer Financial Protection Bureau, Martin Gruenberg, Chairman of the Federal Deposit Insurance Corporation, and more.

Shaun Donovan

Secretary Donovan spoke about potential reforms to Fannie Mae and Freddie Mac and recognized the conference participants for their work to help people during the foreclosure crisis and to also help with rebuilding afterwards.  He also spoke about the ongoing crisis of a lack of affordable housing in communities across America and cited NCRC’s work to ensure that reforms to Fannie and Freddie don’t leave low-income communities behind.

Fleeced

Wednesday night included a screening of “Fleeced”, a documentary about elder financial abuse which was a big draw with a packed room. A panel discussion included Kim Jacobs, the producer of the film, Anita Gardner, a consumer in the film who faced an uphill battle with her bank when she sought assistance with her mortgage after health problems, as well as Robert Zdenek, the Director of National Neighbors Silver at NCRC, and Dory Rand, president of the Woodstock Institute. The film was commissioned by NCRC, with support from the Atlantic Philanthropies.  A screening will also be held in Sacramento on April 15th at 5:30pm, as part of the Housing California conference and Annette Smith, a consumer featured in the film will also be one of the panelists who speaks after the screening.

California delegates flew into Washington DC early to meet with our elected officials as well as banking and housing regulators.

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On Thursday, as part of NCRC’s Hill Day, CRC Members headed to Capitol Hill to meet with their senators and representatives.  There were a number of topics to discuss, a few of the topics the California delegation discussed included:

  • Payday lending and the upcoming rule-making by the Consumer Financial Protection Bureau
  • The need for more investment in affordable housing in California, especially since the dissolution of redevelopment agencies that funded affordable housing
  • GSE reforms (and ensuring that low-income communities aren’t left behind)
  • A recent proposal for the USPS to offer financial services through a prepaid card
  • Effects of private equity firms and other investors buying up homes
  • The Permanently Protect Tenants at Foreclosure Act of 2013
  • Extension of the Mortgage Debt Forgiveness Act
  • Transparency around foreclosure reporting (to see if mortgage modifications and other assistance is getting to communities equally- a topic recently addressed in a February 2014 GAO report (read more here)
  • Small business lending (especially to minority business owners- read our December report about this issue here)
  • Future mortgage settlements, and concerns about transparency of who is receiving modifications, and whether modifications are getting to communities hit hardest
  • Bank mergers and the impact on rural California- For more on why this is such a pressing matter, see CRC’s “Down in the Valley” 2013 report, or our recent protest against the proposed acquisition of Sterling Bank by Umpqua Bank.
  • Issues faced by widowed homeowners who are facing foreclosure instead of receiving assistance from their bank or mortgage servicer. See this December 2013 article that explains why improvements, monitoring, and enforcement are still needed: “Bank might foreclose on home because late husband isn’t residing there

After meeting with their senators and representatives, attendees were especially excited by the lunchtime speaker: Senator Elizabeth Warren, (D-MA), an outspoken advocate who was paved the way for improvements in policies and programs affecting the same communities and people that NCRC’s members serve.

On Friday afternoon, CRC’s new Executive Director, Paulina Gonzalez spoke at a session: Winning Public Benefits for Your Community, with other advocates including Ernest Hogan, Executive Director of Pittsburgh Reinvestment Group, and Mitria Wilson, from NCRC.

Friday night closed with a bang!  The Rev. Dr. William Barber II was awarded the Senator William Proxmire award, which recognizes the individual whose life’s work exemplifies the spirit and work of Senator Proxmire’s contributions to economic mobility.  Dr. Barber gave a rousing speech about the need for organizations to work together to stop disinvestment in communities.  Senator Proxmire was the author and lead sponsor of the Community Reinvestment Act.

Kevin Stein, Associate Director at CRC, was also confirmed to the National Community Reinvestment Coalition board of directors.

A big thank you to our CRC members who joined the meetings, including:

It was another excellent conference put on by NCRC- See you next year!

Free Webinar on Home Affordable Modification Program September 24

You’re probably aware of the fact that the California Homeowner Bill of Rights went into effect on January 1, 2013, and you may also know that other states and cities are considering/have already implemented their versions of this important law.

But did you know there is also a collaborative of five organizations dedicated to ensuring that this law is followed by banks and servicers?  The California Homeowner Bill of Rights Collaborative (HBOR Collaborative) is comprised of San Francisco-based housing advocacy center, the National Housing Law Project (NHLP), and its project partners, Western Center on Law & Poverty, the National Consumer Law Center, and Tenants Together.

In addition to sponsoring trainings for attorneys on using the California Homeowner Bill of Rights to represent homeowners, the HBOR Collaborative is also sponsoring an upcoming webinar:

HAMP Rules on Loss Mitigation” on Tuesday, September 24, 2013 from 12pm to 1:30pm Pacific Time.  This free webinar will introduce the basic structure of the federal Home Affordable Modification Program (HAMP) and place it in the context of other available modification programs. We will review topics including eligibility, how modifications are done, and servicer requirements for timing and notice.  Updates on recent developments will be included.

Presenter:  Alys Cohen, staff attorney, National Consumer Law Center

Click here to register: Webinar Registration

After registering, you will receive a confirmation email containing information about joining the webinar.

If you need help registering for this webinar, please contact jhiemenz@nclc.org

The HBOR Collaborative is funded by the Office of the California Attorney General under the national Mortgage Settlement. The HBOR Collaborative offers free training, technical assistance, litigation support, and legal resources to California’s consumer attorneys and the judiciary on all aspects of the new California Homeowner Bill of Rights (HBOR). The goal of the Collaborative is to ensure that California’s homeowners and tenants receive the intended benefits secured for them under the Homeowner Bill of Rights by providing legal representation with a broad array of support services and practice resources.

For more information and contact information regarding all the HBOR Collaborative’s services for attorneys, go to http://calhbor.org/

For a concise summary of rights under the Homeowner Bill of Rights, check out summaries prepared by the Fair Housing Law Project: English and Spanish.