Housing & Lending
Shelter is a basic human need - and homeownership is a basic key to financial viability. Some of the civil rights issues we look at here are predatory lending, fair housing laws, and homelessness.
May 29, 2009 - Posted by Tyler Lewis
New Mortgage Bankers Association (MBA) data released yesterday shows that foreclosure rates and delinquency rates, or the rate of people who are at least one payment behind in their mortgages but not in foreclosure, increased in the first three months of 2009, even for homeowners with prime loans.
According to the MBA, there are more prime fixed-rate loans than other types of loans among new foreclosures for the first time since the rise in subprime lending. Generally, only borrowers with good credit qualify for prime loans.
The delinquency rate for homeowners with prime loans increased to a little more than 6 percent. In addition, the percentage of loans in the foreclosure process doubled in the last year. The combined percentage of delinquent loans and loans in foreclosure was about 12 percent, the highest ever recorded by the MBA.
Despite rising delinquency and foreclosure rates, the MBA lobbied aggressively to block an amendment to a foreclosure prevention bill in Congress that would have given bankruptcy judges the ability to rework defaulted home mortgages on family homes to an affordable value.
Without the amendment, the bill that was passed last week will not help as many homeowners as it could have. According to estimates by the Center for Responsible Lending and the National Association of Consumer Bankruptcy Attorneys, the change to bankruptcy law could have prevented up to 1.7 million mortgages from falling into foreclosure.
May 27, 2009 - Posted by The Leadership Conference
You may think that not owning a home will protect you from foreclosure - but an estimated 40 percent of households facing eviction due to foreclosure are renters, not homeowners. Many renters have been evicted from their homes with little or no notice - sometimes with no idea that a foreclosure was pending - after their landlords were unable to pay their mortgages.
But renters now have some protection against eviction under the foreclosure prevention bill signed by President Obama last week. The new law, which took effect immediately, requires the new owners of a property to allow tenants to remain in the home, as long as the tenants pay their rent on time. Renters will be able to stay until the end of their lease, or will get at least 90 days notice if they do not have a lease or if the new owner intends to reside in the home.
May 20, 2009 - Posted by Tyler Lewis
The Senate passed a bill (90-5) yesterday that will help curb credit card abuses that have unfairly harmed millions of borrowers.
May 18, 2009 - Posted by The Leadership Conference
A payday loan store in Henrico County, VA. Photo credit: Andrew Bain.
Today's Washington Post article, Poor? Pay Up, details how low-income people often end up paying more for basic goods and services - both in money and time - than middle-class people pay for the same items.
For example, in Washington, D.C., where LCCR/EF's office is located, some low-income neighborhoods don't have a supermarket. If you don't have a car, you can either go to a corner store, where you would pay $3.79 for a loaf of wheat bread, or you could take the bus to a supermarket in another part of the city, where you would get that loaf of bread for only $1.19 - but you've wasted hours waiting for and taking the bus to get to the store.
The article also details the problems caused by payday lenders, to whom low-income people often turn if they need money quickly for unplanned expenses such as car repairs, prescriptions, or higher-than-usual utility bills. It's fairly easy to get a short-term loan, but you may end up paying fees and interest that add up to an annual percentage rate of more than 400 percent. In contrast, the average rate for credit cards in the United States is less than 15 percent. Payday lending is currently legal in 37 states.
May 13, 2009 - Posted by The Leadership Conference
More than one in five homeowners are "under water," or owe more money on their house than it is currently worth, according to a new study by Zillow.com, a real estate research service. Negative equity occurs when the value of a home drops below the value of the homeowner's mortgage. In the past year, average home prices fell 14.9 percent nationwide.
Although historically, negative equity will resolve over time, it can lead to foreclosure when homeowners need to sell or refinance a home in the first few years after a purchase, before they have built up significant ownership equity.
In recent years, many homeowners bought houses with adjustable rate mortgages (ARMs), which offer a low "teaser" interest rate -- and low payments -- for a set period of time, often two to three years. At the end of the initial period, the mortgage then "adjusts" to the market interest rate, which can dramatically increase the monthly payment account.
Homebuyers who took out ARMs during the 2000s were assured by lenders and mortgage brokers that they would be able to sell or refinance their homes before the interest rate was scheduled to adjust, avoiding the increase in monthly payment. However, when housing values dropped, many homeowners discovered they were not eligible to refinance their mortgages because they didn't have enough equity in the home.
May 4, 2009 - Posted by Corrine Yu
More than 40 years after the passage of the Fair Housing Act, housing discrimination continues to be a problem, according to the National Fair Housing Alliance's (NFHA) annual report on fair housing enforcement (PDF).
The Fair Housing Act prohibits housing discrimination on the basis of race, color, national origin, religion, sex, familial status and disability. It covers the sale, rental, and financing of dwellings, as well as housing-related transactions such as advertisements and insurance.
Last year, 30,758 complaints of housing discrimination were filed, a nearly 14 percent increase from the previous year, and the highest number filed in a single year since the Department of Housing and Urban Development (HUD) started keeping track in 1990. NFHA attributed the spike in the number of complaints to the deepening foreclosure crisis, as well as internet ads that violate fair housing laws.
However, the number of complaints filed doesn't reflect the enormity of the problem. HUD estimates that fewer than one percent of housing discrimination occurrences are actually reported.
In the report, NFHA makes recommendations for improving the enforcement of fair housing laws, such as establishing an independent fair housing enforcement agency, enhancing HUD's ability to process complaints more quickly, providing additional funding for private fair housing organizations, and pushing the Justice Department to prosecute more predatory lending cases.
The report comes on the heels of Fair Housing Month, which was established in April to celebrate the anniversary of the passage of the Fair Housing Act on April 11, 1968 and educate Americans about the importance of fair housing enforcement.
May 4, 2009 - Posted by Tyler Lewis
From left to right: Former HUD Secretaries Henry Cisneros and Jack Kemp at a National Commission on Fair Housing and Equal Opportunity hearing in Chicago in July 2008.
Jack Kemp, former Republican vice presidential candidate and secretary of Housing and Urban Development (HUD), passed away from cancer at his home in Bethesda, Md., on Saturday at the age of 73.
Kemp had a long and distinguished political career, serving in Congress for nine terms and serving as HUD secretary under President George H.W. Bush. He was also an advocate for civil rights, pushing his party to embrace fair and humane immigration reform, D.C. voting rights, and federal investment in low-income housing.
Along with fellow former HUD Secretary Henry Cisneros, Kemp co-chaired the bipartisan National Commission on Fair Housing and Equal Opportunity, created in 2008 by LCCREF, the Lawyers' Committee for Civil Rights Under Law, the NAACP Legal Defense & Educational Fund, and the National Fair Housing Alliance. The commission held hearings all over the country to examine the effect that federal enforcement of fair housing laws and the subprime mortgage crisis have had on residential segregation, releasing a report of its findings with recommendations in December 2008.
April 30, 2009 - Posted by Tyler Lewis
Due to stiff opposition from the banking and mortgage industries, the Senate voted against passing (45-51) an amendment today that would have given bankruptcy judges the ability to rework defaulted home mortgages on family homes to an affordable value.
According to estimates by the Center for Responsible Lending and the National Association of Consumer Bankruptcy Attorneys, the bankruptcy provision could have prevented up to 1.7 million mortgages from falling into foreclosure.
Supreme Court Hears Arguments in Case about States' Right to Enforce Fair Lending Laws Against National Banks
April 28, 2009 - Posted by The Leadership Conference
Today, the U.S. Supreme Court heard oral arguments in a case regarding whether states have the authorize to enforce state fair lending laws against national banks and other financial institutions.
The case, Cuomo v. Clearing House Association, began in 2005 when the state of New York tried to investigate certain national banks operating in the state that it believed were charging minority borrowers higher interest rates than White borrowers. Federal Reserve home mortgage data released that year showed that minority borrowers were given higher-interest mortgages at disproportionately higher rates than White borrowers.
Like his predecessor Elliot Spitzer, who initiated the investigation, New York Attorney General Andrew Cuomo wanted to determine whether banks and other lending institutions were complying with consumer and anti-discrimination laws. The banks refused to turn over their records, arguing that only federal regulators have the power to make them disclose loan information.
However, many civil rights advocates believe that states should take greater initiative in regulating banks because the federal government isn't doing enough to prevent abuse within the mortgage industry. In their amicus, or friend-of-the-court, brief (PDF), the Center for Responsible Lending and AARP argued that "there is significant evidence that enforcement by state regulators has served an important role in protecting consumers against financial practices" and added that "consumers, communities and the economy would be ill-served by concentrating in one federal agency the authority to enforce [consumer protection laws]."
The District of Colombia and 49 other states also submitted amicus briefs in support of the state of New York.
April 27, 2009 - Posted by Tyler Lewis
With the number of foreclosures still rising around the country, the Senate is expected to consider a bill this week that would help millions of struggling homeowners keep their homes.
The House of Representatives passed their version of the Helping Families Save Their Homes Act on March 5, but a provision that will give bankruptcy judges the ability to rework defaulted home mortgages on family homes to an affordable value has drawn stiff opposition from some senators and the banking and mortgage industries, preventing the Senate from voting on the bill more quickly.
Recent data on foreclosures shows that the crisis is far from over. According to RealtyTrac, the number of foreclosure filings in the first quarter of 2009 increased nine percent from the previous quarter, and 24 percent from the first quarter of 2008.
More than three million homeowners are projected to default on their mortgages this year and more than two million are expected to lose their homes, according to Moody's Economy.
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