Celebrating Financial Capability Efforts to Support Latino Financial Well-being

By Agatha So, Policy Analyst, Economic Policy Project, NCLR

Financial Capability Counseling gives Latino families the information and tools needed to improve credit, increase savings, and build wealth. Through participation in a financial capability program, Latino families can access a range of resources and learn how to use skill-building tools and financial products that will help them achieve their financial goals, such as homeownership.

For Affiliate partners of the NCLR Homeownership Network (NHN), building families’ financial capability has never been more important. Because of the financial crisis nearly a decade ago, millions of Latino families saw their savings disappear when they lost their homes to foreclosure. At the same time, a rise in unemployment among Latino workers made it harder for families to the get the assistance they needed to save their homes. Today, a generation of Latino families are still recovering and trying to repair the damage to their credit when they lost their homes. Rebuilding by understanding how to budget, save, and improve credit is critical to economic recovery and the ability for Latinos to become homeowners.

Continue reading

Citigroup Settlement Penalties Are the Largest in History

Gavel and Law BooksThe U.S. Department of Justice recently announced a $7 billion settlement with Citigroup Inc. over the bank’s faulty mortgage securities and egregious practices. The settlement includes the largest civil fraud penalty ever levied by the Justice Department under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) and is more than twice what many analysts expected.

The government’s description of Citi’s wrongdoing closely mirrors conduct outlined in the Justice Department’s settlement with J.P. Morgan Chase. In both cases, the banks, or entities that they acquired, acknowledged repeatedly giving investors misleading information about mortgages underlying the securities. In many cases, those mortgages didn’t meet internal underwriting guidelines—which ensure that safe and secure loans are issued and help set the terms of the loan—but were included in packages and sold to investors.

Since the housing crisis hit in 2008, NCLR supported the efforts of state attorneys general in pursuing financial institutions whose predatory lending practices decimated the household wealth of millions of families, which was particularly devastating to Latinos and other communities of color. Working alongside advocates, housing counselors, and champions within the administration and the attorney general coalition, a national settlement was reached that made key changes to the mortgage servicing industry.

In California, NCLR worked closely with Attorney General Kamala D. Harris in the state’s successful passage of the Homeowner Bill of Rights, the first legislation of its kind that gives homeowners protections against abusive foreclosure practices by banks, and put an end to dual tracking.


This settlement is a reminder of the main causes of the financial collapse: poor practices in subprime mortgage lending, lack of transparency in the complex securitization process, and lax regulatory enforcement and oversight. Regulatory reforms are now in place that, we hope, will substantially improve the financial system.

The agreement also appears to improve on prior settlements by including affordable housing financing and counseling funds as permissible activities, a strong monitor, and it references relief to reach hard-hit areas.

That said, it will be important to assess how well the settlement is administered. Citi can make amends by working in good faith to ensure that hard-hit areas receive the relief and attention they deserve. In addition, the bank can significantly improve the financial system by collecting and reporting impact data by race and ethnicity, adding a substantial measure of transparency and accountability to the process. In doing so, the bank can ensure that those most harmed by their wrongdoing receive the help they need.

It is important for banks and mortgage lenders to settle accounts with the public for the 2008 crisis once and for all, and to provide as much relief and help as possible to those damaged by it. In doing so, they will help to build a better and stronger financial market in the future.

Family in front of houseLatinos are expected to comprise 40 percent of new households over the next two decades, and 50 percent of homebuyers will be Latino. Even with the recent foreclosure crisis, the desire for Latinos to be homeowners has not abated. According to a poll conducted by Latino Decisions and NCLR, the majority of Latino voters still believe that a key component of the American Dream is owning a home. Overall, 53 percent of Latino voters and 58 percent of immigrants agree that homeownership is a principle of the American Dream.

Latinos can contribute to the recovery of the nation’s housing market, but the widespread availability of safe and affordable mortgages depends on whether financial reforms can create a housing finance system that is accessible, transparent, and accountable for all Americans.

Underwater Homeowners Receive Much Needed Help, But Are Latinos Being Left Out?

It’s been over a year since the nation’s five largest mortgage servicers agreed to the historic $25 billion National Mortgage Settlement aimed at providing relief for underwater homeowners and preventing future unnecessary foreclosures.  Fortunately, it seems we’re headed in the right direction.

Family in front of houseEarlier this week, Joseph Smith, Independent Monitor of the Office of Mortgage Settlement Oversight, released his fourth report detailing the progress made under the deal.  Between March 2012 and March 31, 2013, more than 620,000 homeowners received over $50 billion in overall consumer relief.  A big portion of this came in the form of a principal reduction.

Continue reading

Housing on the Precipice

By Jose Garcia, Policy Fellow, Wealth-Building Policy Project, NCLR

Home for GoodAs 2013 approaches, the clock most people are watching is not in Times Square but in Washington, DC, where the countdown to the fiscal cliff has begun.  Lawmakers face a self-imposed deadline of December 31 to figure out how to deal with tax hikes and spending cuts.  If an agreement is not reached, the Congressional Budget Office projects that it could cost the U.S. two million jobs next year.  This drastic job loss could hamper the housing recovery, and the timing could not be worse.

The U.S. is still reeling from a recession that drained more than $17 trillion in wealth from American families, disproportionately affecting low- and middle-income families and communities of color.  Hispanic families lost an alarming 66% of their household wealth.  Their ability to save and invest in their families, their communities, and our nation’s economy has been severely limited by high rates of unemployment, stagnant wages, and an increased cost of living.  Yet on the cusp of a new year, the U.S. is trying to balance the budget by putting the confidence of consumers and our few, hard-earned economic inroads at risk.  For Latino families, the fiscal cliff could mean a return to double-digit unemployment, affecting their ability to keep a roof over their heads.

If an agreement is not reached, the U.S. Department of Housing and Urban Development will suffer 8.2% in cuts to a number of programs, including $1.5 billion to tenant-based rental assistance and $4 million to its Housing Counseling Program.  For homeowners, fewer jobs could lead to a new wave of foreclosures as newly unemployed workers struggle to make mortgage payments.  Decreases to funding for housing counseling could further erode Latino home equity, as there will be less assistance available to help families save their homes.

Cuts to housing subsidies put at risk the housing of millions of families who rely on these subsidies to make ends meet.  For these renters, this assistance provides a way to cover the cost of basic living expenses and survive economic shocks from unplanned emergencies like car repairs.

The fiscal cliff also threatens to slow the momentum in the housing market, as nervous consumers may be less likely to purchase a new home.  Uncertain about tax hikes or job losses, prospective buyers may hold off on purchasing a home until they feel more secure about their economic prospects.  Fewer homebuyers could stall growth of the housing market, and from there the fiscal cliff could lead to an economic slump that may result in greater reliance on economic assistance.

As was evident during the last election, the issues that are important to Latinos can no longer be ignored.  Hispanic voters have rejected a strategy that would focus only on spending cuts.  Instead, Latinos want to see a balanced approach that raises revenue by requiring everyone to pay their fair share of taxes.  Like all Americans who are still recovering from a deep recession, Latinos are most concerned with rebuilding our nation’s economy.  Recent polls show that Latino voters overwhelmingly support strategic investments in education and infrastructure over cutting taxes as the best way to spur economic growth.  The fiscal cliff provides the U.S. with an opportunity to work toward a better future for all by helping our workforce acquire the skills needed in today’s market, and by taking care of the elderly who worked tirelessly to make the U.S. one of the most prosperous nations in the world.  This can all be accomplished while still balancing the budget and avoiding sequestrations.  We need to be smart about the budget challenges that our nation faces.  We cannot afford to put the housing of working families at risk just to keep giving tax breaks to rich individuals and corporations.

With Dream of Homeownership Threatened, Candidates’ Silence on Housing Issues Elicits Frustration

By Janis Bowdler, Director, Wealth-Building Policy Project

How do you convince somebody to fix a problem when they are seemingly blind to the overwhelming evidence that the problem even exists? Today, 11 million Americans owe more on their mortgage than their home is worth. Analysts predict that we will see an estimated two million foreclosure filings this year with millions more at risk of losing their homes. As a result, hundreds of thousands of senior citizens are losing their economic security, children and families are being uprooted, and neighborhoods are blighted with vacant properties.

The nation’s housing market is in a precarious position, and despite millions of homeowners across the nation bearing the brunt of the housing crisis, too few of the decision-makers on Capitol Hill are championing the necessary solutions to protect the American Dream of homeownership. And in the midst of a presidential election, the onus falls on the two candidates to carve out serious proposals to navigate homeowners out of this colossal mess. But when political strategy dictates that its best for both candidates to avoid the issue altogether, it becomes incredibly challenging to push for the type of national conversation we need.

Recently the Home for Good campaign—a collaboration of more than 70 civil rights, community, and public interest groups—reached out to homeowners across the country for help. In the end, nearly 40,000 people signed on to our call, asking the presidential candidates to offer real solutions to:

  • Stop needless foreclosures
  • Expand affordable rental housing
  • Revive a sustainable path to homeownership

Along with signatures of tens of thousands of concerned voters and advocates, we have offered a blueprint for restoring home opportunity called the Compact for Home Opportunity. We have made it especially easy for them. The Presidential candidates have our signatures and a plan, now the ball is in their court.

It’s important for both candidates to remember that while they may choose to skirt the issue until Election Day, there will be no hiding from the housing crisis over the next four years. Housing has traditionally led previous recession rebounds, so it is no wonder that our economic recovery has dragged alongside a weak housing market. We must address the crushing mortgage debt overhang, keep families in their homes, and bring new homeowners into the market.

Important housing policy questions are looming. Will the candidates lean on Fannie Mae and Freddie Mac to stop dual tracking, a practice that moves families through foreclosure before they know if they could qualify for a loan modification? Will they give away resources for housing counseling and low-income renters in the pending “Grand Bargain?” It’s these kinds of details that have been completely absent from both candidates’ platforms.

The financial crisis has decimated neighborhoods, wiped out family wealth, and ruined financial futures, but it has not changed the central role the home plays in our lives. We continue to seek shelter with a few basic amenities—safe streets, good schools, and access to quality jobs. It is time that candidates speak frankly with voters and explain what they plan to do to ensure that families who dream of owning a home can make that dream a reality.