CPD IN THE NEWS

National Journal, The Next America - March 15, 2013 - Leading mortgage lender Wells Fargo is urged to be more transparent about relief reporting and to grant principal reductions. An overwhelming majority of homes in California’s major cities that are in danger of foreclosure are also in majority-minority ZIP codes, according to a report released this week.

The report focuses particularly on homes with mortgages serviced by Wells Fargo. Of the 21 major California cities examined, more than eight in 10 homes in danger of foreclosure are in areas where at least half of its residents are minorities—evidence, the report’s authors say, that further supports the idea that the housing crisis has been particularly harmful to African-American and Hispanic homeowners.

The findings come on the heels of the housing-market decline and the ensuing Great Recession that ensnared many homeowners who have been fighting to maintain their financial standing and retain their homes. While the report focuses on the California economy, other Americans are in similar circumstances. Across the nation, homeowners—many of them minorities—struggle to stay afloat as they watch their savings plummet and their dreams of maintaining a middle-class American lifestyle disappear. In its place are notices of default and the impending threat of bankruptcy.

In California, a total of 65,466 homes are in the pipeline for foreclosure, many of them purchased before the housing market crash in 2007.

Coauthor Ady Barkan, of the Center for Popular Democracy, a national organization based in New York, said the report focuses on Wells Fargo because the bank is responsible for the highest number of homes in California’s foreclosure pipeline—in addition to being headquartered in the same state. As leading lender, the bank is responsible for mortgages for 11,616 California homes—nearly 1 in 5 homes in the pipeline.

The “foreclosure pipeline” refers to homes that have received a notice of default or a notice of trustee sale. While some homeowners eventually pay back the debt, more often the homes are foreclosed, Barkan said.

Wells Fargo spokeswoman Vickie Adams took a contrary view, saying that the term “pipeline” can be overused and doesn’t take into consideration the complexities of the mortgage-lending industry. She added that the bank offers various programs and workshops to help educate its customers on their options to prevent losing their home.

“It’s always challenging to articulate some of the specifics of what some perceive to be a pipeline of sorts,” she said. “The facts are when a home has come to foreclosure, there are oftentimes that a customer is able to find options to prevent [it].… In foreclosure, no one wins. What we do is try to provide a great deal of support to the community in a number of ways.”

The wide variety of data sources that reports use can often create conclusions that aren’t necessarily in line with standard industry practices, Adams added.

“We all understand everyone’s right to raise issues they believe are important, but I think it’s really important, again, to look at the data and understand what the data says and use the measures that are appropriate for the industry,” she added.

According to the report, the opaque nature of Wells Fargo’s reporting data has made it difficult to track who is receiving the help. The report’s authors urge the bank to practice more-transparent reporting practices that include race, ZIP code, and income data for all foreclosures, short sales, and principal reductions.

According to Adams, the data for relief efforts and other information is available through industry publications such as RealtyTrac and Inside Mortgage Finance, as well as government sources.

Last year, the bank settled a lawsuit with the Justice Department, which alleged that the financial institution had discriminated against minority borrowers during the housing bubble, charging higher fees and rates to minorities than whites, even when they had the same credit risk.

The Wells Fargo case wasn’t unique: Lawsuits surrounding discriminatory housing practices and predatory sub-prime mortgage lending hit major banks everywhere.

(RELATED: Big Banks, Racial Discrimination Linked in Housing Crisis)

Using data from the Home Mortgage Disclosure Act Database, the report found that between 2007 and 2009, Wells Fargo was 188 percent more likely to put African-Americans into riskier sub-prime loans than white borrowers with similar credit history; the risk for Hispanics was 117 percent.

Adams maintains that Wells Fargo is a “fair and responsible lender” that adheres to regulations according to the Fair Lending Act. She added that the bank works closely with various advocacy and real estate organizations to help minority and low-income borrowers.

The report, co-authored by the Alliance of Californians for Community Empowerment, Center for Popular Democracy, and the Home Defenders League, asks Wells Fargo to commit to principal reductions in the interest of saving homeowners from complete financial ruin.

Between 2009 and 2012, Wells Fargo granted $6.3 billion in principal forgiveness; their goal is to hit $7 billion by 2014, Adams said.

“We take it very seriously, and we work very hard at it. We really are focused on excellence, helping our customers succeed financially, and we have a culture of continuously improving our home-lending activity,” Adams said.

The report argues that allowing all 65,466 homes in California to be foreclosed would be a detriment to the state and local economy. Foreclosure would cause the homes to lose 22 percent of their value, at an estimated cost of $7.6 billion. Maintenance costs for vacant homes would cost the government $19,227, resulting in a total cost of nearly $467 million for taxpayers.

“Communities have already sustained significant harm from the foreclosure crisis; unless Wells Fargo changes its practices, more harm will be done in coming months and years. New homes continue to enter the pipeline, inflicting tremendous stress and damage on homeowners and communities until Wells Fargo adopts significant new policies,” the report states.

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San Diego Free Press - March 13, 2012, by Alliance of Californians for Community Empowerment - When it comes to foreclosing on Californians, it looks like Wells Fargo may take the prize. According to a report released today, Wells Fargo is responsible for more homes in the foreclosure pipeline in California than any other single lender.

Wells Fargo is servicing the most loans, but they are providing less principal reduction to struggling borrowers than either Bank of America and Chase – who themselves should be doing more! The recent report from the Monitor of the multi-state Attorneys General settlement with the five big mortgage servicers showed that Wells Fargo trails behind Bank of America and Chase when it comes to the amount of principal reduction given as part of first lien loan modifications.

This is the very same Wells Fargo that just had its most profitable year ever in 2012, with earnings of $19 billion.

The report, California in Crisis: How Wells Fargo’s Foreclosure Pipeline Is Damaging Local Communities, by ACCE (Alliance of Californians for Community Empowerment), the Center for Popular Democracy and the Home Defenders League, shows the harm coming to homeowners, communities and the economy unless Wells Fargo reverses its course and averts some or all of the impending foreclosures.

Click here to download the report.

The report uses data from Foreclosure Radar to look at loans currently in the foreclosure pipeline in California – meaning loans that have a Notice of Default or Notice of Trustee Sale. Of the 65,466 loans in the foreclosure pipeline, close to 20% of them are serviced by Wells Fargo.

If Wells Fargo’s 11,616 distressed loans go through foreclosure, California will take a next $3.3 billion hit: Each home will lose approximately 22 percent of its value, for a total loss of approximately $1.07 billion; homes in the surrounding neighborhood will lose value as well, for an additional loss of about $2.2 billion; and government tax revenues will be cut by $20 million, as a result of the depreciation.

And not surprisingly, African American and Latino communities will be particularly hard-hit. The report includes maps for seven major cities showing minority density and dots for each of Wells Fargo’s distressed loans. In city after city, they are heavily clustered in neighborhoods with high African American and Latino populations.

“My community has been absolutely devastated by the foreclosure crisis, and I put a lot of the blame at the doorstep of Wells Fargo,” says ACCE Home Defenders League member Vivian Richardson. “Wells Fargo’s heartless and unfair foreclosure practices are sending far more homes into foreclosure than is necessary.”

San Francisco Supervisor David Campos released a statement of support: “Our communities and our entire State are still reeling from the housing crisis, and will be for years to come. As this report shows, the numbers of homes still facing foreclosure is enormous. Principal reduction is clearly a critical strategy for saving homes and stabilizing the economy. Wells Fargo and the other major banks should be doing more of it.”

The report recommends:

Wells Fargo should commit to a broad principal reduction program.

This means that every homeowner facing hardship should be offered a loan modification, when Wells has the legal authority to do so. The modification should be based on an affordable debt-to-income ratio, achieved through a waterfall that prioritizes principal reduction and interest rate reductions. Junior liens must also be modified.

Wells Fargo should report data on its principal reduction, short sales, and foreclosures by race, income, and zip code.

Wells Fargo must be more transparent about its mortgage practices. The bank has an egregious history of harming California’s African American and Latino communities through predatory and discriminatory lending. To show the public that it has reformed, Wells Fargo must make this data available. The people of California need to know that Well Fargo is no longer discriminating against people of color and is fairly and equitably providing relief to homeowners and to the hardest hit communities.

 Wells Fargo should immediately stop all foreclosures until the first two demands are met.

In the event that it takes a few months to set up a fully functioning principal reduction program, Wells Fargo needs to immediately stop all foreclosures. Wells Fargo has done enough harm. It’s time to stop. California deserves a break.

ACCE is waging a campaign to push Wells Fargo to be a leader in California, their home state, in saving homes – beginning with their performance to comply with the Attorneys General Settlement and with the Homeowner Bill of Rights, but not ending there.

Click here to sign on to a letter to Wells Fargo CEO John Stumpf to support to campaign demands.

 

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KQED - March 12, 2013 - California is still struggling to get back on its feet after a devastating housing crisis. And Wells Fargo is partly to blame for the sluggish recovery because it is refusing to modify home loans, according to a coalition of homeowners groups.

By foreclosing on homeowners who can't make their payments, the San Francisco-based bank will suck billions of dollars out of the state's economy, according to the Alliance of Californians for Community Empowerment, the Center for Popular Democracy and the Home Defenders League.

In a new report, the coalition charges that Wells Fargo has been less inclined to reduce the principle of home loans than have other banks, such as Bank of America.

Wells Fargo responded that it has a low foreclosure rate compared to the industry in general.

Wells Fargo's bias toward foreclosures is disproportionately affecting predominantly black and Latino neighborhoods, the report charges.

Right now, about 65,000 California homeowners have received notice of a pending foreclosure, and about 20 percent of these loans are serviced by Wells Fargo, the report says.

The report estimates that as of February 2013, Wells Fargo had 11,616 homes in its "foreclosure pipeline."

Foreclosing on the homes will have the following effects, according to the report:

Each home would lose approximately 22 percent of its value, for a total loss of approximately $1.07 billion,

Homes in the surrounding neighborhood would lose value as well, for an additional loss of about $2.2 billion, and

Government tax revenues would be cut by $20 million, as a result of that depreciation.

If the bank were to reduce the principle on the borrowers' loans, homeowners would have more money to spend. This would boost the state's economy, the coalition says.

Wells Fargo often bundles loans to sell to other entities, such as Fannie Mae, but acts as an agent for the new lender, collecting payments and handling foreclosures. In that capacity, Wells Fargo makes more money through foreclosures than loan modifications, the report says.

Wells Fargo has had an aggressive principal reduction program for loans that we own since 2009. Wells Fargo conducts all lending and servicing activities in a fair and responsible manner without regard to race or ethnicity. We are proud to be the nation’s leading lender.

Wells Fargo issued a written statement in response to the report:

Over the last four years, Wells Fargo has: • Helped more than 841,000 customers with loan modifications. • Provided $6.3 billion in principal forgiveness—most of which has gone to borrowers in California.

Wells Fargo consistently provides assistance to customers facing financial challenges. Wells Fargo’s delinquency and foreclosure rates continue to rate below the industry average. Here are the facts: • The combined national industry delinquency and foreclosure rates are roughly 11%. Wells Fargo’s is 7.04%. • The Wells Fargo foreclosure rate in California is 1.04%*, less than half of our national rate.

*As of Q4 2012

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Huffington Post - February 26, 2013, by Camille Rivera - In March of 1968 -- just three weeks before he was assassinated -- Dr. Martin Luther King Jr. declared in a speech that one of the great lessons of the civil rights struggle was that it was not just about integration -- but also about economic justice.

"We know now that it isn't enough to integrate lunch counters," Dr. King said. "What does it profit a man to be able to eat at an integrated lunch counter if he doesn't have enough money to buy a hamburger? ... What does it profit one to be able to attend an integrated school, when he doesn't earn enough money to buy his children school clothes?"

Unfortunately, 45 years later, we can still ask those questions.

New York is one of the richest cities in America, but it also has one of the widest income inequality gap in the nation: A report last year found that the top one percent of income earners made 32 percent of the income.

We have far too many hard-working New Yorkers, many of them people of color, working at or below minimum wage, often without overtime and benefits. They work in car washes, fast food restaurants, as airport security guards and in food service and small supermarkets.

That's Why UnitedNY, Make the Road NY, New York Communities for Change and labor organizations like the Retail, Wholesale and Department Store Union and 32BJ SEIU supported the workers when they formed an unprecedented coalition across all industries last summer, and held a big rally and march in New York City on July 24.

Since then, there have been actions, a boycott and a one-day fast food walk out -- all of which generated a great deal of public support. Five car washes have voted to join RWDSU; some supermarkets have settled unfair labor practices suits and agreed to pay a combined $750,000 in lost wages and back pay.

That's also why UnitedNY and the Center for Popular Democracy released a report on the ongoing plight of low-wage workers in New York City at a "Workers Rising" symposium on Feb. 13. The report spelled out the problem -- and organizing efforts -- and offered a list of recommendations to improve wages and working conditions for those at the bottom of the socio-economic ladder.

The recommendations range from supporting legislation to allow paid sick days for workers, to establishing a Mayor's Office of Labor Standards to ensure that employment laws are enforced, to urging New York State to allow the City to set a minimum wage higher than the State minimum, due to the higher cost of living in the five boroughs. These proposals are the result of conversations with workers who have struggled for far too long to make ends meet. They are the result of hearing from families who have lost loved ones who could not afford to take time off from work to get the medical care they needed before it was too late.

Hundreds of workers, advocates and community members turned out for the symposium, which featured lively panel discussions about strategies to help lift low-wage workers into the middle class. The energy inside those rooms was electric; the air was thick with hope and dreams.

A gaggle of elected officials was on hand for the Workers Rising event, including two declared mayoral candidates -- Public Advocate Bill de Blasio and former city comptroller Bill Thompson - as well as City Council members and others.

The report came just one day after President Obama said in his State of The Union speech that America should not be a place where working people who make minimum wage are still in poverty.

"That's wrong," he told a joint session of Congress. "In the wealthiest nation on earth, no one who works full-time should have to live in poverty."

Obama called for raising the federal minimum wage to $9 an hour, with indexing tied to cost of living increase. That's certainly a lot better than $7.25, which is the minimum wage at the federal level and in the State of New York, but nowhere near enough in New York City.

The UnitedNY/CPD report said raising the minimum wage to $10 an hour would allow full-time workers to make just $20,000 a year. The report also noted that more than 110,000 full-time workers live in poverty.

Any way you look at it, an increase in the minimum wage is overdue, and needs to be enacted immediately. If it can't be approved on the federal or state levels, those of us here in New York City must find a way to increase it locally. It is clear that $7.25 an hour is not enough to make ends meet, and the time for change is now.

All in all, the symposium helped to foster real conversation between elected officials, policy experts, and the low-wage workers themselves about the economic issues that are plaguing New York's workforce. Symposium attendees left the conference energized, engaged and filled with hope. They would have made Dr. King proud.

Source: Huffington Post