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.


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. 


JPMorgan Chase Settlement: Good Steps Forward, But More Should Be Done

November 19, 2013—Responding to reports of a final settlement between the US government and JPMorgan Chase, Kevin Stein, Associate Director of the California Reinvestment Coalition, released this statement:

“While details are still emerging, some of the provisions in the settlement will go a long way towards helping homeowners who are struggling to keep their homes. We applaud the focus on principal reduction modifications for first mortgages (modifications that are statistically the most likely to help keep people in their homes) and support the appointment of a strong monitor to oversee the settlement. The bank committing to provide additional quality loans to low and moderate income home buyers is welcome, and could be an antidote to all-cash investors and Wall Street firms that are buying up properties and pushing out first-time home buyers.

CRC also has some concerns about the settlement: 

1) The independent monitor should require Chase to submit demographic information on their customers who are facing foreclosure, and whether or not the bank offers modifications to these customers and their neighborhoods to ensure that hardest hit communities receive help, and that fair housing and lending laws are followed.

2) Chase should stop any foreclosure proceedings for borrowers who might be eligible to receive relief under this settlement so that they are not foreclosed on while waiting for a modification.

3) It appears the bank could receive credit for granting forbearances, wherein a homeowner’s monthly payments are temporarily reduced, but their loan balance is not. In most cases, offering a forbearance to a homeowner is a band-aid solution that merely postpones dealing with the underlying problem in the loan. Instead, the bank should focus on offering permanent, sustainable modifications.

4) The settlement reportedly includes $2 billion in fines to federal prosecutors. Some of that fine should be used to fund housing counselors and nonprofit attorneys who will work with homeowners to ensure they receive help under the settlement. Part of the fine should also be used to fund the development of more affordable, multifamily housing, a need that has only increased, especially in California, since the mortgage meltdown.

5) Lastly, if Congress doesn’t extend the Mortgage Debt Forgiveness Act, or if it’s not addressed in the final settlement, the principal reduction modifications in this settlement could create unintended tax consequences for homeowners who are already struggling financially.”

In October, CRC, along with 17 other California nonprofits that directly serve homeowners facing foreclosure, released a statement, suggesting that all future mortgage settlements incorporate seven provisions, based on “lessons learned” from previous settlements.The seven provisions are listed below, for more detail on the provisions, visit this link.

All Future Mortgage Settlements Should Include:

1. Relief commensurate with harm caused.
2. Priority on keeping people in their homes through first lien principal reductions.
3. Support for housing counselors and legal service lawyers.
4. Stronger loan servicing standards
5. Support for affordable housing.
6. Transparency and data reporting to ensure relief is distributed fairly.
7. Strong enforcement and monitoring.