Foreclosure Relief Under the Obama Administration April 16, 2010 Goldman School of Public Policy Kevin Stein California Reinvestment Coalition
Feb 25, 2016
Foreclosure Relief Under the Obama Administration
April 16, 2010Goldman School of Public Policy
Kevin SteinCalifornia Reinvestment Coalition
Outline: Foreclosure Related Issues• Context – surveys, Redlining report• HAMP• Tenants – PTFA• Whats Left/Needed:–Judicial Modification–Financial Regulatory Reform – CFPA–CRA Modernization–Protest
Banks Not Helping Borrowers: CRC Statewide Survey Findings
• Foreclosure most common outcome• Loan modifications - rare, short term• Principal write downs - rare• Obama Plan–Servicers aren’t working w/ borrowers–Disparate outcomes??!!!
From Foreclosure to Re-RedliningCRC Report February 2010
From Foreclosure to Redlining Report: CRC 2010
• Redlining • Steering/Predatory Lending• Concentrated Foreclosures• Inadequate and Uneven Loan Modifications• Re-redlining
Foreclosure Filings by Neighborhood: Oakland 2008
Loan Mods to REO Ratio: Worse in CA Cities Than US
California Reinvestment Coalition: From Foreclosure to Re-Redlining
Monthly E mpty Homes v s . L oans Modified: S ample S ec uritiz ed L oan P ools Dec 2008-Nov 2009
0
5
10
15
20
25
R E O per Mod 6.77 21.87 11.38 15.69 9.38 8.19
US Oakland S ac S tockton L os A ngeles
S an Diego
Prime Loans Shift to White NeighborhoodsCalifornia Reinvestment Coalition: From Foreclosure to Re-Redlining
C hang es in the Dis tribution of P rime L oans in Oakland Neig hborhoods : All L enders 2006-
2008
0
10
20
30
40
50
80% or moreP OC
79.9% -50%P OC
49.9% -20%P OC
19.9% -10%P OC
% P
rim
e Ln
s
2006
2008
Making Home Affordable Plan
1. Home Affordable Refinance2. Home Affordable
Modifications3. GSEs to Lower Interest Rates
Home Affordable Refinance
Predicted to help 4 to 5 million BorrowersMay have limited impact in CA:• Must have GSE owned or guaranteed
loan• Must be current• Must be less than 105%, later 125% LTV• Who fits this category?
Home Affordable Modifications
• Predicted to help 3 to 4 Bs• $75 Billion to incent servicers, investors, Bs• For owner occupants and 1st lien loans• Target 31% income for front end ratio• Must pass net present value test• Incentive to work with borrowers at-risk
HAMP #s March 2010Source: The Atlantic
,
HAMP: CRC Critique• Poor performance – 200,000 permanent mods• Not mandatory • Pays servicers to do what they should do• Principal reductions not a part, but..• Not much help for unemployed, but…• Little transparency – npv test, denials, but…• No meaningful way to appeal, but…• Race data collected, not public, but…• No enforcement, accountability, (no but)
Bankruptcy Cramdown: Judicial Modification
• Could have helped 600,000 borrowers directly• Would give borrowers leverage• Passed the House, Killed in Senate• Senator Durbin –
–the bankers “frankly own the place (Congress)”
• Where was the President? (in his platform)
CFPA
• Agency to protect consumers• No regulatory race to the bottom – Ex. OTS• Strong proposal by President• Strong opposition from industry• Key issues– Rule making and enforcement authority– Where does it reside?– Exemptions
Community Reinvestment Act Modernization
• CRA is the one law that works!• Paying More for the American Dream III study– CRA lenders more likely to make prime loans
• But CRA needs to be strengthened– Include race, not just income– Include all areas where loans are made. Ex: CW– Report data on which banks are helping– Cover mortgage, insurance, Wall Street firms– Don’t dilute public input!