New Report On Federal Home Loan Banks Released

A new federal report FHLBank System at 100: Focusing on the Future assessing the Federal Home Loan Bank (FHLB) system will help the public and policymakers achieve effective reforms to improve the FHLBs’ future performance. The Federal Home Loan Bank System has been a key component of the nation’s housing finance system since it was created over 90 years ago. Today, the Federal Home Loan Banks (FHLBanks) connect domestic financial institutions - many of which are small, community focused lenders - to the global capital markets. Those connections make it possible for lenders to better support housing and community development. 

The Report recommends that: (1) The role of the FHLBanks in providing secured advances must be distinguished from the Federal Reserve’s financing facilities, set up to provide emergency financing for financial institutions with immediate liquidity challenges. The FHLBank System does not have the functional capacity to serve as the lender of last resort for troubled members. (2) FHLBanks should coordinate with their members’ primary regulators and the Federal Reserve Banks to make sure their members’ borrowing needs continue to be met when they no longer satisfy the FHLBanks’ credit criteria. (3) FHLBanks also should regularly update their credit evaluations of their members to avoid encouraging excessive risk taking. 

Additional steps that will better enable the FHLBanks to perform their liquidity function include: (i) improving the ability of the FHLBanks to maintain interest-bearing deposits with commercial banks to manage intra-day liquidity requests; (ii) limiting the potential for an increase in debt issuance costs for all members following a large liquidity request from a single member; and (iii) strengthening capital management and stress testing to keep the FHLBanks able to serve their members through all economic environments.

FHFA seeks to help the Federal Home Loan Bank System continue being a source of stable and reliable liquidity, while increasing support for housing and community development. The report summarizes issues raised throughout the initiative, actions FHFA will take, and recommendations, some of which are for consideration by Congress. 

FHFA will further review these issues and do the recommendations through ongoing supervision, guidance, or rulemaking. Much of this work will involve additional collaboration and communication with stakeholders. Certain recommendations require statutory changes, which in turn require coordination with, and support from, Congress.

The new report was produced with input from stakeholders including NCRC. FHFA started its review of the FHLBs in 2022, to identify how it could modernize the FHLB system and better serve the public. NCRC has called for reforms to strengthen community-based accountability, increase affordable housing resources, and further fair housing. The recommended changes would also more effectively support Community Development Finance Institutions (CDFIs) as well as important community development investments in climate resilience and other projects. 

Read the November 8, 2023 NCRC release.

 Push for Fair Housing Education on November 14th

The National Community Reinvestment Coalition (NCRC) and the U.S. Department of Housing and Urban Development (HUD) have teamed up for a social media campaign to raise awareness of housing discrimination and highlight the importance of fair housing across the country.    NCRC will lead a #FairHousingMatters #WelcomeME Social Storm on November 14, all day across all platforms, to spark wider public interest in fair housing.    Here is a toolkit with sample graphics and social posts to help you post during the social storm.   The Fair Housing Act prohibits discrimination in the sale, rental, or financing of dwellings and other housing-related activities because of race, color, religion, sex (including sexual orientation and gender identity), national origin, familial status, or disability. If you or someone you know has experienced housing discrimination, please contact @NCRC immediately for assistance. #fairhousingmatters #welcomeme https://www.ncrc.org/fh/

 CFPB Sues Repeat Offender Freedom Mortgage Corporation for Providing False Information to Federal Regulators

The Consumer Financial Protection Bureau (CFPB) filed a lawsuit in federal court on October 10, 2023, alleging that Freedom Mortgage Corporation submitted legally-required mortgage loan data that was riddled with errors. The CFPB alleges that Freedom’s practices violate both the Home Mortgage Disclosure Act (HMDA) and a 2019 consent order. In a recent separate matter, in August 2023 the CFPB fined Freedom $1.75 million for paying illegal kickbacks for mortgage loan referrals. 

Freedom is a privately held nonbank mortgage loan originator and servicer with headquarters in Boca Raton, Florida. In 2020, Freedom reported HMDA data on more than 700,000 mortgage loan applications and originated nearly 400,000 HMDA-reportable loans worth almost $100 billion. Under HMDA, mortgage lenders are required to report information about loan applications and originations to the CFPB and other federal regulators. The public and regulators can use HMDA information to assess if the financial institutions are serving the housing needs of their communities, and to identify possible discrimination.

In 2019, the CFPB found that Freedom had intentionally misreported HMDA data about applicants’ race and ethnicity. For example, certain loan officers were told by managers or other loan officers that when applicants did not provide their race or ethnicity, they should select non-Hispanic white. The 2019 order required Freedom to pay a $1.75 million penalty, improve its compliance management system, and avoid future HMDA violations.

The 2023 lawsuit alleges that the HMDA data Freedom submitted for 2020 contained widespread errors across multiple data fields, and that the errors constitute violations of HMDA, the Consumer Financial Protection Act, and the 2019 order. Specifically, the CFPB alleges: (1) Freedom reported information to regulators with widespread inaccuracies: After the CFPB found 51 errors in an initial review of 159 files in Freedom’s 2020 submission, the company had to resubmit its data. In that resubmission, Freedom corrected errors in 35 different required HMDA data fields. There were errors in over 174,000 data entries affecting nearly 20% of Freedom’s mortgage loan applications; and (2) Freedom violated a 2019 law enforcement order to clean up its deficient data practices. It has failed to do this, and has continued to provide federal regulators with error-ridden data.

Under the Consumer Financial Protection Act (CFPA), the CFPB has the authority to take action against financial institutions violating consumer financial laws, including HMDA. The lawsuit seeks to stop Freedom’s alleged unlawful conduct and for it to pay a civil money penalty which will be deposited in the CFPB’s victims relief fund. 

Read today’s complaint.

Read the October 10, 2023 CFPB release.

 CFPB Orders Citi to Pay $25.9 Million for Illegal Discrimination Against Armenian Americans

The Consumer Financial Protection Bureau (CFPB) has ordered Citi to pay $25.9 million in fines and consumer redress for intentionally and illegally discriminating against credit card applicants the bank identified as Armenian American. From 2015-2021, Citi rejected applicants for certain credit card products, based on their surnames, whom it suspected of being of Armenian descent. Citi supervisors hid the discrimination by instructing employees not to discuss the discrimination in writing or on recorded phone lines. Citi employees also lied about the basis of denial, providing false reasons to denied applicants. Under the order, Citi will pay $1.4 million to harmed consumers and a $24.5 million penalty.

Citibank, N.A. is a national bank headquartered in New York City that issues consumer credit cards, including retail services credit cards for companies like Home Depot and Best Buy. Citi’s parent company is Citigroup (NYSE: C), a global financial services holding company. As of June 30, 2023, Citi had $1.7 trillion in total assets – making it the third-largest bank by asset size in the U.S.

In essence, Citi treated Armenian Americans as criminals who were likely to commit fraud. From at least 2015 through 2021, Citi identified retail services credit card applicants with surnames that Citi employees associated with Armenian national origin as well as applicants in or around Glendale, California. The bank specifically targeted surnames ending in “-ian” and “-yan.” Nicknamed “Little Armenia,” Glendale has approximately 15% of the Armenian American population.

Intentionally denying credit based on national origin is illegal under the Equal Credit Opportunity Act.  Specifically, Citi harmed consumers by:

• Denying credit applications because of borrowers’ ancestry: Citi’s supervisors taught employees how to discriminate against people of perceived Armenian descent using surname suffixes. When Citi identified applicants as possibly having Armenian national origin using this method, the bank used more stringent criteria to evaluate their applications, including denying them totally and requiring additional information or blocking the account. 
• Giving borrowers fake reasons for credit denials: When Citi denied credit applications because of applicants’ perceived Armenian national origin, Citi employees lied about the specific reasons for the adverse actions. For example, a Citi employee explained it had been a while since they had discriminated against a perceived Armenian, and wanted to learn how to cover up the discrimination. S/he was told to decline the credit card application due to suspected credit abuse, which essentially blamed the applicant for the denial.

Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating consumer financial protection laws, including the Equal Credit Opportunity Act and its implementing Regulation B. 

The CFPB’s order requires Citi to: (1) pay $1.4 million to affected consumers: Consumers who applied for a Citi Retail Services Credit Card between January 1, 2015, and December 31, 2021, and are identified as having been denied the credit card based on national origin discrimination are eligible for redress; and pay a $24.5 million fine to the CFPB’s victims relief fund.

Read today’s order.

Consent Order 

Stipulation 

Read the November 8, 2023 CFPB release.

View case filings

PUSH FOR BALTIMORE INCLUSIONARY HOUSING LEGISLATION CONTINUES

The Baltimore Inclusionary Housing Coalition is continuing to lobby for a vote on a Baltimore City Council bill that would require affordable housing units to be created in certain residential projects. There are more than 20 organizations in the Coalition, which has been working on the inclusionary housing bill since before the 2007 expiration of an inclusionary housing policy. 

The nonpartisan Coalition was formed by the Baltimore Branch of the NAACP, Baltimore Renters United, Beyond the Boundaries, BRIDGE Maryland, Inc., Citizens Planning and Housing Association (CPHA), Community Development Network, SEIU 1199, and the Public Justice Center (PJC), among numerous other Baltimore area nonprofit and community organizations, volunteers, and City Councilwoman Odette Ramos (District 14).

Council Bill 22-0195 is one of the two bills the coalition is advocating for. It would “eliminate the loopholes and waivers in the prior inclusionary housing law that made it a failure,” according to a webpage by the League of Women Voters of Baltimore City, a member of the coalition. The bill would require developers to set aside 10 percent of units as affordable housing in residential projects that receive city funding or rezoning and have greater than 20 units. Affordable is defined as a household earning less than 60% of Area Median Income (about $55,740 for a family of two) would pay rent that is no more than 30% of their income. 

Courtney Jenkins, President of the Metropolitan Baltimore AFL-CIO, has said that with the average cost of housing in the City being around $1,200 monthly, renters are paying about $15,000 yearly on housing. Since 54% of Baltimoreans make less than $60,000 annually, housing costs are at least 25% of their income, if not more, he said. The National Equity Analysis estimates that more than 20,000 households in Baltimore City are behind on rent. Lack of access to affordable housing and an overabundance of inadequate housing especially hits people of color.

There have been five hearings and 30 amendments to CB 22-0195 since its introduction in February 2022. The Coalition deplored the fact that the proposed law has not yet been brought before the full council for a vote. “I think any other amendments are active[ly] delaying this even further,” said Loraine Arikat, a member of the 1199SEIU Maryland/DC division, a union that represents healthcare workers. Once the law is passed, it will not go into effect immediately. The proposed law grants a six-month grace period before it goes into effect. That buffer gives time to gather advisory board appointees.  

The Historic Sharp Leadenhall Community Association agrees with the Coalition that something has to be done immediately: “We cannot continue to have families not have decent shelter. We cannot continue not to have access to affordable food. We cannot continue to accept this as a people.”

The last inclusionary housing policy was passed in 2007 and expired in June 2022, according to an inclusionary housing study commissioned by the Baltimore City Department of Housing & Community Development and completed by Enterprise Community Partners. That policy solely led to the development of 34 affordable housing units due to loopholes and waivers. City Council President Nick Mosby  said the proposed CB 22-0195 must create as many inclusionary housing units as possible across the whole city. At a Coalition rally, He said, “No matter your ZIP code, your socioeconomic status, new buildings - new quality buildings with affordable units - should be able to be available to you. You should have quality development in communities that you’re most comfortable with, that you have cultural competency with, and that you wanna grow and stay growing in age in.” 

In 2021, Mosby introduced a legislative package “House Baltimore” to provide low-income residents with opportunities to buy and rehabilitate existing Baltimore homes. Advocates heavily criticized it, and he apologized after a hearing to discuss the bill ended chaotically.

Ramos has said she understands activists’ impatience but wants the bill to be done correctly. Although she said the bill has support from the Council, as of today there is not a date set for the vote.  

If approved, C 22-0195 will create an advisory board that must approve the developers’ plans before they can obtain a permit. The advisory board will ensure the enforcement of the program. Members will be appointed by Mayor Brandon Scott, according to Matt Hill, an attorney for the Public Justice Center, a legal advocacy group and coalition member. Developers would not receive their subsidy until after completing the reporting procedures required by the bill. This is to make sure that too much subsidy might be going to the developers. The coalition will likely make recommendations for the board to the mayor, Hill said.

Another City Council bill, CB 23-0369, is coupled with the inclusionary housing policy to create a high-performance inclusionary housing tax credit. The tax credit would give eligible property owners a 15% abatement of city property tax. 

For more information and to support the proposed law, the public can go to the Action Network's dedicated page.

Read the November 3, 2023 Baltimore Beat article.

 The CFPB and FTC Accuse TransUnion of Illegal Rental Background Check and Credit Reporting Practices

The Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) have requested a federal court to order penalties for the rental screening subsidiary of TransUnion for violations of the Fair Credit Reporting Act. TransUnion: (a) did not make sure that the rental background checks that landlords use to evaluate renters were accurate, and (b) withheld from renters the names of third parties that provided the inaccurate information. The CFPB and FTC's request is to fine TransUnion $15 million for its illegal behavior, stop illegal tenant screening practices,  and make significant improvements to how it reports evictions. Regarding the financial penalty, $11 million would be paid to consumers and $4 million would go to the CFPB's victims relief fund.

Separately, the CFPB has ordered TransUnion to pay $8 million for lying to thousands of consumers about when it placed or removed security freezes and locks on credit reports. TransUnion told consumers the requests were completed when instead the requests joined its multi-year backlog. It also did not keep active-duty members of the military from pre-screened solicitation lists – which protects servicemembers from identity theft. 

The 2018 Fair Credit Reporting Act required TransUnion and other credit reporting companies to offer free security freezes to the public and enhanced protections for active-duty members of the military. This Act also requires that companies respond timely to consumer requests to place or remove security freezes – which with credit locks helps prevent potential identity theft by blocking many third parties from accessing consumers’ credit reports.

TransUnion had annual revenue in excess of $3.7 billion in 2022, and collects information on over 200 million Americans, including information on their payment histories, debt loads, maximum credit limits, current creditors, and related credit relationships. It provides security freezes and security locks of individuals’ consumer reports. TransUnion previously had been accused of improprieties by the CFPB. Those and the current enforcement action stemmed from CFPB's investigations and reports.

Read today’s CFPB and FTC joint complaint and proposed order.

Read today’s CFPB order.

Learn more about credit reports and scores.

Read the CFPB’s 2023 report on consumer complaints about TransUnion and the other two nationwide consumer reporting companies.

Read the remarks of Eric Halperin, the CFPB’s Assistant Director of Enforcement, on today’s actions.

Consumers can submit complaints about financial products and services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Read the October 12, 2023 CFPB article.

 FAIR HOUSING E-NEWS

October, 2023

 

Welcome to this edition of Fair Housing E-News! This newsletter is produced by the GBCHRB as a public service. More info/resources: http://www.gbchrb.org. Just a few of the headlines are:

Baltimore Civil Rights Week 2023 is October 30-November 3^rd. Civil Rights Week 2023 is held by the Baltimore City Office of Equity and Civil Rights (OECR). Civil Rights Week 2023 Sponsorship Packages.

 Project Begun to Increase Accessibility of Baltimore-Area Houses of Worship. To help religious leaders make their houses of worship more welcoming to people with disabilities and their families, the Kennedy Krieger Institute’s Maryland Center for Developmental Disabilities has started its Faith Community Learning Collaborative. : Read the September 11, 2023 Baltimore Sun article.

 Massachusetts Study of Housing Mobility Program Finds Positive Results. Read the Full Report and Executive Summary.

Study Links Historic Redlining to Worse Cardiovascular Health for Veterans. Read the July16, 2023 Washington Post article.

2022 Saw the Highest Rate of Recorded Antisemitic Incidents in the US and Maryland Sees Antisemitic Graffiti and Noxious High School Behavior. Read the October 13, 2023 CNN article. Read the September 20, 2023 CBS News report. Read the September 20, 2023 WBALTV article.

 Florida Bank that Denied Loans to Blacks, Hispanics to Pay $9 Million. Read the October 19, 2023 Washington Post article.

To read this issue of Fair Housing E-News: fhnews2023oct.pdf.

Contact the GBCHRB for free Fair Housing training.

GBCHRB 

P. O. Box 66180

Baltimore, Maryland 21239-6180

http://www.gbchrb.org

443.347.3701