FHFA Takes Key Step to Improve Language Access in the Mortgage Market

Last week, the Federal Housing Finance Agency (FHFA) made a key decision to include a question that asks a borrower his or her preferred language on the updated standard mortgage application. We and our partners in the civil rights community applaud this critical fix to the mortgage application process.

This is how the question will appear on the updated mortgage application:

Updated mortgage application sample

Continue reading

Why Isn’t the Federal Housing Finance Agency Doing More to Help Keep People in Their Homes?

By Nancy Wilberg Ricks, Senior Policy Strategist, NCLR

Years after the economic crisis, when financial institutions profited by steering unsuspecting families into risky and expensive home loans, corporations are once again playing the housing market for profit while a majority of low- and middle-income families continue to see the values of their homes flounder.

A recent PBS Newshour piece (video below) reinforced what we have long known: many homeowners could remain underwater—owing substantially more on their mortgage than their home is worth—for a lifetime. In particular, the PBS story highlighted how large states like California and Florida, areas with large Latino populations, continue to experience trouble in the housing market. These ongoing issues are detrimental to the national economy and eliminate homeowners’ ability to pass their single greatest asset—their home—on to the next generation.

Principal reduction Newshour piece

More than five million homeowners in the United States are paying much more in monthly mortgage payments than their homes are worth. Some homeowners owe anywhere from $60,000 to $150,000 beyond the current value of their house. They are barred from refinancing and are stretched thin in a market where the recovery has been uneven for low- and moderate-income families. Many end up losing their home or remain beholden to a mortgage that far exceeds any return they’ll see on investment.

The Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, has the power to permit reasonable and safe principal reductions to help families keep their homes and prevent lenders from taking a substantial hit. While FHFA’s own study indicates that this is a proven win-win, FHFA refuses to make a change. Even more troubling is that families are now losing their homes only to see them bundled and sold to investors at or even below the cost of a reasonably adjusted mortgage. In response to this practice, community organizations rallied earlier this week to discuss this issue with FHFA Director Mel Watt. In addition, many nonprofits, including Hogar Hispano, Inc, a subsidiary of NCLR, run programs that purchase distressed assets from lenders and sell them back to home-ready families at market rate.

Moving from a community of dedicated homeowners to a conglomerate of faceless investors alters the makeup of once-thriving neighborhoods. To truly stabilize the housing market, the FHFA should exercise every option they have to reverse this practice, keep families in their homes, and stabilize communities across the country.

Why Does Mel Watt Continue to Waver on Homeowner Relief?

By Nancy Wilberg Ricks, Senior Policy and Communications Strategist, NCLR

HousingDiscrimination_blogpic_newMore than five million homeowners in the United States are paying much more for their homes than they are worth. Ironically, one of those homeowners is Sylvia Alvarez, who heads the Housing & Education Alliance, a leading housing counseling agency in Tampa, Fla., and an NCLR Affiliate. Alvarez and her dedicated staff have helped many families escape unsustainable mortgages.

Alvarez is an ideal candidate for principal reduction, but she cannot get help because her mortgage is owned by Fannie Mae. Most of the largest banks have granted some families principal write-downs, understanding that reducing the principal on a home for a struggling homeowner is a win-win. Families stay in their homes, continue to pay their mortgages, and stabilize the economy.

After the housing crisis, many experts knew that the solution to a healthier housing market was large-scale principal reduction, and the best place to start was with the Federal Housing Finance Agency (FHFA), which manages Fannie Mae and Freddie Mac. Consumer advocates fought very hard to ensure that FHFA had a strong leader and advocate for homeowners.

That’s why NCLR and our allies rallied for Mel Watt, a former U.S. representative and housing proponent, to be appointed as director of FHFA. We fought for Watt so he could fight for homeowners like Alvarez who need relief now. In 2013 we won the fight, and Watt was confirmed as the leader of the most powerful housing entity in the business.

Two years later, we still wait for progress. During the first year of his leadership at FHFA, Watt wanted to study the issue. Research points to obvious benefits of helping homeowners keep their homes, and even the 2013 Congressional Budget Office reported that a principal reduction plan could assist 1.2 million borrowers and save Fannie Mae and Freddie Mac $2.8 billion.

Yet Watt wavered.

Mel Watt

Mel Watt

Now, eight years since the height of the crisis, Watt and FHFA refuse to implement principal reduction. Families pay mortgage dollars that far exceed the value of their homes, and many cannot keep up. In the meantime, banks and investors are pushing out homeowners and acquiring properties at pennies on the dollar. This devastates communities. Turning long-seasoned homeowner neighborhoods into rental communities might not seem bad, but studies indicate that homeownership translates into stability and greater investment in one’s own neighborhood.

When will FHFA and Mr. Watt finally give households the relief they need? Principal reduction remains the solution. It would finally restore homes to their true value. It would also help families hold on to the largest investment most will ever make.

Latino Families Benefit from Strong Leadership at FHFA

490px-Melvinwatt

FHFA Director Mel Watt

Over the past year, the Federal Housing Finance Agency (FHFA) has taken significant steps to improve America’s housing market for struggling homeowners, prospective homebuyers, and those suffering from foreclosure. Yesterday, FHFA Director Mel Watt testified before the House Financial Services Committee to highlight how the agency’s actions have helped homeowners since his confirmation about a year ago.

Just last month, NCLR applauded Director Watt’s decision to fund two essential affordable housing programs: the National Housing Trust Fund and the Capital Magnet Fund. In the wake of a housing crisis that cost more than one million Latino families their homes due to foreclosure, our nation is in desperate need of increased affordable housing stock. Funded with just one-twentieth of a percentage point of Fannie Mae and Freddie Mac’s business purchases, at least $400 million is expected to become available for these programs annually.

In addition, the FHFA’s actions in promoting the Home Affordable Refinance Program has allowed thousands of qualified underwater homeowners—who owe more on their mortgages than their homes are currently worth—to refinance their mortgages, enabling savings on mortgage payments and preventing needless foreclosure.

Access to affordable mortgage credit continues to be a real barrier to homeownership; in response, the FHFA has recently introduced mortgage products with 3 percent down payments. These products are an important step in helping Latino families whose savings were wiped out by the financial crisis enter the home purchase market. By expanding mortgage eligibility to a greater section of prospective buyers, the FHFA is working to ensure all demographics are fairly served by our housing system. Low down payment products will be offset by proven housing counseling, private mortgage insurance, and other compensating measures of creditworthiness.

While the FHFA has taken great strides in improving the housing sector for families, the agency can still do more to improve mortgage access for the Latino community. We encourage the FHFA to strengthen its commitment to all Americans by issuing a strong duty to serve rule, requiring Fannie Mae and Freddie Mac to fulfill their statutory responsibility to serve all creditworthy borrowers. The FHFA should also continue to promote housing counseling in new ways, and should move beyond traditional FICO scores and toward alternative scoring options such as Vantage and FICO-9.

To truly make a difference in the lives of America’s millions of underwater borrowers, the FHFA should also direct Fannie Mae and Freddie Mac to implement principal reduction, adjusting mortgages to what underwater borrowers’ homes are currently worth.

As Director Watt approaches his one-year anniversary at the FHFA, the agency is on track to continue making a difference in the lives of American homeowners, prospective homebuyers, and renters. We urge Director Watt to continue the FHFA’s efforts to make housing more affordable and to take new and significant action to expand mortgage access to serve all creditworthy borrowers.

Watch the entire hearing below:

Relief for Latino Families, FHFA to Fund Essential Affordable Housing Programs

Family in front of homeThis week, the Federal Housing Finance Agency (FHFA) announced plans to fund two essential affordable housing programs—the National Housing Trust Fund (NHTF) and the Capital Magnet Fund.

At NCLR, we’ve long urged the FHFA to fund these programs, which would begin to correct the dire shortage of affordable housing in this country.

Nearly a year of inaction after his swearing in, we’re pleased to see FHFA Director Mel Watt take a stand for struggling families by directing FHFA to fund the much-needed affordable housing programs. To be funded from less than one-twentieth of a percentage point of Fannie Mae and Freddie Mac’s business purchases, the funds are expected to total between $400 and $500 million annually, amounting to a boon for low-income Latino families.

Created during the height of the housing crisis in 2008 and designed to increase the affordable housing supply at a time when families were rapidly losing their homes, the critical programs remained unfunded after Fannie Mae and Freddie Mac were placed under conservatorship in 2008.

Photo: Jeffrey Turner

Photo: Jeffrey Turner

Since the programs’ creation more than five years ago, America’s affordable housing stock for extremely low-income households has sharply declined.

With the freeing up of funds for the NHTF and the Capital Magnet Fund, this trend could soon be reversed as the programs’ provisions take effect in every U.S. state and the District of Columbia.

With full funding, the overwhelming majority of NHTF money will go toward the construction of affordable rental housing stock for extremely low-income individuals. This will greatly benefit Latino families who are struggling to get by, making 30 percent or less of the federal poverty income level.

Sold Home For Sale Sign in Front of New HouseA fully capitalized Capital Magnet Fund would also direct its funds toward the affordable housing work of registered community development financial institutions (CDFI) across America. These qualifying nonprofit organizations would be able to compete for grants to fund low-income housing developments and other projects designed to stabilize low-income communities, including workforce development, day care, and health care centers.

In deciding to direct funds toward the National Housing Trust Fund and the Capital Magnet Fund, Director Mel Watt and the FHFA have taken a powerful step toward mitigating the shortage of affordable housing in America. This is essential for the estimated 1.3 million Latinos having lost their homes between 2009 and 2012.

This holiday season, the FHFA announcement will help prevent homelessness and give Latino families the gift of basic housing security.

At Confirmation Hearing, Castro Supports GSE Overhaul and Wins Bipartisan Support

Photo: Wikipedia

Photo: Wikipedia

Last week, Mayor Julián Castro of San Antonio faced the Senate Banking Committee for his confirmation hearing as nominee to head the U.S. Department of Housing and Urban Development. Overall, the hearing went fairly smoothly, with Castro receiving support from committee Republicans Bob Corker of Tennessee and John Cornyn of Texas, who introduced him.

For the benefit of homeowners, renters, and all Americans, confirming Julian Castro as Secretary of Housing and Urban Development is the best opportunity to ensure a sustainable housing system and a housing finance overhaul that serves all communities.

A three-term mayor of America’s seventh-largest city, boasting a majority-Latino population, Julián Castro presided over San Antonio’s successful urban revitalization. As he succeeded in San Antonio, we believe he can succeed in the Obama Cabinet.

While NCLR has expressed strong support for Castro’s nomination, adding another highly qualified Latino to the Obama Cabinet, no matter who the new secretary is we urge that person to focus on ensuring real, affordable access to housing credit for communities of color in any housing finance overhaul.

Fortunately, there is strong reason to believe that such goals are consistent with Castro’s positions. Though the hearing did not delve into specifics, Castro highlighted support for major housing finance changes.

Currently, control of the two government-sponsored enterprises is placed under the Federal Housing Finance Agency, but this temporary system is unsustainable. The Senate Banking Committee recently passed the Johnson-Crapo proposal, which would overhaul the current system, replacing Fannie Mae and Freddie Mac with private capital backed by government guarantee.

Unfortunately, the current version of this bill passed in committee doesn’t do nearly enough for the Latino community, effectively cutting off unacceptable numbers of people of color and underserved communities from access to affordable mortgage credit. A newly confirmed Secretary of Housing and Urban Development could persuade the Senate to change that while also impacting access and affordability through improvements at the Federal Housing Administration. We hope that, if successfully confirmed, Julián Castro will make sustainable housing finance reform a top priority.

Weekly Washington Outlook – May 12, 2014

U.S. Capitol

What to Watch This Week:

Congress:

The House:

The House is not in session this week.

The Senate:

On Monday, the Senate will vote to confirm two nominations and then proceed to a motion to end debate on the Energy Savings and Industrial Competitiveness Act of 2014 (S. 2262). If cloture is invoked, the Senate will vote on passage early in the week and likely a stand-alone measure to authorize the construction of the Keystone XL Pipeline by TransCanada Corp. Following disposition of S. 2262, the Senate will take a procedural vote to advance a Finance Committee-backed bill to extend retroactively over fifty expired tax credits.

White House:

On Monday, the president will host President Jose Mujica Cordano of Uruguay at the White House; the vice president will also attend. They will discuss strengthening bilateral economic ties and improving market access for each nation’s goods and services; expanding collaboration on science, technology, and health; increasing educational exchanges; and consulting on multilateral issues including peacekeeping. In the afternoon, the president and vice president will honor the 2014 National Association of Police Organizations (NAPO) TOP COPS award winners at the White House. On Tuesday, President Obama will award Kyle J. White, a former active duty Army Sergeant, the Medal of Honor for conspicuous gallantry. Sergeant White will receive the Medal of Honor for his courageous actions while serving as a Platoon Radio Telephone Operator assigned to C Company, 2nd Battalion (Airborne), 503rd Infantry Regiment, 173rd Airborne Brigade, during combat operations against an armed enemy in Nuristan Province, Afghanistan on November 9, 2007. Sergeant White will be the seventh living recipient to be awarded the Medal of Honor for actions in Iraq or Afghanistan. On Wednesday, the president and the first lady will travel to New York metropolitan area. While in New York, President Obama will host an event on the economy and attend DNC and DSCC events. On Thursday, the president and the first lady will tour the National September 11th Memorial and Museum; Mr. Obama will also deliver remarks at the dedication ceremony. Following his remarks, the president and the first lady will return to Washington for unspecified meetings in the White House on Friday.

Also this week and beyond:

Immigration Reform – Last week, Congressmen Cardenas (D-Calif.), Polis (D-Colo.), and Garcia (D-Fla.) used a series of parliamentary maneuvers to offer the budgetary savings from H.R. 15, the House companion to the Senate immigration bill, to offset an unpaid for permanent extension of the Research & Development tax credit. This effort provided an opportunity for these members to speak on the House floor about the economic benefits of immigration reform and ask House Republicans why they will not bring a bill for a vote on the floor. Elsewhere, Congressman Diaz-Balart (R-Fla.) reminded his colleagues last week that the deadline for Congress to act is August.

Healthcare – The Senate Finance Committee will hold a confirmation hearing on Wednesday on Sylvia Mathews Burwell’s nomination to Secretary of the Department of Health and Human Services. While she will likely face difficult questions about the Affordable Care Act, she is widely expected to be confirmed.

Veterans’ Healthcare – Veterans Affairs Secretary Eric Shinseki is scheduled to appear before the Senate Veterans’ Affairs Committee on Thursday to address allegations of delays in service in VA hospitals. The House Veterans’ Affairs Committee, for its part, has subpoenaed documents from the agency relating to these claims and a number of members, including House Speaker John Boehner, have called for Secretary Shinseki’s resignation.

Housing Finance Reform – On Tuesday, Federal Housing Finance Agency Director Mel Watt will give a speech at the Brookings Institution outlining the future of Fannie Mae and Freddie Mac under conservatorship. The remarks come at a particularly sensitive time as draft legislation to unwind the GSEs appears stalled in the Senate.  After postponing a mark-up of Johnson-Crapo to attempt to get support from six Democrats on the Committee, the Senate Banking Committee will reconvene on Thursday to finish. The expectation is that the six Democrats will not endorse the measure after negotiations fell apart late last week.  Without their support, the bill’s chances on the Senate floor are meager.

Transportation – The Senate Environment and Public Works Committee will mark-up a six-year surface transportation reauthorization on Thursday. The mark-up will follow a call by the president on Wednesday at an event in New York to invest in infrastructure and quickly pass a so-called “highway bill” before the Highway Trust Fund runs dry. The last reauthorization expires at the end of September.

Education – The Senate Health, Education, Labor and Pensions Committee will mark-up on Wednesday Chairman Harkin’s (D-Iowa) Strong Start for America’s Children Act.  The bill would expand early education programs for children under five.

Tax Reform – The Senate this week will consider “extender” legislation that would retroactively extend the majority of the fifty-five tax credits that expired at the end of 2013.  The extension currently has no off-set and attempts to use revenue from limiting Child Tax Credit eligibility for ITIN-filers are widely anticipated to be put forward. The Senate approach to extenders is in sharp contrast with the House; Ways and Means Chairman Dave Camp has indicated that he will renew each expired credit on an individual basis and plans to make several permanent as a means to change the baseline of his draft bill.

New Report Raises Concern for Latinos as Foreclosure Crisis Continues in Communities of Color

(Cross-posted from the Home for Good blog)

Photo: Jeffrey Turner

Photo: Jeffrey Turner

During the foreclosure crisis, government regulators ordered major mortgage lenders to conduct a review of their internal foreclosure practices. This effort, dubbed the Independent Foreclosure Review (IFR), was supposed to provide relief for homeowners who suffered from wrongful foreclosure and illegal robo-signing practices. Sadly, IFR was an expensive disaster from the start, with a weak outreach plan that did not adequately reach communities of color. Just as borrowers were beginning to file claims, the government shuttered the process and opted for a settlement.

In its place, regulators settled with the banks in the $10 billion Independent Foreclosure Review Settlement, distributing relief to 4.2 million homeowners regardless of the actual level of harm done to individual families. The settlement seemed like welcome relief, given the millions of dollars paid to third-party vendors while homeowners received nothing.

However, according to the latest Government Accountability Office (GAO) report, the settlement may have come too soon, before the extent of damage done to homeowners was fully known. At the time of the settlement, banks had reviewed only very small portions of their total obligations—some had completed less than 2 percent of their required case reviews. While regulators had calculated a harm error rate of 6.5 percent, at least one bank that had completed a larger portion of its review had an error rate of about 24 percent. Since this bank had completed much more of its review process than the others, it’s entirely possible other banks had higher harm error rates as well.

For the Latino community, this news is deeply troubling, as the effects of the foreclosure crisis have been severe and ongoing. Vast amounts of generational wealth and home equity have been lost, with the racial wealth gap between Hispanic and White Americans standing abysmally high. After the recession, Hispanic families experienced the largest decrease in net worth among all groups. For every dollar the average White family owns, the average Latino family owns only seven cents.

Family in front of houseSadly, the foreclosure crisis is far from over today, with a new Haas Institute report documenting the nation’s metro areas hit hardest by foreclosure and underwater mortgages. Nationwide, nearly one in five of all mortgaged homes were underwater at the end of 2013—more than 9.8 million households. States and cities with large Latino populations including Miami, Chicago, Nevada, and California all suffer from high rates of foreclosure and underwater mortgages. In Newark, New Jersey, a city overwhelmingly Black and Latino, over half of all mortgages are currently underwater. Our communities are clearly still in crisis.

Latino families and all Americans affected by the foreclosure crisis did not receive the relief they deserved as victims of mortgage lending errors. We must continue to look for practical solutions to help these families recover the wealth they lost. We renew our call to protect Latino families and all American homeowners still struggling to avoid foreclosure. With Director Mel Watt now at the helm of the Federal Housing Finance Agency, principal reduction should be implemented immediately to provide relief to underwater homeowners struggling to make their mortgage payments before it’s too late.

Today, the foreclosure crisis is still not over and communities of color are still struggling to get back on their feet and regain the massive amount of wealth lost during the recession. The stability of our entire economy depends in part on a strong housing recovery. No American dream is complete without homeownership, which is why we must continue to work to ensure that housing policies facilitating sustainable homeownership remain at the core of our nation’s housing agenda.

Mel Watt’s FHFA Must Restore Funding for Rental Housing Programs for Vulnerable Latino Renters

(Guest blog post from MyHomeForGood.com)

HFG_LOGO-FullColor-horiz 6 4 12At the height of the foreclosure crisis, which claimed the homes of over one million Latino families, Congress authorized the creation of affordable rental housing funding streams via the National Housing Trust Fund (NHTF) and the Capital Magnet Fund (CMF) as part of the Housing and Economic Recovery Act of 2008.

Under Ed DeMarco, Acting Director of the Federal Housing and Finance Agency (FHFA), these crucial rental housing funding sources remained unfunded for more than five years!  However, the FHFA’s newly confirmed director, Mel Watt, has the authority to restore funding to these programs and provide essential affordable housing for the disproportionately vulnerable Latino community.

Since the programs’ creation in 2008, the availability of affordable homes for extremely-low-income households—those struggling at or below 30 percent of the federal poverty level—has plummeted by more than one million units.  For these most vulnerable families, a massive shortage of nearly five million affordable housing units exists today.

With full funding restored by the FHFA, the National Housing Trust Fund would immediately begin to remedy this shortage.  Nearly 90 percent of NHTF funding would go directly toward the construction or renovation of rental housing for extremely-low-income households.  Fanning out across the country as block grants to every state and Washington, DC, the funds would bring tangible relief to the Latino community and America’s hardest-hit populations. Continue reading

Weekly Washington Outlook – December 2, 2013

Congress Instagram

What to Watch This Week:

Congress:

The House: The House will reconvene Monday afternoon to consider three bills under suspension of the rules. The most notable among these is a measure by Rep. Howard Coble (R-N.) that would extent an existing law for ten years requiring guns to be manufactured with metal components to ensure they can be detected by X-ray machines and security devices. On Tuesday the House will take up nine more minor bills under suspension of the rules that relate to the Transportation Security Administration and natural resources issues. The remainder of the week, the House will consider the Small Business Capital Access and Job Preservation Act (H.R. 1105) sponsored by Rep. Robert Hurt (R-Va.) and may also take-up a patent troll bill sponsored by Rep. Bob Goodlatte (R-VA).

The Senate: The Senate is in recess, returning December 9th.

White House: On Monday, the president will deliver remarks from the White House in observance of World AIDS Day. On Tuesday, Mr. Obama will welcome President Santos of Colombia to the White House. On Wednesday, the president will deliver remarks on the economy at the Center for American Progress. On Thursday, he will host a Hanukkah reception at the White House. The president and the First Family on Friday will attend the National Christmas Tree Lighting also at the White House.  Continue reading