Recent posts by Tom Feltner
Seizing and restructuring underwater mortgages through eminent domain could provide significant public benefit by preventing foreclosures and protecting property values. But eminent domain should be used primarily in cases where existing principal reduction options are not available, and public accountability should be an integral part of the process. In comments prepared for the Chicago City Council Joint Committee on Finance, Housing, and Real Estate, Woodstock Institute described the scope of the negative equity problem and how a possible program could be structured.
Today, hundreds of community organizations called on President Obama to make a recess appointment to the Federal Housing Finance Agency (FHFA). FHFA is currently led by an Acting Director, Ed DeMarco, who has refused to allow Fannie Mae and Freddie Mac, which hold the majority of the mortgages in the country, to participate in a key administration principal reduction program.
As efforts to roll back restrictions on high-cost payday loans ramp up in the House, the Protecting Consumers from Unreasonable Credit Rates Act introduced in the Senate by Senator Dick Durbin (D-IL) would create a national interest rate cap of 36 percent. The bill is a response to the persistent triple digit interest rates common among payday loan and other high-cost loan products.
In an effort to highlight the local impact of the ongoing foreclosure and economic crisis, Woodstock Institute and Illinois members of the National Community Reinvestment Coalition went to Washington on April 19 to call on policymakers to support a broad economic development agenda to keep homeowners in their homes, return vacant properties to productive use, and increase employment opportunities.
Last year, Chicago and surrounding Cook County amended vacant property ordinances to clarify property stewardship requirements for homeowners and mortgagees before, during and after the foreclosure process. Opponents of the ordinance have suggested that shortening the judicial foreclosure process is a better approach than requiring mortgagees to maintain vacant properties. This oversimplifies a complicated problem.
The need to address the issue of negative equity has finally captured the attention of people working to mitigate the effects of the foreclosure crisis. The Home Affordable Modification Program (HAMP) recently ramped up incentives for servicers to provide principal writedowns. Attorneys general, federal banking regulators, and the five largest servicers have agreed to a robosigning settlement largely focused on reducing principal for underwater homeowners. And Edward DeMarco, the Acting Director of the Federal Housing Finance Agency (FHFA), is under pressure to drop his staunch opposition to principal reductions for loans backed by Fannie Mae and Freddie Mac.
Two proposals pending in the Illinois General Assembly promise to crack down on the practice of incarcerating indebted consumers with little or no income. Each year, thousands of debt collection cases end up in court, with many borrowers unable to repay claims without dipping into exempt income, such as Social Security or the limited equity in their home or car. A 2008 Woodstock Institute report found that 45 percent of borrowers taking out consumer installment loans in Cook County failed to appear in court, resulting in ex-parte default judgments in favor of the lender.
The Federal Reserve Board approved Capital One’s acquisition of the online savings bank ING Direct, the first major bank merger since the passage of the Dodd-Frank Consumer Protection and Wall Street Reform Act.
Woodstock Institute, a member of the Monsignor John Egan Campaign for Payday Loan Reform, joined Rep. Greg Harris to support HB3935, which ensures that unlicensed lenders, often operating online, can no longer pursue Illinois consumers in court for alleged damages from illegally issued payday loans.
The Zoning and Buildings Committee of the Cook County Board of Commissioners unanimously approved an ordinance proposed by Commissioner Bridget Gainer that would give suburban communities the ability to step up maintenance requirements for vacant properties stuck in the foreclosure process. The proposal follows a recent ordinance adopted by the Chicago City Council that mandates minimum maintenance standards for so-called “red flag” properties that become vacant during lengthy foreclosure processes.
The Federal Housing Finance Agency, the agency charged with overseeing Fannie Mae and Freddie Mac, has filed a lawsuit in the U.S. District Court for the Northern District of Illinois against the city of Chicago to prevent enforcement of Chicago’s vacant property ordinance. The agency states that the City’s effort to hold mortgagees responsible for the upkeep of troubled, vacant properties stuck in the foreclosure process infringes on the FHFA’s sole authority to supervise the secondary mortgage market enterprises.
Woodstock Institute issued the following statement today after the failure to secure cloture on the nomination of Richard Cordray as director of the new Consumer Financial Protection Bureau (CFPB):
“Today, Senator Mark Kirk cast his vote in opposition to strong consumer protections for loans made by mortgage brokers, payday lenders, and private student lenders,” said Dory Rand, president of Woodstock Institute.
The Consumer Financial Protection Bureau (CFPB) – a centerpiece of the 2010 Wall Street Reform and Consumer Protection Act– opened its doors on July 21. It’s the nation’s first ever agency with the sole mission of preventing abusive, deceptive and discriminatory consumer products and practices.
GOP lawmakers and community bankers used Monday’s U.S. House Committee Financial Services field hearing in Chicago to air their objections to the 2010 financial overhaul, as consumer and community advocates called for a commitment from policymakers and the industry to give the new Consumer Financial Protection Agency (CFPB) time to put into place consumer protections from firms such as mortgage brokers and payday lenders that previously were not subject to federal regulation.
On Thursday, Senator Mark Kirk will make it clear where he stands on ending tricks and traps in the consumer financial marketplace when the full Senate votes on Richard Cordray’s nomination to direct the Consumer Financial Protection Bureau (CFPB). We urge him to stop his attempts to weaken the agency and confirm the nomination of Richard Cordray as the CFPB’s permanent director.
The CFPB is soliciting a third round of comments on its Know Before You Owe project to simplify disclosure forms used in the mortgage process. The agency last week extended the deadline to this Wednesday.
Legislation that would regulate rent-to-own stores has popped up in Illinois and in D.C., but neither bill has strong enough protections for consumers of this extremely high-cost service. The national legislation is particularly harmful—it would prohibit stores from disclosing the interest rate on rent-to-own transactions and preempt stronger state laws. On the eve of the launch of the Consumer Financial Protection Bureau, these industry-backed bills remind us why we badly need a strong consumer watchdog with the authority to regulate financial transactions that occur outside of traditional banks.
Two key reforms proposed by Housing Committee Chair Karen Yarbrough that would empower communities to better address the foreclosure crisis are coming up for consideration in the Illinois House of Representatives Housing Committee this tomorrow, April 7. We need your support to make sure that communities have enough resources to keep families in their homes and keep vacant foreclosed homes from destabilizing neighborhoods.
During the last year, your support has proven critical in helping Woodstock pursue its fair lending, wealth creation, and financial systems reform work. We are thankful to have had the opportunity to partner with you to promote foreclosure prevention, payday lending reform, and examining the impact of concentrated, very low credit scores.
2010 was a heartening year for consumer advocates working to eliminate income tax refund anticipation loans (RALs), the high-cost loans that strip assets from low-wealth tax filers. First, the Office of the Comptroller of the Currency (OCC), the federal regulator of national banks, issued a policy statement regulating the provision of RALs that strengthened its hand compared to previously unenforced policies. On the heels of that announcement, Chase announced it was leaving the RAL business. Chase was the second of the three major banks who provided RALs to withdraw, following Santa Barbara Bank & Trust’s forced exit in 2009. In August, the IRS announced it would stop facilitating the preparation of RALs by providing information on a borrower’s debts to tax preparers. Finally, the year ended with more happy news: the OCC ordered the third main RAL provider, HSBC, to stop providing RALs, leaving H&R Block without a bank partner for the upcoming tax season. Republic Bank and Trust, an FDIC-regulated bank that is currently the last bank around to provide RAL financing, is even limiting the amount of funding available to its RALs, including those arranged by Jackson Hewitt. With few financing options left for tax preparers who want to make wealth-stripping loans to working families, this could be the beginning of the end for RALs as a meaningful market.