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Real Estate

Real Estate (2)

Fair lending to be CFPB’s top priority in 2017

By Charlene Crowell

As a New Year approaches, fair lending will be the priority for the nation’s consumer financial cop on the beat. Mortgage and student loan servicing along with redlining and small business lending will be a triple-focus in 2017 for the Consumer Financial Protection Bureau (CFPB).

“While the Bureau has taken important strides in our efforts to protect consumers from credit discrimination and broaden access to credit, we continue to identify new and emerging fair lending risks and we will monitor institutions for compliance,” said Patrice Ficklin, CFPB’s associate director for fair lending.

Specifically, CFPB will evaluate whether lenders have practiced one or more of the following:

§ Intentionally avoided lending in minority neighborhoods;

§ Whether racial or ethnic concerns affect how loan servicers work with borrowers who are behind on either a mortgage or student loan; and

§ Whether discriminatory practices affected access to credit for minority and women-owned businesses.

For all consumers, CFPB’s 2017 priorities are an encouraging sign. But for Black, Latino and other consumers of color, heightened fair lending enforcement could signal less predatory and discriminatory lending that robs people of their hard-earned livings. With heightened monitoring and related enforcement actions, lenders and creditors who violate fair lending laws will pay a price, and consumers will hold on to more of their own money.

To date, CFPB has recovered more than $11 billion for 27 million consumers who were harmed by illegal financial ploys. These enforcement actions have affected a wide range of lending areas from mortgages to student loans, auto finance and more.

The cumulative clout of CFPB enforcements has also attracted united support among national civil rights groups. On December 21, the Leadership Conference on Civil and Human Rights, NAACP, National Council of La Raza and the National Urban League released a joint statement in support of the Bureau.

“If the 2008 financial crisis showed us anything, it’s that consumers need a strong and independent regulator to look after the interests of consumers. The civil rights community stands behind Director [Richard] Cordray as he continues to lead the CFPB in the fourth year of his five-year tenure,” wrote the leaders.

“Any effort to weaken the agency or undermine its leadership would risk severe impacts on our communities – including communities of color and low-income families who are most vulnerable to financial abuse,” the leaders continued.

Unfortunately, many communities of color that were hardest hit financially during the Great Recession are also targeted for discriminatory and predatory lending. Racial disparities in earnings and income are worsened by business practices and decisions that deny consumers a chance to get ahead financially. Hence, no one should be surprised to learn that many consumers of color struggle to attain financial stability.

For example, on December 28, the Department of Justice announced a $9 million settlement to end a lawsuit alleging that Union Savings Bank and Guardian Savings Bank redlined predominantly Black neighborhoods in Indianapolis and three Ohio cities – Cincinnati, Columbus and Dayton. The two banks share ownership and management from their joint base in Cincinnati.

An opposite outcome occurred in early December when 10 lawsuits filed by a group of Black businesses in Michigan were dismissed. As reported, the plaintiffs alleged that Mercantile Bank violated the Equal Credit Opportunity Act with practices and loan terms that resulted in diminished commercial lending. According to U.S. Judge Robert Homes Bell, the charges that alleged violations occurred from 2007 to 2009 were beyond the statutory limitation. The lawsuits were filed in 2013.

“Three demographic factors affect your wealth: your race or ethnicity, how much education you have, and when you were born,” noted Lowell Ricketts, a senior analyst with the Center for Household Financial Stability, a program of the Federal Reserve Bank of St. Louis. “Wealth is distributed unequally across all three demographic categories.”

Ricketts found that between 2004 and 2013, the median wealth of Black families fell by 55 percent. In 2013, the median Black family owned 8 cents for every dollar that the median white family owned.

Another analysis, this one by the Economic Policy Institute, found that in 2015, Black workers were paid 26.2 percent less than their White peers.

This column has and will continue to share consumer victories that diminish these and other disparities that consumers of color continue to face. But as Vanita Gupta, the head of the U.S. Justice Department recently noted, “success stories alone cannot erase systemic injustices. They cannot eradicate profound inequities.”

“But they do give me faith in America’s capacity for progress,” she continued, “ – the notion that we can march forward, imperfectly but unyieldingly, to build a more inclusive, more just and more free union. And they give me hope that together we can advance the cause of justice.”

Here’s hoping that in 2017 our nation’s public policies will continue the journey towards financial justice.

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Southern California Real Estate Buying Expert Denounces Bank Loans and Traditional Means of Mortgage-Based Home Buying

Affordable Housing Alliance CEO Don Nay Challenges Banks and Offers Alternatives for Home Sellers and Home Buyers Alike

Nay will also hold free home buying workshops at Hilton Orange County on:

· Tues., Sept. 10 at 12:00 p.m. to 3:00 p.m.

· Thurs. Sept. 12 at 6:00 to 9:00 p.m.

· Tues. Sept. 17 at 12:00 p.m. to 3:00 p.m.

An additional three-day, in-depth seminar will take place from Fri., Sept. 20 through Sun., Sept. 22 from 8 to 5:00 p.m. at the Hilton Orange County.

Echo Media Group

While the home loan mortgage foreclosure crisis seems to have lost prominence as a primary topic of discussion and media coverage on a national level, hundreds of thousands of consumers, especially in markets like Southern California are still suffering from the ill effects of loan modifications, foreclosures and repossessions. In fact, lenders seized 3,297 Orange County, Calif., homes through foreclosure during the 12 months ending in April 2013 and the numbers are even greater in Los Angeles County and the San Bernardino-Riverside County market.

According to RealtyTrac® during the first half of 2013 there was a 34 percent jump in judicial scheduled foreclosure actions nationwide, on track to reach more then 800,000 foreclosure starts for the year. During the same period there were also 248,538 bank repossessions, on pace for nearly 500,000 for 2013.

Affordable Housing Alliance CEO Don Nay is an outspoken critic of banks and their processes for resolving challenged mortgages. “Banks force their mortgage holders to become delinquent on their mortgages before they address loan repayment issues,” explains Nay. “They delay loan modifications, offer little to no principal relief with those modifications, tack the unpaid amount onto the end of the modification, and when modifications are not granted, properties are foreclosed and offered at auction for ridiculous discounts, just 1.8 to 4.2 percent below the market rates in Southern California. Banks force properties to become Toxic Assets, which they can then bundle and sell at any price to other financial institutions like mutual funds. The entire process is reprehensible.”

RESOLVING THE FORECLOSURE PROBLEM

“Banks are financial institutions, not people,” explains Nay. “They have a cookie-cutter approach to making and servicing home loans that is without concern for the person responsible for repaying the loan. There are better ways to resolve the foreclosure problem than the programs banks offer.” And Nay should know, he has purchased more than 3,300 residential properties during the past 30 years and has never borrowed money from a bank to purchase a home.

DON NAY’S SOLUTION – BECOME THE BANK

Nay is an advocate of using Purchase Money Mortgages (PMM) to expedite residential real estate transactions and without involving banks. “About twenty years ago, PMMs were a common tool used to purchase homes,” explains Nay. “As banks became more ‘creative’ with their home loan offerings, the same offerings that caused consumers to become over-extended with their home loans, PMMs slowly lost prominence. But, they are more relevant today than ever before.”

With a PMM the seller basically becomes the bank. The buyer buys ‘Subject To’ a seller’s mortgage, and the difference between the balance on the assumed mortgage and the sales price of the property, the seller’s ‘equity’, is made up with seller financing. The purchaser pays the seller either up front or overtime, and continues to pay the mortgage to the bank. If the purchaser does not pay the seller or the bank mortgage on time, the home ownership reverts back to the seller and the seller retains all of the money received from the buyer. During the transaction, the bank has receives all required home loan mortgage payments and the seller has avoided the modification, foreclosure or repossession process.

INTERVIEW TOPICS

·How Do Purchase Money Mortgages Benefit Distressed Home Owners?

·Why Should Owner-Occupied Home Buyers Use Purchase Money Mortgages to Purchase a Home?

·How Can Individual Investors Benefit from Using Purchase Money Mortgages?

·Why Don’t Banks Offer Purchase Money Mortgage Programs?

·What Will the Don Nay-Real Deal Seminars Teach Consumers About Buying Homes?

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