Tension building for action on foreclosures
The National Training and Information Center— based here in Chicago — is expected to announce recommendations for working with Wall Street investors to keep people in their homes. These and other recommendations will be announced at the NTIC Housing and Banking Summit this week. Activists and others have been meeting over the past several months to develop these recommendations.
It's part of the 30 year anniversary of the Community Reinvestment Act.
In March we wrote about how the CRA had unforeseen consequences: banks were buying and selling portfolios of mortgages made in neighborhoods simply to get CRA credit - You can download that story here.
Here's the press release from the NTIC.
FOUNDING ORGANIZATION CALLS FOR MODERNIZATION OF CRA
(CHICAGO, IL) As the Community Reinvestment Act (CRA) turns 30, Americans are turning their heads looking for answers to today's foreclosure crisis. An effort lead by Chicago-based National Training and Information Center (NTIC), CRA was Congress' response to the cry for help coming from low-income families asking for legislation that would require financial institutions to reinvest in these communities. Thirty years later, housing leaders are calling for the expansion of the Community Reinvestment Act (CRA) to stop mortgage companies from doing business "outside" the law.
"CRA is still the most effective tool for bring good loans into low-income communities," said George Goehl, executive director of NTIC. "Unfortunately CRA has not kept up with the times so while financial institutions "depositories" are closely regulated, mortgage companies have not been brought in under this regulation umbrella—they've slipped through the cracks and have been allowed to operate "outside the law," Goehl said.
In the 1970s communities across the country faced a crisis. Dwindling access to credit and widespread disinvestment in low-income communities resulted in urban blight throughout the country. Community leaders, members of Congress, and President Carter responded by passing the Community Reinvestment Act. Since 1977, the CRA legislation has resulted in $4.7 trillion invested in low- and moderate-income communities—that was its intent—to stop widespread disinvestment in low-income communities.
"Back then banks did not see the opportunity in low-income communities but we weren't asking for banks to make bad loans," said NTIC co-founder Shel Trapp. "And today we are begging for lending institutions to stop making bad loans because its result is growing urban blight, increasing crime and decreased home value," Trapp continued.
More than one million families with subprime mortgages have already lost their homes and another two million more are at risk of foreclosure as hefty interest rate hikes (also know as resetting adjustable rate mortgages) are around the corner.
"Now is a perfect time to reflect on the bold and responsible actions that community and political leaders took in 1977 when the Community Reinvestment Act was signed into law, and act boldly by implementing reforms designed to keep families in their home, protect our economy and ensure that predatory lending is outlawed," said Goehl.
NTIC recently launched "Save the American Dream," a campaign, which aims to push industry leaders and Congress to once again respond to America's cry for help.
"Save the American Dream" calls for three critical solutions to stop the foreclosure crisis:
1. Expand the Community Reinvestment Act (CRA) to include mortgage companies, which are currently unregulated in their lending policies to low- and moderate-income communities.
2. A moratorium on ARM resets—NTIC named Wells Fargo and Countrywide the two key lenders and servicers that played a critical role in the rise of foreclosures.
3. Establish national regulations that place criminal penalties on individual brokers and lenders that knowingly engage in abusive lending practices (i.e. bait and switch, equity stripping, steering or fraudulent appraisals).
The National Training and Information Center is a 35-year old network of community organizations that is dedicated to community organizing as a means of creating a more just and equitable society. NTIC is made up of 18 affiliate organizations in 10 states and works with 40 additional allied organizations from across the country. NTIC began its campaign against predatory lending and for homeowner justice in 1999. Since then NTIC has held some of the nation's largest lending institutions accountable and has developed national lending partnerships to clean up the industry and keep families in their homes. For more information visit www.ntic-us.org.
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