As we finish celebrating Black History Month and the 50th Anniversary of the Fair Housing Act, the Senate will consider laws that would undermine our nation’s commitment to equal legal protection. At a time when harmful Trump administration rhetoric and policies are sowing divisions that seek to marginalize racial, ethnic, and other minorities, Congress should not weaken civil rights laws or consumer protection by disrupting more than four out of five banks and credit unions exempts from an obligation to disclose information about mortgage loans. If so, anyone looking to buy or sell a home will be affected by the lowering of mortgage loan transparency from banks and credit unions that make fewer than 500 loans a year.
Between 2020 and 2030, 88 percent of new household growth will be non-white. In the years to come, the new homeowners will disproportionately be Latinos, African Americans, and Asia-Pacific Americans. However, a recent study by the Center for Investigative Reporting found that African Americans and Latinos are routinely denied mortgages at far higher interest rates than whites.
Racial differences in access to mortgages hurt families just as they begin to recover from the 2008 financial crisis, largely caused by predatory subprime lending. Tragically, Nevada had the nation’s highest foreclosure rate for 62 straight months during the great recession. Things got so bad that in 2010 an estimate found that 70 percent of homes in Las Vegas were “under water” – which means that the borrower owed more on their mortgage than the house was worth. Many of these borrowers had equity in their home before they were targeted by an unscrupulous lender who aimed to turn that equity into loans with high fees and loans by refinancing borrowers non-viable monthly payments.
Ten years after the economic recession, lending has returned for many Americans. But the gap between white and black home ownership is wider today than it was in 1960, and there are signs of modern redlining across the country. Special correspondent Aaron Glantz reports on a year-long investigation by Reveal from the Center for Investigative Reporting.
The result was the destruction of trillions of dollars in household assets and the erosion of many of the attacked neighborhoods. Anyone who drove through parts of Las Vegas in 2009 could see the boarded up houses, the “For Sale” signs, and the scruffy lots abandoned by absent banks. And while all neighborhoods suffered, we saw African American, Latin American, and Asian communities in Nevada and across the country, even by accounting, have higher foreclosure rates for their income and assets. African American and Latin American families were more than twice as likely to be denied credit. If they got a loan, the likelihood of getting a subprime loan was more than twice that of a white family, even if they had the same or better income and credit.
After this devastation, policymakers realized they had incomplete data to understand patterns of discriminatory lending and its impact on different communities. Without sufficient information, state, local, and federal agencies have been unable to determine the prevalence of predatory or discriminatory lending to prevent foreclosures and financial crises.
As a result, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 modestly expanded information reporting that began in 1975 under the Home Mortgage Disclosure Act, an important civil rights and consumer protection law aimed at combating racially discriminatory “redlining”. Mortgage Practices. This extension required banks and credit unions to report information they were already collecting in the underwriting process – including specific details about the loan such as total points and fees, the difference between the annual interest rate paid and the reference rate on all loans, any prepayment penalty conditions, the value of the Property, the borrower’s creditworthiness, and whether the loan was a “reverse mortgage” sold to a senior. Legislators have tried to expand reporting requirements to help policymakers better identify when underserved communities are unfairly denied credit or excessively charged. It also allows law enforcement agencies to use their resources efficiently and target the predatory lenders who are unfairly pulling down the good players in the banking sector.
The law currently pending at the Senate – the law on economic growth, regulatory relief and consumer protection (p.2155) – would benefit around 85 percent of the banks and credit unions from the new one Reporting requirements. Its proponents claim that they are only trying to reduce regulatory requirements on small banks and credit unions, even though current law excludes really small lenders who have taken out fewer than 25 mortgages in the past two years, as well as financial institutions that are not based in major cities are areas. Banks and credit unions, including small institutions, make record profits.
Yet without this data, attorneys general, fair housing advocates, and others would be back to where we were after the 2008 crash: we couldn’t link racial, ethnic, gender, and age discrimination to mortgages in our communities and elsewhere in the country.
At the same time, President Trump appointed his own budget director and cabinet member Mick Mulvaney to also head the Consumer Financial Protection Bureau. Mulvaney wasted no time undermining the Bureau of Equal Protection’s mission under the law. He Removed its enforcement and supervisory authorities from the CFPB’s Fair Lending Office, has sworn himself Reset rules aims to stop the payday loan debt trap and has ended lawsuits against predatory lenders demanding 900 percent interest.
As former officials tasked with enforcing consumer and civil rights laws, we know firsthand that his approach to law enforcement is deeply troubling and that attorneys general across the country will struggle to protect homebuyers and consumers whom Mr Mulvaney the banking system is developing for fraudsters across the country.
Now is not the time for Congress to make it difficult for attorneys general to fill the void in consumer protection and civil rights enforcement that President Trump has created. If S.2155 is passed, regulators, law enforcement, and advocacy groups across the country will lose vital information they need to stop discrimination – before another crisis ravages Nevada, our communities and the economy.