The Leadership Conference on Civil and Human Rights

The Nation's Premier Civil and Human Rights Coalition

The Leadership Conference on Civil and Human Rights  & The Leadership Conference Education Fund
The Nation's Premier Civil and Human Rights Coalition

Housing & Lending

Shelter is a basic human need - and homeownership is a basic key to financial viability. Some of the civil rights issues we look at here are predatory lending, fair housing laws, and homelessness.

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Civil Rights Groups: New Financial Regulatory Agency Must Be Able to Protect Minority Consumers

October 16, 2009 - Posted by The Leadership Conference

Civil rights leaders recently testified in the House Committee on Financial Services about the role that the proposed Consumer Financial Protection Agency will play in protecting minority and low-income Americans.

The new agency would be tasked with prohibiting abusive, deceptive, and discriminatory lending practices.  Advocates hope that the agency will ensure that the consumer financial services market operates fairly and that traditionally underserved communities have access to mainstream financial services.

Hilary Shelton, Washington Bureau director of the National Association for the Advancement of Colored People, said in his testimony that the new agency could make it easier for the federal government to adequately monitor abusive practices.  "Current laws and enforcement allow a range of institutions to escape supervision because responsibility for consumer protection is fragmented across too many regulators. Too many finance companies are not regulated at all at the federal level," Shelton said.

Janis Bowdler, deputy director of the National Council of La Raza's wealth-building policy project, recommended that the new agency also be tasked with the responsibility of identifying trends that negatively impact minority communities and taking the necessary steps to prevent such behavior, as well as promoting financial counseling by trained professionals to families that are in need.

In order to eliminate opportunities for abuse, Michael Calhoun, president and CEO of the Center for Responsible Lending, recommended that the new agency have rulemaking authority over all consumer financial services providers and their products.  Calhoun also said that the new agency must be independent and have a strong, clear mandate to enforce its authority.

The House Finance Committee is currently considering legislation that will create the new agency.


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Study Finds That States with Tough Anti-Predatory Lending Legislation Post Lower Foreclosure Rates

October 8, 2009 - Posted by The Leadership Conference

A new study released by the University of North Carolina's Center for Community Capital shows states that had adopted tougher anti-predatory lending laws had lower foreclosure and delinquency rates than those that did not enact such legislation.

The mortgage loans created in these states were also less risky, and average credit scores were higher, while average debt-to-income ratios and loan-to-value ratios were lower. 

Center Director Roberto G. Quercia noted that, "State laws can only provide patchy protection if different types of lenders within a state are subject to different rules.  Based on these results, we recommend that federal regulators set minimum standards – a floor, rather than a ceiling – and allow states to enact and enforce higher standards if they choose."

Full study (PDF)

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Congress Will Consider Bankruptcy Legislation – Again

September 9, 2009 - Posted by Tyler Lewis

A bill that will give bankruptcy judges the ability to rework defaulted mortgages on primary residences so that struggling homeowners have a greater chance of keeping their homes may come up in Congress again this year.

The banking industry has repeatedly blocked the bankruptcy bill, even as the rate of past due mortgage loans and foreclosures continues to rise

Rep. Barney Frank, D. Mass., told The Huffington Post yesterday that he intends to include the bill – which passed in the House earlier this year before it was defeated in the Senate – as part of a larger financial regulatory reform bill.  Frank said last month that he would bring the bankruptcy bill back if the mortgage industry didn't take greater advantage of a federal foreclosure prevention program that provides mortgage modifications to eligible homeowners.

UPDATE 5:45 p.m.: Sen. Christopher Dodd, D. Ct., announced that he would remain as chairman of the Senate Banking Committee.  There had been some speculation that he would give up his post to replace Sen. Ted Kennedy, D. Mass., as chairman of the committee overseeing health care reform, following Sen. Kennedy's death in August.  LCCR was pleased with Sen. Dodd's decision, noting that he has been a strong supporter of consumer-friendly legislation, including bills to expand bankruptcy relief and curtail predatory lending.

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New Orleans Housing Struggles Continue Four Years After Katrina

August 20, 2009 - Posted by The Leadership Conference

Four years after Hurricane Katrina destroyed hundreds of thousands of Gulf Coast homes, a lack of affordable housing, thousands of unihabitable residences, and a stagnant real estate market continue to vex New Orleans residents and evacuees looking to return to the city.

The Road Home, a federally funded program that provides compensation to homeowners affected by Hurricanes Katrina and Rita, has distributed $7.95 billion to help Gulf Coast residents return to their homes. But while the number of unoccupied homes in St. Bernard and Orleans parishes has increased in the past year, 53 percent and 31 percent of homes are still vacant, respectively.

According to a June 2009 report by the Greater New Orleans Community Data Center, the average rent for a studio apartment is $733 per month, which is 40 percent more expensive than pre-Katrina rates.  Few service workers can afford a New Orleans area apartment without paying more than 30 percent of their income.

Like many metropolitan areas dealing with the economic crisis, the New Orleans housing market has suffered in the past year. Home sales are down 23 percent since May 2008, but housing prices have not fallen as steeply as the national average, making homeownership a relative expensive proposition in the city. 

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Historic Settlement Requires Westchester County New York to Build Affordable Housing for Minorities

August 11, 2009 - Posted by Tyler Lewis

Westchester County, New York, a county just north of New York City, agreed yesterday to build affordable housing for low-income people and minorities in predominantly White neighborhoods, as part of a settlement with the U.S. Department of Housing and Urban Development that could set a precedent for how the federal agency will pursue housing discrimination and fair housing enforcement.

The agreement settles a lawsuit brought in January 2007 by the Anti-Discrimination Center of Metro New York, a New York fair housing advocacy organization.  The suit alleged that the county received more than $45 million in federal funds yet falsely certified that it was complying with funding requirements of the Fair Housing Act to affirmatively ensure fair housing.

"The roots of residential segregation in our nation run deep, particularly for working class racial minorities struggling to overcome economic and discriminatory barriers that limit their ability to live in neighborhoods of their choosing...This historic settlement is only a first step in grappling with a persistent nationwide problem; but we know, with the strong leadership currently at HUD, we can expect more groundbreaking developments that will move us ever closer to a truly integrated society," said Wade Henderson, president and CEO of the Leadership Conference on Civil Rights, in a statement.

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Congress Losing Patience with Lending Industry over Slow Pace of Foreclosure Prevention

August 4, 2009 - Posted by The Leadership Conference

Rep. Barney Frank, D. Mass., chairman of the House Committee on Financial Services, is taking a hard line with the lending industry for failing to take action to prevent more foreclosures. In a statement issued last week, Frank said his committee would not support the industry's legislative agenda until lenders do far more to modify troubled mortgage loans.

In 2008, Congress passed a law designed to encourage, but not require, mortgage lenders to refinance loans in order to prevent foreclosures.  Another bill that would have given bankruptcy judges the ability to rework defaulted home mortgages passed in the House of Representatives earlier this year but was stripped from the Senate bill after intense lobbying by the banking industry.

The industry argued that allowing courts to modify loans would force lenders to raise interest rates and discourage them from voluntarily modifying mortgage terms.  However, data released today by the Obama administration shows that only 9 percent of eligible homeowners have had their mortgage terms restructured since the program began in February.

"I can assure all concerned that no legislation which we are asked to pass to facilitate the full return of the lending industry to the role it should be playing in the economy will pass out of the Financial Services Committee unless we see a significant increase in mortgage modifications and foreclosure-avoidance, or the legislation includes a bankruptcy provision for primary residences," said Frank. 

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New Federal Financial Regulatory Agency Will Protect Consumer's Rights

July 23, 2009 - Posted by The Leadership Conference

LCCR and other civil rights organizations have long argued that the modern system of mortgage lending is profoundly flawed, and keeps many people from sustainable homeownership.

Despite the gains made in civil rights and fair housing during the last several decades, many members of racial and ethnic minority communities still struggle to obtain fair and sustainable mortgages, with federal regulators doing little to prevent the predatory lending practices that heavily contributed to the nation's economic downturn.

Recently, LCCR's Nancy Zirkin testified before the House Financial Services Committee in support of legislation that will create a new agency responsible for the enforcement of most financial consumer protection laws.


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Homelessness Increases among Families

July 15, 2009 - Posted by The Leadership Conference

The number of homeless families who spend some time in a shelter increased by 9 percent from 2007 to 2008, according to the U.S. Department of Housing and Urban Development's (HUD) annual report on homelessness. The report, released last week, also showed significant increases in homelessness in suburban and rural areas.

The overall number of homeless people that spend some time in a shelter has changed very little since 2007, but the report identified important differences among homeless families and individuals. Families living in shelters are most likely to be headed by a single woman under the age of 30, whereas individuals in shelters are most likely to be disabled men between the ages of 31 and 50. Whites are also more likely to experience homelessness individually, whereas minorities are more likely to enter homeless shelters accompanied by family members.

The report also found that 42 percent of homeless people at any given point in time are "unsheltered on the street or in other places not meant for human habitation."

The report reflects some of the toll that the housing crisis and the economic recession have taken on American families. However, because the report doesn't include data after September 2008 when the economic downturn worsened, the recession's impact on homelessness may be even greater than the report suggests. HUD began monitoring homelessness on a quarterly basis this year in order to further explore the effects of the financial crisis.

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FEMA Unprepared for Catastrophic Disaster

July 13, 2009 - Posted by The Leadership Conference

The Federal Emergency Management Agency (FEMA) is unprepared to house people in the event of a catastrophic disaster such as Hurricane Katrina, according to Richard Skinner, inspector general of the Department of Homeland Security (DHS), which oversees FEMA.  The Office of the Inspector General is responsible for auditing and critiquing DHS.

When people are displaced after a disaster, they often lose not only their shelter, but their way of life: their income, all of their possessions, and their communities.  Hurricane Katrina destroyed more than 300,000 homes and displaced about a million people, many of whom are still unable to return to their communities.  Property damage alone was estimated at over $100 billion. 

Affordable housing is the first and most critical step to disaster recovery.  Once people have reliable housing, they can begin to rebuild their lives. 

However, in a House Committee on Homeland Security hearing last week, Skinner stated that FEMA's high-cost temporary housing units, limited housing repair capacity, lack of clear goals and priorities for success, and lack of coordination with local and state authorities have crippled the agency's ability to respond to large-scale catastrophes.

Skinner said that in order for FEMA to be sufficiently prepared for a major catastrophe, the agency must find low-cost alternatives to using travel trailers for temporary housing, develop a plan for the quick restoration of affordable housing, and develop policies in collaboration with local and state authorities to clarify responsibilities for housing and relocating displaced people.

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Supreme Court Holds that States May Investigate National Banks

July 2, 2009 - Posted by The Leadership Conference

In its 5-4 decision in Cuomo v. Clearing House Assn., L.L.C. this week, the Supreme Court ruled that states, not just federal authorities, can enforce their own fair lending and consumer protection laws against national banks. Consumer advocates say the ruling will play a major role in how consumer protection and civil rights laws are enforced.

The case began in 2005 when the state of New York tried to investigate certain national banks it believed were charging minority borrowers higher interest rates than White borrowers.

National banks, who are already regulated by the federal government, argued that state scrutiny of their mortgage lending records would unleash a complicated patchwork of state regulations that would make it hard for them to meet the needs of their customers across all 50 states.  

But Justice Antonin Scalia, writing for an unusual group of four other justices – Justices Stevens, Souter, Ginsburg, and Breyer – found that in instances where state and federal law do not explicitly conflict, states should be free to enforce their civil rights laws in court. Otherwise, said Scalia, "the bark remains, but the bite does not."

"This Supreme Court decision is a victory for taxpayers, who have suffered enormously as a result of abusive business practices in all types of lending.  This decision will help to restore confidence in the financial services industry and the national economy," said Michael Calhoun, president of the Center for Responsible Lending

Read the opinion.

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