CRC’s Response to the New Threats Facing our Communities

Dear CRC Members and Supporters,

Like you, we were shocked and saddened by the violence and hatred demonstrated by white supremacists and neo-Nazis chanting anti-Semitic and racist chants in Charlottesville, culminating with the murder of Heather Heyer, a nonviolent protester. We were horrified to watch the president refuse to condemn the violent perpetrators and instead equate the actions of those who espouse hate with those who resist it. It was heart wrenching and rage inducing. Like many of us, I found it difficult to sleep that night. I found solace at church the next day when my pastor compelled us to keep our eyes on the prize through our sorrow and anger.

Today, I write to you to remind us to collectively keep our eye on the prize. CRC staff are working hard in this moment not just to respond, but to build; and to do it in greater partnership with our coalition members. We know our communities need our members and our work more than ever. While the forces in power are trying to drive us further into the margins, we are pushing back and are determined to do all we can to achieve our vision of a fair and inclusive economy that puts the needs of communities of color and low income communities at the center.

Thankfully, the five-year strategic plan that our board, members, and staff helped build a year and a half ago continues to give us the vision and structure to work toward our five strategic goals: holding financial institutions and regulators accountable to the needs of our communities, building economic opportunity, protecting and building family and household wealth, building people power through community engagement, and deepening and broadening our impact.

Since the election, the communities we serve are experiencing unprecedented pressures that threaten their financial health and stability. The race baiting, fear mongering, and overt racism we saw on the campaign trail is now a policy agenda. It is reflected in the proposal to build a wall, the Muslim Ban, attacks on affirmative action, dramatically increased detentions and deportations, proposed budget cuts and weakening of rules at HUD, a proposed ban on transgender people serving in the military, attempts to disenfranchise people from voting, and the attacks against the Consumer Financial Protection Bureau and the Community Reinvestment Act (CRA), our two strongest tools that ensure that all communities have access to safe and transparent credit and financial products that help build wealth.

A recent report from the Treasury Department outlined this administration’s goals to relax banking safeguards and to modernize the CRA. We will work to ensure that any CRA modernization plans do not entail weakening the law or reducing investment in California’s communities. CRC will also continue our work to preserve the common-sense safeguards that were implemented under Dodd-Frank to prevent another Great Recession.

While CRC will continue our CRA accountability work, I also want to update you on how we’re responding to these new threats.

CRC is Responding.

At three emergency summits that we co-hosted with the Greenlining Institute after the election, we heard concerns from our members and allies in Fresno, Los Angeles, and San Francisco about this administration’s approach to housing, its attacks on immigrants and people of color, and how local and state governments will need to step up and fill in the void at the federal level. Service providers also raised the need for dramatically increased organizing and advocacy.

CRC is taking these challenges head on. Our organizational mission, vision, and strategic plan call for no less. As the current administration further attempts to divide our country and marginalize the most vulnerable among us, we will fight back and work even harder with you to bring our communities together and to advance our shared goals in the following ways.

Resisting Economic Displacement: CRC is working with our local partners and members to fight displacement of low-income communities and communities of color in the East Bay, with a special focus on the mechanics of how this is happening, including who is financing this activity, and how we can stop it.

Protecting Immigrant Financial and Economic Resources: Next month, we will release the results of a survey of our members that reveals how their immigrant clients are being impacted, including some who have even gone “underground” in response to this new climate of fear.

We are also building from the momentum of a sold-out, standing room only symposium we co-hosted in March for front line providers in the East Bay focused on financial resources for immigrant families. CRC will be engaging with immigrant families and the service providers they trust to understand the unique financial and economic challenges they’re facing, and to identify and expand access to resources that can help, starting with better banking practices.

Making Government a Force for Good, not Harm: Many families are being ensnared in debt traps created both by government fines and fees and the abusive debt collection practices used to collect on them. The lack of income to pay a parking or traffic ticket can quickly spiral out of control into mounting debt, ruined credit, driver’s license suspension, job loss, criminalization, and incarceration. We believe now more than ever, local and state governments need to stand up on behalf of working families, not against them. We’ll be engaging in this new area of work with our California members and allies, and also with our long-term partners in three states: North Carolina, Illinois, and Maryland.

CRC stands in solidarity with our members, partners, and allies, and we will continue to advocate for policies that support communities of color and working families, and against policies that would cause them harm.  In what often feels like dark times, we are keeping our eyes on the prize, with the belief that together in struggle we can and will prevail.

We appreciate your support and I welcome your feedback.

In solidarity,

Paulina Gonzalez

Executive Director

The California Reinvestment Coalition

HUD Denied Our Fee Waiver for a FOIA Request About Reverse Mortgage Complaints

It would appear that HUD does not want CRC, nor the general public, to know more information about reverse mortgages, complaints about them, or foreclosures on surviving spouses.

In late 2014, we submitted a Freedom of Information Act (FOIA) request to HUD, asking, among other things for data related to:

  • the number of complaints that have been filed to HUD about reverse mortgages serviced by Financial Freedom;
  • any data on estimates of the number of non-borrowing spouses who could face foreclosure if their reverse mortgage borrowing spouse were to pass away;
  • the number of complaints made against Financial Freedom, a reverse mortgage servicer that is owned by OneWest Bank, a bank which is trying to merge with CIT Group; and
  • the number of foreclosures on surviving spouses by Financial Freedom since April 2009, and the number of foreclosures for the industry as a whole.

In December 2014, HUD denied our request for a fee waiver.   We appealed.

Today, we heard back that we have lost our appeal.  HUD’s letter to CRC suggests that we failed to meet the criteria that “the disclosure of the information would contribute significantly to the public’s understanding of government activities or operations.”

To understand why this is so problematic, consider why we submitted a FOIA request in the first place.

For years, reverse mortgage brokers have been telling couples that it is okay to remove the younger spouse from the title of the home in order for the older spouse to obtain a reverse mortgage.  Couples were told there was no chance the younger spouse would be kicked out if the older spouse were to pass away, or in other cases (like this one), they were told the younger spouse could be added onto the mortgage as soon as they turned 62.  All of this was done with HUD turning a blind eye to this practice.  Unfortunately, as the older spouses have passed away, reverse mortgage servicers have been moving to foreclose on the surviving spouse.

HUD is already being sued for enabling these foreclosures and as a result, a federal judge ordered HUD to develop a policy to assist theses non-borrowing, surviving spouses.  The policy that HUD announced in January is NOT expected to help any surviving spouses because it relies on the servicer’s discretion and because it would likely require the surviving spouse to come up with a large lump sum of cash.  For more on this, see today’s press release:  Advocates: Grandma May Get Run Over By HUD’s New Reverse Mortgage Policy

So, what should one conclude from HUD denying a fee waiver for our FOIA request because granting it would NOT contribute significantly to the public’s understanding of government activities or operations?

We feel the public would gain a lot from this knowledge.

A 2013 story below illustrate why we think it’s important for HUD to disclose this information.  Stay tuned to hear our next steps.

Reverse Mortgage Nightmare

WFMY News2Reverse Mortgage Nightmare: Widow Facing Foreclosure

WINSTON-SALEM, N.C.– In 2007, a knock at Barbara Freeman front door, came with a great opportunity: to be debt-free and take care of her sick husband.

This year, another knock at that same door was a sheriff’s deputy serving foreclosure papers — and that’s when her nightmare began.

The widow is now at the brink of losing everything she and her husband worked for all because of a reverse mortgage. In the most simplified terms, reverse mortgages differ from “regular mortgages” because in the latter, a homeowner makes monthly payments to a lender.

Watch the full story here: Reverse Mortgage Nightmare: Widow Facing Foreclosure

 

Delays by Financial Freedom Cost Family Heir Extra Money with Reverse Mortgage

The testimony of Elizabeth Lavulo, 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 ELIZABETH LAVULO

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

FEDERAL RESERVE BANK, LOS ANGELES BRANCH

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

My name is Elizabeth Lavulo.  My family property is located in Salt Lake City, Utah.  I am a Marketing and PR Executive.

When my Grandmother was sold a reverse mortgage her conditional acceptance was for her family to retain the property after her death.

When she passed away, I did everything according to HUD regulations to repay the loan.

Beginning with the repayment letter, One West Bank (OWB):

Did not provide a Single Point of Contact or anyone helpful.

OWB said they didn’t get my documents – time after time.  THEY DID

OWB claimed I did not have legal authority to speak to them or act on behalf of my grandmother’s estate – I DID

OWB Accelerated foreclosure 4 months after my Grandmother’s death

OWB refused to honor my letter of intent to repay the loan and refused to grant me the HUD authorized time to obtain a new loan.

I provided proof of loan approval multiple times

The OWB response:  3 attempts to auction the property in 6 weeks – on September 17th, October 17th and October 31st 2014.  It was only stopped with hours to spare by HUD intervention.

Escrow proceeded and certified funds were sent per the OWB loan payoff statement.

OWB refused to accept the certified funds and demanded additional legal fees because OWB chose to list the property for auction a 4th time.  OWB’s statement to escrow “If the additional fees for listing the property for auction are not paid immediately OWB will return the certified funds and auction the property.”

In order to close the loan I was forced to pay $2,015.60 in foreclosure related costs and legal fees for the decision of OWB to accelerate foreclosure and auction 4 times.

My story in illustrative of OneWest Bank’s refusal to allow consumers to repay reverse mortgage loans with certified funds, to accelerate foreclosure, and violate all federal regulations and consumer rights.

I request an Investigation, audit, and review of OWB Reverse Mortgage Loan Files

  • For the servicing violations of Federal Regulations and consumer rights
  • To ensure compliance with existing laws and regulations.

Thank You!

Documented evidence of my testimony can be provided upon request.

Consumer Testifies to Federal Reserve About Financial Freedom Reverse Mortgage Problems

The testimony of Karen Hunziker, a surviving family member 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 KAREN HUNZIKER
PUBLIC MEETING FEBRUARY 26, 2015, 8 AM to 4 PM
FEDERAL RESERVE BANK, LOS ANGELES BRANCH

Name: KAREN HUNZIKER

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

My name is Karen Hunziker. I am a 19 year homeowner of the home I shared with my husband in Pollock Pines, California. I am an artist craftswoman.

I am considered a Non-Borrowing Spouse. I was 60 and my husband was 65 when the originating salesperson told us to remove my name from title. Although we were both very concerned that I could be giving up my property rights, the salesperson assured us I would be protected until 62 when I was put on title. On my 62nd birthday my husband and I met with our Trust Attorney who informed us the only way I could be on title was to refinance into a new reverse mortgage and bring $60,000 to close the loan. That was impossible because of the first reverse mortgage.

My husband passed away in May 2014 and 10 days later OWB sent me a repayment letter and a PRE-FORECLOSURE letter saying they would initiate foreclosure in 30 days.

OWB has denied all HUD rights and consumer protections.

• OWB claimed I have less rights than other heirs because I am a non-borrowing spouse;
• OWB Made a legal determination to the validity of my legal authority as Successor Trustee;
• OWB demanded my Trust be recorded violating my privacy rights and California Law;
• OWB Refused to communicate with me directly;
• OWB used the California Homeowner’s Bill of Rights to Accelerate foreclosure, violate Federal Regulations and my consumer rights

Additionally OWB has failed to provide a Single Point of Contact. This creates a communication maze impossible to navigate for the consumer to get customer support or guidance:

One day, I called 5 times to verify I received the 90 day extension OWB promised in writing. I spoke to 5 different people all with a different story. In part, I was told:

• OWB didn’t receive the documents faxed multiple times,
• The documents needed to be reviewed by their legal department,
• I had to call back in 5 days
• I used up all my extensions.
• I didn’t get the documents in on time,
• The last person told me my property was scheduled for auction in 30 days.

At all times OWB refused to put any phone conversation in writing.

My story illustrates the consistent pattern and practice of OneWest Bank to aggressively foreclose and evict non-borrowing spouses from their homes.

I request an Investigation, audit, and review of OWB Reverse Mortgage Loan Files
• For the servicing violations of Federal Regulations and consumer rights
• To ensure compliance with existing laws and regulations.

Thank You!

Documented evidence of my testimony can be provided upon request.

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.

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

Bet Tzedek Testimony at OneWest CIT Group Merger Federal Reserve Hearing

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

CIT Group/OneWest

JOINT PUBLIC MEETING

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

February 26, 2015

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

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

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

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

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

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

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

Thank you.