A report in the Wall Street Journal shows that the banks and Department of Justice feel pressure from public demands for better foreclosure relief. But the Home Defenders League is quoted saying they must do much better than they have under the JP Morgan Chase settlement so far.
Wall Street Journal, By Alan Zibel, 7/14/14
U.S. authorities are giving Citigroup Inc. detailed instructions for providing $2.5 billion in aid to consumers as part of its multi-billion-dollar mortgage-securities settlement—after criticism that previous pacts gave banks too much leeway in disseminating the funds.
Citigroup’s $7 billion settlement with the Justice Department over the sale of flawed mortgage securities includes an agreement by the bank to provide $820 million worth of loan forgiveness and other assistance, plus nearly $300 million in refinancing. The money is also earmarked to help with down payments, donations to community groups and financing for rental housing.
These requirements, outlined in a 15-page appendix to the agreement, provide more specificity for consumer assistance than a $25 billion 2012 state/federal settlement with Citigroup and four other banks over mortgage-servicing problems. They also are more detailed than a November 2013 settlement with J.P. Morgan Chase & Co. over similar flawed mortgage securities sold to investors.
At a press conference in Washington on Monday, Associate Attorney General Tony West said the department aimed to improve on previous settlements by establishing an “an innovative consumer relief menu—one that not only includes the principal reductions and loan modifications we’ve built into previous resolutions, but also new, consumer-friendly measures.”
The Citigroup settlement, unlike previous pacts, directs the bank to provide half of its loan assistance to particularly hard-hit parts of the country. It also mandates that borrowers whose loan balances are cut won’t remain “underwater” —or owe more on their homes than their properties are worth.
The J.P. Morgan settlement addresses similar issues, but in a less targeted way. It gave the bank a bonus for providing aid to hard-hit areas, but set no specific requirement. In addition, the J.P. Morgan settlement encourages loan write-downs but does not specify how much of a borrower’s debt must be forgiven. The Citigroup settlement contains $180 million in financing for affordable rental housing—a provision not included in other settlements.
“This settlement is far more nuanced than previous settlements with respect to consumer relief,” said Andrew Jakabovics, senior director for policy development and research Enterprise Community Partners, a large affordable-housing nonprofit group. The pact, he said, “reflects many of the best practices we’ve seen develop with respect to creating sustainable loan modifications.”
A Justice Department official said the consumer-assistance portion of the Citigroup settlement reflects refinements to the government’s thinking after previous settlements. In addition, the official said the smaller size of Citigroup’s mortgage-lending portfolio caused the government to consider additional avenues for relief because the bank had fewer loans to modify.
There has been tension between the Obama administration and liberal activist groups over efforts to resolve cases related to banks’ mortgage-crisis conduct.
Consumer groups have been unhappy with previous settlements of mortgage-related cases. For example, the 2012 mortgage-servicing settlement allowed banks to receive credit for short sales, in which a bank agrees to allow the sale of a property with a mortgage worth more than the home’s value, and for granting “deeds in lieu of foreclosure,” where a homeowner voluntary surrenders the home.
Some activists are still skeptical of the government’s settlements with the financial industry. Kevin Whelan, national campaign director for the Home Defenders League, an activist group representing homeowners, said there’s been no noticeable impact from last fall’s J.P. Morgan settlement.
“We haven’t seen any evidence that they’ve done anything at all,” Mr. Whelan said.
No statistics on the J.P. Morgan settlement have been released. A J.P. Morgan spokeswoman declined comment.
Joseph Smith, a former North Carolina banking regulator, is serving as the independent monitor overseeing the J.P. Morgan settlement and is expected to release a report on its progress in the coming weeks.
Mr. Smith also served as the independent monitor for the $25 billion settlement reached in 2012.
Thomas Perrelli, a former Justice Department official who helped broker the 2012 mortgage settlement, will serve as the monitor of the Citigroup agreement. Mr. Perrelli is now at the law firm Jenner & Block in Washington.
On Tuesday July 8, homeowners and community groups took peaceful action at US Attorney offices around the country, delivering thousands of petition signatures and demanding greater oversight and accountability for settlements the Justice Department is reportedly negotiating with big banks. The actions, which took place in at least 10 cities, were a part of nationally coordinated effort under the banner "Show Us The Money"-- a sentiment felt by homeowners still waiting to see the relief promised from last year's record-breaking $13 billion settlement with JPMorgan Chase.
In addition to a petitions, the groups delivered a letter addressed to Attorney General Eric Holder, requesting that he personally intervene to ensure that the terms of previous mortgage settlements are fully implemented and that future settlements provide greater relief to the consumers harmed by the foreclosure crisis in the first place. As the events were taking place, news of a possible deal with Citigroup worth $7 billion resurfaced. Bank of America is expected to reach a deal with the Justice Department soon that could top $17 billion bringing the total to close to $50 billion - money that struggling homeowners and hard hit communities could desperately use.
Sergio Ceballos Aguilar, one of the homeowners who hoped the settlement with Chase would help him save his home from foreclosure, took part in the day of action, joined by members of Occupy Homes MN and the Home Defenders League. The group marched to Chase Bank's Minneapolis headquarters, where they released a banner held by balloons that read "Sergio's House: Show Me the Money," before stopping at US Attorney Andrew Lugar's office to present the letter.
"I want to be able to support my children with stable housing on the street they grew up on. All we ask for is a fair negotiation, to sell my home back to me so that I can continue to pay for my home," said Ceballos Aguilar. It is terrible that JPMorgan is pulling the same trick on our country that it is pulling on me! First they negotiate, then they retreat before sealing the deal.”
The Honorable Eric Holder
Attorney General of the United States
U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530-0001
July 8, 2014
Dear Attorney General Holder:
We, the undersigned, representing hundreds of thousands of homeowners from across the country, are writing today to request your support in ensuring that the terms of negotiated settlements with America’s largest banks are followed.
During the past year since the $13 billion JPMorgan Chase settlement was announced, struggling homeowners have waited for relief. In fact tens of thousands of Americans signed a petition to the CEO of JP Morgan Chase bank, a copy of which was also delivered to your office, calling on the bank to temporarily suspend foreclosures while new, homeowner-friendly policies can be put into place.
However, relief from the Chase Settlement has yet to arrive. The bank has not announced any new relief programs. Nor has there been a noticeable increase in new modifications. Instead, Chase and their competitors are often transferring servicing rights to newer mortgage companies not covered by recent or future settlements.
As you know, the foreclosure crisis is far from over. Families in all areas of our country continue to struggle and many are at constant risk of losing their homes. We have brought several of their stories to you and your staff and will continue to do so.
As your department continues to negotiate with major banks such as Bank of America, we urge you to ensure that the consumers who have been the victims of predatory lending practices see the relief that is intended and has been promised. We also ask that your office does better advocating for consumers in future settlements.
We’re ready and willing to work with you in this very urgent matter.
We are requesting the following information on your most recent and pending settlements with the largest financial institutions:
1) An accounting of the JPMorgan Chase settlement monies disbursed including:
- How many homeowners received aid and average amount of aid
- How much money has been spent on principal reduction
- How much money has been disbursed to homeowners with mortgages under $500,000
- How much money has been disbursed to homeowners with mortgages under $250,000
- What other categories and amounts of aid have been disbursed
- Any ongoing audits and independent reviews of the settlement disbursements
- Plans for spending down the rest of the money
- Plans for homeowners' representatives to provide input and oversight to the process
2) Plans for the Bank of America and other pending settlements to provide meaningful relief including plans for categories “a” through “h” above.
The undersigned groups would also appreciate a meeting to ask follow-up questions on your process. We can meet at your convenience. You may contact us via Kevin Whelan, National Campaign Director, Home Defenders League, 911 W. Broadway Ave., Minneapolis, MN 55411; (888) 441-5527; firstname.lastname@example.org.
Kevin Whelan, National Campaign Director
Home Defenders League
Alliance of Californians for Community Empowerment
New Jersey Communities United
Occupy Homes Atlanta
Occupy Homes Minnesota
The Friday, May 9 edition of the New York Times has a powerful Op-Ed from Occidental College professor Peter Drier, the co-author of a new study released yesterday (see press release here) showing that for many people, especially those hardest hit - moderate-income households, and African-Americans and Latinos - when the big banks destroyed our economy, the so-called "housing recovery" simply doesn't exist.
Not only are 20% of all homes with mortgages still underwater, but nearly 5 million households have been foreclosed on since the banks created this crisis. All this represents permanent and continuing damage to communities across the United States.
Drier's op-ed does reinforce the calls that Home Defenders have been making since we started taking action in the summer of 2012, as the final four paragraphs make plain.
"The Obama administration created several initiatives to help troubled borrowers, but these programs do not require banks to reset loans as a condition of getting federal funds. The government’s Home Affordable Modification Program has helped only one-quarter of the four million homeowners it was supposed to reach.
Worse, the federal government has actually been an obstacle to reform. The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, has refused to allow these two mortgage giants to reduce the principal on underwater mortgages that they own or guarantee. All it would take is for President Obama’s new appointee as F.H.F.A. director, former Representative Melvin Watt, to change the policy, an action that does not require congressional approval. He should do so immediately.
Meanwhile, faced with this predicament, some municipalities have been trying to take matters into their own hands. Late last year, Richmond, Calif., was the first city to develop a plan to use its power of eminent domain to buy underwater mortgages at their current market value and to refinance them, but many other localities are likely to follow. A number of responsible for-profit and nonprofit lenders stand ready to do business with them so that local governments don’t have to use tax dollars to purchase these loans.
Dealing with this problem on a city-by-city basis may not be the most efficient way to confront a national crisis, but in the face of Wall Street intransigence and federal indifference, cities have had to find their own way to restore the lost wealth of their constituents."
You can read the entire thing below the fold. Or at the New York Times here: http://nyti.ms/1kTPbXFRead more
Yesterday was the culmination of the “Foreclose on Wells Fargo” days of action. By the time the sun set, Home Defenders, Wells Fargo workers, affordable housing activists, people fighting private prisons (which Wells invests in heavily), and our allies had carried out over two dozen actions against the bank. Additionally over 6,000 people signed a petition on the Home Defenders League website directed at CEO John Stumpf demanding that Wells end foreclosures, work to keep families in their homes, provide reasonable load modifications that include principal reduction, and stop blocking communities like Richmond, CA from enacting their own programs to combat the foreclosure crisis.
New Jersey Communities United member and foreclosure fighter Yolanda Andrews took those petitions with her to San Antonio to deliver personally to CEO Stumpf. That was part of the flagship event for the Days of Action, crashing the Wells Fargo Annual Shareholders Meeting in San Antonio, Texas bright and early the morning of Tuesday, April 29th. Actually, it was a combo of inside testimony directly to CEO Stumpf and his senior staff and an outside rally a Wells Fargo branch about three miles away from the Hyatt resort the bank had locked down for the meeting.Read more
On April 1st, Mayors, homeowners and advocates called on federal officials to stand with local communities, including Irvington and Richmond, over Wall Street lobbyists that have threatened illegal retaliation against their cities because of an anti-foreclosure program known as Local Principal Reduction.
In a telephone press conference, Mayor Gayle McLaughlin of Richmond, CA, and Mayor Wayne Smith of Irvington, NJ, released two letters signed by more than two dozen local officials from across the country -- one to Mel Watt, the Director of FHFA, and one to Attorney General Eric Holder -- along with 11,000 signatures from around the country asking that the Department of Justice investigate fair housing violations by SIFMA, the leading lobby organization for Wall Street mortgage securities traders.
McLaughlin and Smith lead cities on opposite ends of the country with large populations of underwater homeowners, specifically homeowners who are people of color. Both of their cities have initiated steps toward beginning a new local foreclosure prevention program known as Local Principal Reduction or "reverse eminent domain.
“Although separated by two coasts; today Richmond and Irvington spoke with one voice," Mayor Smith said. "The friendly condemnation of toxic mortgages is necessary to save our main streets from the predatory tactics of wall street. I stand proudly with Mayor McLaughlin in the fight to keep our citizens in their homes.”
The letters were transmitted to Watt and Holder via email today and have also been sent via US Postal Service.
- The letter to Watt along with full list of signatories here: https://drive.google.com/file/d/0BzgxE4tCqjPOTkxRelZYZ2NXRkk/edit?usp=sharing
- The letter to Holder along with full list of signatories here: https://docs.google.com/file/d/0BzgxE4tCqjPOSzdaZ0hqVVNRUk0/edit
Under previous leadership at the FHFA (under Watt's predecessor Ed DeMarco), officials took an aggressive stance against Local Principal Reduction in a way that harmed communities of color. The ACLU, ACLU of Northern California, ACLU of New Jersey, and the Center for Popular Democracy, on behalf of the Home Defenders League, the Alliance of Californians for Community Empowerment, and a group of community organizations, filed a FOIA request to find out why.
“For years, cities and communities of color were targeted by predatory lending practices and sold toxic subprime mortgages, resulting in a foreclosure crisis,” said Udi Ofer, Executive Director of the ACLU of New Jersey. “Now those same cities that were targeted by predatory lending should be able to consider their full range of options to rescue homes from foreclosure, and to stabilize communities that are facing blight because of discriminatory lending practices.”
In response to the FOIA request, FHFA produced over 1,000 pages of records, detailing extensive contact between the financial industry and high-level FHFA officials. Last week, the FHFA produced another 450 pages of records. The records include a series of emails that show FHFA’s senior officials followed instructions from SIFMA, a leading financial industry trade association, to intervene when San Bernardino, California, was considering Local Principal Reduction using eminent domain solution.
All new files resulting from the FOIA request are available for review here:
John Relman, a partner at Relman, Dane & Colfax PLCC, and national legal expert on fair housing, said that it appears SIFMA and the banks have retaliated against cities that explored Local Principal Reduction as a foreclosure prevention mechanism, that illegal redlining has occurred, the banks are in violation of the Fair Housing Act, and that the illegal acts have disproportionately impacted minority homeowners.
Some key information from the FOIA request:
- Emails show that the industry had routine and close contact with FHFA officials, and their communications exhibited a friendly, almost intimate tone.
- FHFA officials followed instructions from SIFMA, a leading financial industry trade association, to intervene when San Bernardino, California, was considering the eminent domain solution. During the summer of 2012, SIFMA was particularly concerned that San Bernardino County, California, would implement an eminent domain plan.
- An hour after FHFA General Counsel Alfred Pollard received an email from SIFMA's top official Richard Dorfman updating him on San Bernardino, Pollard wrote back that he had “spoken with San Bernardino County this afternoon to gain more information about their intentions.” (July 11, 2012 email from Pollard to Dorfman.) Pollard apparently felt obligated to respond quickly to SIFMA—he separately wrote to DeMarco, his boss, that he would respond because “I am trying to get him [Dorfman] off of us.” (July 11, 2012 email from Pollard to Dorfman.) It’s also worth noting that San Bernardino officials did not perceive Pollard’s call as mere information-gathering, but understood Pollard to have been conveying the FHFA’s “thoughts and concerns” about the eminent domain program. (July 30, 2012 letter from Gregory Devereaux, San Bernardino County CEO, to Pollard.)
- FHFA officials followed instructions from SIFMA to announce that Fannie and Freddie would take aggressive action against communities using eminent domain. During the summer of 2012, Dorfman wrote Ed DeMarco, then-Acting Director of the FHFA, as well as a number of other officials, that SIFMA remained strongly opposed to the use of eminent domain for principal reduction, which, in SIFMA’s view would “portend ruinous consequences to a range of US financial institutions.” Accordingly, he “urge[d]” DeMarco to “engage promptly in whatever actions would be necessary to exclude from acquisition-guarantee and/or securitization” by Fannie and Freddie any loans that had been acquired through eminent domain. The statement that FHFA released in August, 2013, went even further, when it wrote that FHFA might direct Fannie and Freddie “to limit, restrict or cease business activities within the jurisdiction of any state or local authority employing eminent domain to restructure mortgage loan contracts.”
- FHFA does not appear to have performed substantial independent research in formulating its position on eminent again. Included among the research materials that it produced was a Wikipedia article on “Eminent Domain.”
- Finally, while the FHFA had extensive email, phone, and in-person contact with the financial industry over eminent domain proposals, the FHFA has produced no comparable communications reflecting concern about the impacted homeowners and communities who were exploring the eminent domain solution.
LINK TO EARLIER FOIA MATERIALS DATED JANUARY 15 2014: https://www.aclu.org/racial-justice/federal-housing-finance-agency-foia-documents-eminent-domain
Home Defenders Take Action Against Wells Fargo In Support of 86 Year Old Grandmother Facing Foreclosure
On Wednesday February 19, Home Defenders League members delivered petitions signed by over 2,000 people to Wells Fargo branches around the country, urging the bank not to foreclose on Lavinia Curry, an 86 year old Grandmother in Irvington, NJ.Read more
Members of Congress stand up for communities, oppose credit discrimination over local principal reduction
Ten members of Congress called on leaders of the Department of Housing and Urban Development and the Federal Housing Finance Agency urging them to allow communities to pursue local principal reduction strategies, including eminent domain, free of legal and other threats.
“We urge FHFA to ensure that the current GSE investments will not discriminate against low-income borrowers, including Latinos and African Americans, who seek short refinances of toxic underwater loans that American cities acquire through their powers of eminent domain,” the members of Congress wrote in a letter to Acting Director DeMarco. “Refusal by the Federal Housing Finance Agency to insure loans that were changed by eminent domain would violate existing rules that prohibit discrimination to qualified borrowers and do further harm to the economy.”Read more
Struggling Homeowners Found Guilty For Demanding Foreclosure Relief—While Wall Street CEOs Who Perpetrated Foreclosure Crisis Walk Free
On Monday, October 7th, two homeowners arrested while demanding Wall Street accountability in the foreclosure crisis were found guilty of unlawful entry in federal court after staging a sit-in at the DC law offices of Covington & Burling, LLC. Sherry Hernandez, Mildred Obi and Annie Quain—each grandmothers who have fought unjust foreclosures on their homes by Wall Street banks—were arrested in the culmination of three days of action in late May as hundreds of homeowners protested at the Department of Justice and Covington & Burling, a firm that epitomizes the revolving door between government and Wall Street interests.
The cases, United States vs. Hernandez, Obi and Quain, have stretched since this summer, when the women were charged with unlawful entry. The three women faced a maximum penalty of 180 days in jail, a fine of $1000, and a payment under the victims fund of up to $250 each—a far cry, supporters say, from the lack of prosecution and punishment for any banker involved in the 2008 crash. Ultimately, Hernandez and Obi were sentenced to time served and the minimum fine of $50 to the victims’ fund; the prosecution dropped charges against Annie Quain.Read more
Thursday, October 3, marks the fifth anniversary of the Troubled Asset Relief Program (TARP) being signed into law and a new report from Public Campaign and Home Defenders League highlights the billions the industry has spent to gum up reforms meant to ensure such a crisis never happens again. The industry has spent $3.2 billion on federal lobbying and campaign contributions since 2009.
Read the full report at http://publicampaign.org/reports/fiveyears.
"When the banks were hurting our elected leaders dropped everything to bail them out. The banks have rewarded politicians with more than a billion dollars, but families like mine and my neighbors are still fighting illegal foreclosures and waiting for relief from the mortgage crisis," said Sherry Hernandez, a member of the Home Defenders League who faces trial in Washington DC on Monday over a protest at the Covington law firm against the influence of Wall Street int the nation's capitol. "I travelled to Washington DC in May to risk arrest demanding that Wall Street be held accountable and relief get to our communities. Wall Street has increased their profit by over 30% since the crisis, from our misery, while we are robbed of our homes, our credit rating which makes it difficult to begin again with a new business venture or a new job."
"Wall Street's money and clout in Washington helped buy the policies that led us into the recession," said Nick Nyhart, president and CEO of Public Campaign. "Over the past five years, they've spent to ensure Congress continues to treat them kid gloves."
The analysis looks at overall spending by the industry and highlights several case studies of Wall Street’s ability to pass policies favorable to them or stop those they don’t like.
- The finance, insurance, and real estate (FIRE) sector has donated $1 billion to federal candidates and parties since 2009, according to analysis of data from the Center for Responsive Politics. It was the top-giving industry in 2012.
- The industry spent $2.2 billion on lobbying during that same period. In fact, more than 3,000 lobbyists worked on financial reform legislation in 2010, as Dodd-Frank was being debated. Half of them had previously worked as Capitol Hill aides, members of Congress, or executive branch staffers.
- The five biggest bank recipients of bailout funds—AIG, Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo—have spent a combined $128.4 million on political influence since 2009.