The BK Live segment on Mortgage Inequities in Brooklyn has been posted to the web. Mark Winston Griffith (Brooklyn Movement Center Executive Director), Alexis Iwaniszie (New Economy Project) and I discuss mortgage inequities and how they effect Brooklyn (and beyond). REFinblog.com gets a nice shout out from BK Live.
I will be appearing on a segment on BK Live on BRIC , the Brooklyn Public Network, about “Mortgage Inequities/Fair Housing in Brooklyn” on Thursday, February 13th at noon (running again at 2pm, 8pm, 9pm and 10pm (Cablevision Ch 69, Time Warner 56, RCN Ch 84, Verizon Ch 44 or online at: www.bkindiemedia.bricartsmedia.org).
I will be appearing with Mark Winston Griffith, Executive Director of the Brooklyn Movement Center, a community organizing group based in Bed-Stuy and Crown Heights, and Alexis Iwanisziw of the New Economy Project.
We will be discussing The New Economy Project’s recent study about inequities in mortgage lending based on race in NYC:
Mortgage lenders made markedly fewer conventional home mortgage loans in communities of color than in predominately white neighborhoods in New York City, according to a series of GIS maps published today.
The maps show unequal lending patterns based on the racial composition of communities in New York City, controlling for the number of owner-occupied units in each neighborhood. New Yorkers who live in predominantly white neighborhoods on average receive twice as many conventional home purchase loans as New Yorkers who live in predominantly black or Latino neighborhoods, for every 100 owner-occupied housing units in the neighborhood.
“The maps show that banks continue to redline communities of color across New York City,” said Monica M. Garcia, Community Education Coordinator at New Economy Project, which produced the maps. “For decades, banks have excluded neighborhoods of color from fair access to mortgage financing, allowing predatory lenders to flourish right up to the financial crisis. Now it’s déjà vu all over again, with banks failing adequately to provide conventional mortgages to people in predominantly black and Latino neighborhoods.”
“The maps highlight the profound and continued need for strong government action against banks that violate fair housing and fair lending laws,” said Sarah Ludwig, Co-Director of New Economy Project.
To produce the maps, New Economy Project analyzed home mortgage lending data for 2012, the most recent year for which the data are publicly available. New Economy Project received partial funding to produce the maps from the U.S. Department of Housing and Urban Development’s Fair Housing Initiatives Program.
The CFPB announced that it is seeking feedback on potential changes to mortgage information reported under the Home Mortgage Disclosure Act (HMDA). Data collection seems like a pretty obscure issue, but some Republicans and financial industry interests have been attacking the CFPB for collecting so much data. Given the rapid changes in the consumer financial services sector, it seems to me that collecting more data about the types of products being offered to different types of consumers is essential to regulating that sector. For those unfamiliar with HMDA, it
was enacted in 1975 to provide information that the public and financial regulators could use to monitor whether financial institutions were serving the housing needs of their communities and providing access to residential mortgage credit. The law requires lenders to disclose information about the home mortgage loans they sell to consumers. HMDA was later expanded to capture information useful for identifying possible discriminatory lending patterns.
In the wake of the recent mortgage market crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) transferred HMDA rulemaking authority to the CFPB. The law directs the Bureau to expand the HMDA dataset to include additional loan information that would be helpful in spotting troublesome trends. (1)
The CFPB is considering requiring the following information pursuant to HMDA:
- total points and fees, and rate spreads for all loans
- riskier loan features including teaser rates, prepayment penalties, and non-amortizing features
- lender information, including unique identifier for the loan officer and the loan
- property value and improved property location information
- age and credit score (1-2)
There are additional data points under consideration, but these five alone would go a long way to identifyingpredatory trends as they are developing in the mortgage market. Lay people are probably unaware of the rate of change in the industry, but during boom times the kinds of products that are popular can change dramatically in a few months. It is hard enough for regulators to keep on top of such rapid changes, but it is even harder when they only have access to some of the relevant information. The CFPB’s proposal is a step in the right direction as it seeks to get a handle on the market that it regulates.
HSH.com quoted me in The Documents You Need to Apply for a Mortgage. It reads in part,
When it comes time to apply for a mortgage in 2014, you might be surprised at how much documentation you’ll need when applying for a home loan.
J.D. Crowe, president of Southeast Mortgage in Lawrenceville, Ga., says most of the documentation should be familiar to you if you have applied for a mortgage loan in the last five years. If you’re new to the mortgage market this year, he says, this is all new.
The new Qualified Mortgage rules that took effect on January 10, 2014 make this paperwork even more important. To meet the new Qualified Mortgage rules, lenders will be even more diligent in collecting the paperwork that proves that you can afford your monthly mortgage payments.
David Reiss, professor of law at Brooklyn Law School in Brooklyn, N.Y., says that while the documentation requirements under the new Qualified Mortgage rules might come as a shock to those who haven’t applied for a mortgage since 2008, they are common-sense requirements for the most part.
“These are really common-sense rules,” Reiss says. “The new rules say that mortgage lenders are no longer allowed to throw out the common-sense standards of lending money during boom times, when they might be tempted to overlook long-term financial goals for quick profits. If the rules help that happen, they’ll be a good thing.”
In Wolfe v. JPMorgan Chase Bank, N.A., the Alabama Court of Civil Appeals dismissed the appeal of joint homeowners Evan and Kelly Wolfe (“Plaintiffs”) in a foreclosure and attorney fee lawsuit for failing to file the appeal within the statutory time period of 42 days. In Wolfe, Plaintiffs defaulted on their home mortgage and JPMorgan Chase Bank, N.A. (“Chase”), a lienholder, purchased Plaintiffs’ home at a foreclosure sale in February 2010. Regions Bank (“Regions”), another lienholder, redeemed the property from Chase and subsequently filed an ejectment action in the trial court against Plaintiffs.
In March, 2011, the trial court entered a summary judgment in favor of Regions and ordered the Plaintiffs to vacate the property. Plaintiffs appealed and the Court of Civil Appeals affirmed the trial court’s grant of summary judgment in September 2011, and the Alabama Supreme Court denied Plaintiffs’ petition for writ of certiorari to hear their case in March 2012. In February 2012, while Plaintiffs’ certiorari petition was pending, Plaintiffs filed the current lawsuit pro se against Chase, MERS, and their former attorneys from Edith Pickett, Shapiro & Pickett, L.L.P., Beth Rouse, and McFadden, Lyon & Rouse, L.L.C. (“attorney defendants”) alleging claims of fraud and wrongful foreclosure, and they sought an award of damages and “full restoration of all property rights.” The attorney defendants counterclaimed against the Plaintiffs for attorney’s fees.
On September 10, 2012, the trial court granted summary judgment for Chase and the attorney defendants, and reserved jurisdiction to consider the attorney defendants attorney fee claim. Plaintiffs filed a post-judgment motion on October 10, 2012 that was denied on January 8, 2013 and Plaintiffs appealed the decision on February 28, 2013. However, Chase argued that Plaintiffs filed an untimely appeal. The Alabama Court of Civil Appeals agreed with Chase and dismissed Plaintiffs’ appeal as untimely. The Court found that statutory and case law authority required parties to file appeals within 42 days of denial of a motion on the law, such as the post-judgment motion in this case. In Wolfe, the Court found that Plaintiffs had 42 days to file an appeal from the January 8, 2013 denial of their post-judgment motion, which would have required them to file the appeal by February 19, 2013. Instead, Plaintiffs filed their appeal nine days later on February 28, 2013. The Court found that the Plaintiffs failed to comply with the mandatory 42 day filing period and therefore dismissed their appeal as untimely.
Miguel Segoviano et al. of the IMF released a helpful Working Paper, Securitization: Lessons Learned and the Road Ahead (also on SSRN). It opens,
Like most forms of financial innovation, there are cost and benefits associated with the securitization of cash flows. From a conceptual perspective, a sound and efficient market for securitization can be supportive of the financial system and broader economy in various ways such as lowering funding costs and improving the capital utilization of financial institutions—benefits which may be passed onto borrowers; helping issuers and investors diversify risk; and transforming pools of illiquid assets into tradable securities, thus stimulating the flow of credit—an issue of particular relevance for some European countries. However, these features need to be weighed against the potential costs, including the risk that securitization contributes to excessive credit growth in and outside of the formal banking system; principal-agent problems that amplify perverse incentives; the complexity and opaqueness of certain products which make efficient pricing problematic; and the heavy reliance of the industry on credit ratings. (3)
The authors identify lessons learned from the financial crisis as well as impediments to a renewed securitization market. They conclude with a set of policy recommendations.
I recommend this paper as a good overview. I particularly like that it looks beyond the United States market, although it does spend plenty of time looking at the history and structure of the U.S. market. The recommendations tend to be pretty reasonable, but not particularly innovative — implement Dodd-Frank-like requirements in non-U.S. jurisdictions; de-emphasize the role of NRSRO credit ratings; increase transparency and decrease needless complexity throughout the industry; modernize land record regimes, etc.
It is surely hard to get your hands around the global securitization industry, but it is important that we try to. Securitization is here to stay. We should manage its risks the best that we can.
The court in deciding Wolford v. Am. Home Mortg. Servicing, 2013 Cal. App. Unpub. LEXIS 7307 (Cal. App. 2d Dist. 2013) ultimately granted summary judgment in favor of defendants. AHMSI and Wells Fargo met their threshold burden to show they satisfied the requirements necessary for non-judicial foreclosure, and appellant failed to raise a triable issue of material fact.
The plaintiff’s complaint alleged causes of action for declaratory relief; injunctive relief; determination of lien pursuant to California Uniform Commercial Code section 9313; breach of contract and the implied covenant of good faith and fair dealing; violation of the Truth in Lending Act (15 U.S.C. § 1601 et seq.); violation of the Real Estate Settlement and Procedures Act (12 U.S.C. § 2601 et seq.); rescission; unconscionability; and quiet title.
The lower court dismissed the plaintiff’s initial claims as summary judgment was granted in favor of the defendants. Appellant contended the denial of summary judgment in the related unlawful detainer action and evidence of irregularities in the foreclosure process demonstrated triable issues of material fact warranting the denial of summary judgment. However, this court in upholding the lower court’s decision, found that there was no merit to the plaintiff’s contentions.