Rubber stamp foreclosures continue pattern of disrespect for consumers’ rights and legal process, creating moral hazard for financial services industry

Washington, DC – In a letter to President Obama on Friday, the National Community Reinvestment Coalition joined dozens of other consumer and civil rights groups in a call for a temporary national moratorium on foreclosures, until an investigation can be completed to determine the extent to which consumers’ rights have been violated by servicers and lenders. NCRC also called on Congress and the Administration to pursue non-voluntary measures to resolve the foreclosure crisis.

“The rights of consumers have been treated as an afterthought by the financial industry,” said John Taylor, president & CEO of the National Community Reinvestment Coalition. “Allowing the industry to rubber stamp foreclosures, and continue with sloppy, extralegal practices promotes a ‘moral hazard’ that encourages abusive behavior. Not intervening to investigate and ensure that consumers are adequately protected in the foreclosure process sends a message that mortgage lending and servicing continues to be the Wild West, wherein the industry is free to do what they want, without consideration for the borrower.”

“We need to end the voluntary reliance on the industry to do the right thing with respect to homeowners. Three years of following this approach on the foreclosure crisis has largely failed. Congress and the Administration should take this opportunity to finally put in place something that puts an end to unnecessary foreclosures, rather than delaying them,” said Taylor.

Washington, DC – With the strong backing of House Financial Services Chairman Barney Frank, legislation to expand the lending requirements of the Community Reinvestment Act (CRA) to Wall Street was introduced yesterday. Such an expansion has the potential to spur significant job creation by leveraging hundreds of billions of dollars in private investments in small businesses and communities, without spending tax dollars, said John Taylor, CEO and President of the National Community Reinvestment Coalition, which worked closely with Frank in writing the bill. A section-by-section analysis of the bill is available at www.ncrc.org.

Washington, DC--On Friday, September 24th, NCRC will testify before Federal Reserve Board on making critical improvements to HMDA data, so that lenders can be held accountable for the types of loans they are issuing to communities.

“We are in an era of some of the most complicated mortgage products to-date and given the strain that bad mortgage loans have put on our economy, lenders should be examined with a microscope now more than ever. In the era of reckless and corrupt lending, it is crucial that HMDA actually does what it was enacted to do, which is identify discriminatory lending patterns and determine if financial institutions are meeting local housing needs,” said John Taylor, president and CEO of NCRC, in reaction to the Federal Reserve’s 2009 HMDA data report.

The recently enacted Dodd-Frank bill mandates significant improvements to HMDA data. NCRC calls upon the Federal Reserve Board and the new Consumer Financial Protection Bureau to expeditiously implement these improvements. In today’s release, the Federal Reserve Board states that the current HMDA data lacks information on credit scores, property values, and other factors necessary to fully account for disparities in racial access to affordable loans.

NCRC Urges Obama Administration To Mandate Loan Principal Reductions By Lenders & Ignore Calls For A “Do Nothing” Approach On Housing

Washington, DC -- National Community Reinvestment Coalition (NCRC) president & CEO John Taylor today urged the Obama Administration to ignore calls by some housing experts to “do nothing” on housing recovery. Instead, Taylor said the Administration should mandate loan principal reductions by mortgage lenders to prevent more foreclosures from throwing people out of their homes and flooding the market with vacant houses.

“A civilized country cannot embrace an economic policy that ignores human suffering. We can’t just turn away from the millions of families who are facing foreclosure for reasons beyond their control,” said Taylor, who has been advocating for mandated loan principal reductions since 2007.

“In the past four years we lost $6 trillion in real estate values. Somebody has to eat that, and it shouldn’t be the people who had nothing to do with creating the economic crisis in the first place. We need big solutions for very big problems, not half way measures and certainly not intentional neglect,” said Taylor.

Federal Reserve data estimates that residential real estate values dropped from $22.9 trillion in 2006 to $16.5 trillion in 2010, and banks have refused in large measure to bear these losses by writing them down on their books. Some economists believe that if banks did so, it would hasten, not hamper, an economic recovery.

Since 2007, foreclosures have been steadily increasing and, as a result, slowing the economic recovery. The Administration tried unsuccessfully to reduce foreclosures by coaxing lenders to modify mortgages voluntarily. A new HUD effort, which gets underway today, is not expected to make a significant dent in the two million foreclosures expected this year. Housing experts estimate another four million homes compose a “shadow inventory” of failing mortgages that banks have not foreclosed on yet but will have to do so in the near future.

NCRC first called for a broad scale loan modification program in March of 2007. NCRC’s Homeowners Emergency Loan Program (HELP Now) would have the Treasury Department acquire mortgage loans at a discount through the powers granted to the Administration under TARP, or through the power of eminent domain.

This would allow for the permanent and sustainable modification of loans, including principal reductions, which could then be packaged and resold to the market. Prof. Howell Jackson of Harvard Law School has demonstrated how the government could use eminent domain in this instance.

About NCRC

The National Community Reinvestment Coalition is an association of more than 600 community-based organizations that promote access to basic banking services, including credit and savings, to create and sustain affordable housing, job development and vibrant communities for America's working families.

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Click here to download press release as a PDF

Hundreds of NCRC members expected to comment and testify before bank regulators this summer

Atlanta, GA – Today, eight members of the National Community Reinvestment Coalition testified before the bank regulatory agencies regarding ways to improve the Community Reinvestment Act (CRA) to leverage hundreds of billions of dollars more in private investments for job creation and sustainable homeownership. The NCRC members and national partners testifying include: the Center for Responsible Lending, the Housing Assistance Council, National Council of La Raza, Operation Hope, Inc., the Atlanta Neighborhood Development Partnership, the Community Reinvestment Association of North Carolina, Community Development Corporation of Marlboro County, and Housing Education and Economic Development (HEED) of Mississippi (Exec. Director, Charles Harris pictured right). This is the second of four regulatory hearings that NCRC and its members will be attending and testifying at throughout the summer; NCRC’s testimony from the first hearing can be found here: http://bit.ly/8Y3Gke

“While the financial reform brought about by the Dodd-Frank act will guard against abusive and reckless behavior, it will not ensure that small businesses and responsible homeowners have access to the credit that they need to prosper. The whole of the private market must be engaged in the provision of capital and credit, the lifeblood of vibrant communities. The Community Reinvestment Act has encouraged banks to pursue their commitment to communities in a safe and sound manner. It should be expanded and improved, to better promote job creation and sustainable homeownership,” said John Taylor, president and CEO of the National Community Reinvestment Coalition. “I want to congratulate the hundreds of NCRC members who will comment or testify this summer before the bank regulatory agencies. Banking may seem to be an arcane subject to some, but if the financial crisis has taught us anything, it’s the centrality of the financial system to the health and vibrancy of our neighborhoods.”

A complete set of recommendations from the National Community Reinvestment Coalition can be found here: http://bit.ly/8Y3Gke. Specific topics to be discussed at the Atlanta hearing include access to banking services to the under-banked and un-banked individuals in underserved and distressed areas, and improvements to the CRA performance tests with a concentration on rural communities and small institutions.

About the National Community Reinvestment Coalition (NCRC):

The National Community Reinvestment Coalition is an association of more than 600 community-based organizations that promote access to basic banking services, including credit and savings, to create and sustain affordable housing, job development, and vibrant communities for America's working families.

http://www.ncrc.org/

Click here to download press release as a PDF

Regulators Must Fulfill Spirit and Intent of Bill

Washington, DC – Today, John Taylor, president and CEO of the National Community Reinvestment Coalition (NCRC), will join    President Obama for the signing ceremony of the financial reform bill. Taylor made this statement prior to the ceremony:

“Today’s signing of the financial reform legislation by President Obama marks the beginning of a renewed effort by the White House, Congress, regulators and by community and consumer groups like NCRC to hold Wall Street and the banks accountable to taxpayers, who bailed them out after a decade of reckless and greedy financial practices, designed solely to line their pockets. These practices led to an economic crisis unlike anything we have experienced as Americans since the Great Depression.”

Tepid Foreclosure Prevention Efforts Continue to Undermine Economic Recovery

Permanent modifications disappoint, as cancellations trend substantially higher

Washington DC- Today the Treasury Department and HUD released the latest numbers for the Home Affordable Modification Program (HAMP). Nearly 400,000 homeowners have been granted a permanent modification under the program, which compares to over 5.3 million foreclosure filings since the HAMP program began in March of 2009, according to numbers from Realty Trac. Trial modifications canceled exceeded permanent modifications by 122,793 in June, compared to May when 83,000 more trial modifications were canceled than made permanent.

“I feel like a broken record, but HAMP continues to perform very poorly. The permanent modification numbers are simply too low, while foreclosure filings continue above 300,000 for the 16th month in a row. Numerous problems plague the program, the most important of which is that it does not require mandatory principal reductions. Even after implementation of new guidelines in October, principal reduction will continue to be voluntary. The Administration understands that principal reduction is key to having the impact they seek to have on the housing markets. I’m wondering, though, if they have the right priority on this issue,” said John Taylor, president and CEO of the National Community Reinvestment Coalition.

“The lack of effectiveness of the program is contributing to a continued weak housing market. We may be facing a double dip in real estate prices nationally if nothing more is done to prevent foreclosures. The Administration may soon be in the position of needing to pursue more aggressive strategies to stem the foreclosure crisis and shore up the housing markets, such as renewing the first time homebuyer tax credit, bankruptcy reform or a bulk loan purchase program,” said Taylor.

About the National Community Reinvestment Coalition (NCRC):
The National Community Reinvestment Coalition is an association of more than 600 community-based organizations that promote access to basic banking services, including credit and savings, to create and sustain affordable housing, job development, and vibrant communities for America's working families.

http://www.ncrc.org/

Click here to download press release as a PDF

Washington, DC – The Senate has passed the Wall Street reform bill this afternoon. John Taylor, president & CEO of NCRC made this statement regarding it passage:

“This bill represents the most significant overhaul of the financial system since the 1930s. But serious work remains; the proof of the bill's worth will come not from what is written in the bill, but how the regulators interpret the bill, write the rules and then enforce them. Based on the job they did for the past decade, I will believe reform is here when I see it. The bill leaves too much to study, and the discretion of the existing regulators. For that reason, it’s a boon to Wall Street lobbyists, who will now be working behind the scenes to influence the regulators,” said John Taylor, president & CEO of the National Community Reinvestment Coalition. “Given the severity of the economic crisis resulting from reckless and greedy practices on Wall Street, the bill could have been justifiably stronger. This is what happens when you allow the very industry that caused the problem to buy all the front row seats at the bargaining table.”

“We’re pleased to see the creation of an independent Bureau of Consumer Financial Protection, whose sole purpose is to create and enforce rules that will protect consumers from faulty financial products like risky mortgages and high interest credit cards. But the consumer protections in the bill are not as bullet-proof as we would want. The same regulators who ignored consumer advocates' warnings about predatory lending have veto power over the consumer agency; That club of regulators is very insular, and usually in agreement. They can kill serious reform, and the financial lobby remains much more influential with regulators than consumer advocates. And the veto standard of safety and soundness is too broad to the point of potentially including measures that affect the profitability of financial firms, even profits off of very risky practices. It’s critical that this agency get a strong director whose professional devotion is to protecting consumers, and that it remains independent from the regulators,” said Taylor.

“We’re also pleased that Congress accepted our recommendations on additional data enhancements covering home mortgage lending, including foreclosure data, and small business lending. These data enhancements will shine a powerful spotlight on banks efforts to lend for small business expansion and job creation and sustainable homeownership,” said Taylor.”

Wall Street Reform Bill Passes the House

Washington, DC - Reacting to news that the House has passed the Wall Street reform bill this evening, John Taylor, president & CEO of the National Community Reinvestment Coalition (NCRC), made this statement regarding its passage:

“NCRC is very pleased to see some major steps taken to overhaul the banking system. The bill offers necessary consumer protections that would not have been passed without President Obama’s leadership. The Senate needs to act quickly to send this legislation to the President’s desk.  While it’s been distressing to see the outsize influence that the Wall Street banks have on Congress, it’s time now to get this done, and to move forward with other necessary measures to clean up the mess caused by the reckless and irresponsible behavior of Wall Street.”

“The creation of the Consumer Finance Protection Bureau (CFPB) as an independent agency that will be able to create and enforce rules of the road will protect consumers from future abuses. It is critical however that this independence not be undermined by the fact that the Federal Reserve Bank will house, pay for and be part of the oversight agency that has the authority to veto decisions of the CFPB. Only time will tell as to how much influence the banking regulators and others have over this new important agency. We will be paying close attention to the implementation of the agency, to ensure it is set up in a way that maximizes its ability to protect consumers.”

Washington, DC- Early this morning, the Conference Committee passed the Financial Regulatory Reform Bill.  John Taylor, NCRC’s president and CEO, made this statement regarding its passing:

“NCRC is very pleased to see some major steps being taken to overhaul the banking system. The bill offers major consumer protections that did not exist prior to President Obama’s and Barney Frank’s call for reform. The creation of the Consumer Finance Protection Bureau (CFPB) as a independent agency should be able to create rules and regulations and protect consumers from future abuses. It is critical however that this independence not be undermined by the fact that the Federal Reserve Bank will house, pay for and be part of the oversight agency that has the authority to veto decisions of the CFPB. Only time will tell as to how much influence the banking regulators and others have over this new important agency.”

Major components of the bill include:

Consumer Agency:

• A strong consumer agency was created to protect consumers and enforce regulations on mortgages, credit cards and other financial products.
• Independent Funding.
• Director appointed by the President and Confirmed by the Senate.
• Enforcement of pay day lenders, and check cashiers.

Help for Homeowners:

• Assistance to unemployed borrowers facing foreclosure.
• Money provided for the neighborhood stabilization fund which helps with assistance to borrowers for foreclosed or abandoned properties.
• Funds provided for counseling (Legal Aid).