People demand action on predatory lending crisis

Housing Opportunities | Economic Security

August 15, 2009  |  The Catholic Key

Corporate predatory lending practices are strangling both the poor and the middle class, a consortium of community organizing agencies told federal, state and local officials Aug. 1.

Before nearly 200 people who had come from as far away as Wichita, Kan., community leaders from Kansas City’s Communities Creating Opportunity (CCO), mid-Missouri’s Grass Roots Organizing (GRO), and Sunflower Community Action in Kansas outlined horror stories of people losing their homes and their cars, and of neighborhoods being devastated by foreclosures.

The meeting, held at St. Luke’s United Methodist Church in southeast Kansas City, was the fifth of nine regional meetings that Federal Reserve Bank Chairman Ben Bernanke promised to the PICO National Network, with whom CCO is affiliated, and to the People’s Action Network, with whom GRO and Sunflower are affiliated.

Bernanke sent John Moon and Anna Alvarez Boyd from his staff to listen and to report to him on possible Federal Reserve action to rein in predatory lenders. Also present were representatives of the staffs of U.S. Sen. Claire McCaskill and U.S. Rep. Emmanuel Cleaver of Missouri, and U.S. Rep. Dennis Moore of Kansas.

In addition, five members of the Kansas City city council were present, as well as representatives of the staffs of both the Missouri and Kansas attorneys general offices, and members of both state legislatures.

The Rev. Keith Morgan, senior pastor of the host church, told the crowd of more than 200 that had jammed into a small conference room of how pervasive and close to home the home foreclosure crisis has hit.

“About two months ago, a moving van pulled up to one of the houses up the block” from Rev. Morgan’s home, he said. “By morning, the family was gone. The husband had lost his job, and with a son in college, he couldn’t keep up the mortgage. The bank foreclosed and they were forced to move, almost without notice. This house remains vacant today.”

Rev. Morgan noted that his neighbors were neither poor nor “nouveau-riche greedy,” — two groups who are often blamed for getting themselves into mortgages they can’t afford.

They were solid, middle-class neighbors for whom the dream of home ownership became a nightmare.

Andy Deshon, a CCO member, said that he and his wife were offered only an adjustable rate mortgage through a sub-prime lender when they purchased their Kansa City home four years ago.

Deshon said that his wife’s job and income were reduced, and his business felt the crunch of the oncoming recession. When they fell behind on their payments, the only option offered to them was a new loan at initially lower monthly payments with a $14,000 balloon payment due next spring.

Deshon said he and his wife have been making their payments, and are gathering resources to pay the balloon payment. But their mortgage lender is still hounding them.“My wife thinks the sheriff will show up any day to put us out,” he said. “I don’t know. Will they wait until we make the lump sum payment? It seems to me that working this out must be better than putting another foreclosed home on the market.”

Chester Selmon of Wichita recalled the day when his father, an African-American sharecropper in Oklahoma, was denied a loan to purchase the farm he worked because, at age 53, he was “too old.”

Selmon said that when he heard an official of his Wichita bank say that it had money to lend to minority customers but no takers, he tried to get a mortgage loan. The bank required 30 percent down and 13 percent interest.

“We’ve gone from the day when we couldn’t get a loan to the day when we can’t get a fair loan,” Selmon said.

Fenny Dorsey of Mexico, Mo., told of how she paid a payday lender $85 every two weeks for months on a $500 loan, but still owed the original $500. She then took out a car title loan to pay off the payday loan, and wound up losing her car.

B.J. Atkinson told how home repair lenders are preying on the poor and elderly in the central Kansas City neighborhood around St. Therese Little Flower Parish, where she lives and works.

She also told of how banks and mortgage lenders do nothing to maintain foreclosed properties, creating blight in a once strong neighborhood.

“Our city needs to say to lenders, ‘Once you take back a property, you are now responsible for it,’” Atkinson said.

The Rev. Stevie Wakes of Mt. Olivet Baptist Church in Kansas City, Kan., told how he lost his job at a bank, then took out a payday loan in desperation to keep up with his mortgage. He dug himself out of that hole only by borrowing against his wife’s retirement plan.

“We need no pity,” he said. “We are here to demand fairness. We are here because the values imbedded deeply in this country give us faith and hope.”

Specifically, the community organizing groups asked of the officials at all levels:

• A national mortgage modification program on high-interest, adjustable rate mortgages that lowers payments and locks in lower interest rates for distressed homeowners.

• Increased state and federal regulations against predatory lenders.

• A program to encourage banks to offer small, short-term loans at fair interest rates as an alternative to payday and car title loans.

• Local, state and federal cooperation on low-cost home repair programs, specifically targeted toward elderly living on fixed incomes.

• More teeth in local laws, if they exist at all, to force financial institutions to maintain the properties that have been foreclosed until they sell.

Several of the local officials and their representatives promised to support the agenda of the community organizing group members, but also asked that they receive full support and backing of the community organizing groups.

“Thank God community organizing has become cool,” said Kansas City Coucilwoman Cathy Jolly.