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.
June 5, 2009 - Posted by The Leadership Conference
Congress is considering passing a bill that will cap interest rates on consumer loans at 36 percent to prevent lenders from taking advantage of people who rely on these kinds of loans to meet basic needs or to cover unexpected expenses, like car repairs or vital medical procedures, many of whom are minorities and low-income people.
One of the most predatory consumer loans is the payday loan, a short-term loan with high annual interest averaging over 400 percent. Individuals on a limited income take out payday loans and often find that they can't pay back the loan because of the high interest. Often they fall into the debt trap of payday loans by taking out another loan because it is the only way to pay back the first loan, accruing heavy fines in the process.
Payday loan businesses tend to be located in predominantly African-American or Latino neighborhoods. Fifty-five percent of payday loans are taken out by African Americans and Latinos, who together pay over $240 million a year in fees.
A recent Center for Responsible Lending survey found that nearly three in four Americans support a federal cap on consumer loans at 36 percent.
Visit 400 Faces of Payday Lending, Center for Responsible Lending's website devoted to exposing the effects of payday lending on Americans, for more information.
June 3, 2009 - Posted by The Leadership Conference
The Obama administration said today that it will work with FEMA and the Department of Housing and Urban Development to find permanent housing for displaced victims of Hurricanes Katrina and Rita in the Gulf Coast who still live in hurricane relief trailers. The latest deadline extension for residents to move out of the trailers expired on May 30.
More than 80 percent of people living in the trailers own homes that were damaged by the storms but lack the economic means to finish fixing their properties. Most sought federal and state grants to pay for the repairs necessary to make their homes livable again, but frequent delays and administrative problems left many of them with no option but to stay in their trailers.
Under the administration's plan, $50 million will be distributed by Gulf Coast housing authorities in the form of new housing voucher rental assistance. Residents will get more hands-on assistance with transitioning to permanent housing and also have the option to buy their trailers from FEMA for as little as $1.
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.
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