Inner City Press/FFW: Watchdogging and Taking Action, including along the Gulf Coast, Since 1987

Gulf Coast Reporter: Post-Hurricane Katrina in New Orleans, Alabama and Mississippi

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Some MSM coverage of ICP's Gulf Coast work, 2005 back

NOLA: "Group opposes Hibernia deal," New Orleans Times-Picayune, March 11, 2005

AL: "Group Challenges Payday Loans," by Sherri C. Goodman, Birmingham News, July 22, 2004

"Group Opposes Regions Merger," by Russell Hubbard, Birmingham News, March 30, 2004

"AmSouth, First American Face CRA Hurdle: Community Group Questions Bank's Lending Record," Credit Risk Management Report, August 9, 1999

MS: "WaMu Deal Excluded Mississippi Offices: Group Thinks Lending Lawsuit is to Blame," Seattle Post - Intelligencer, Dec. 16, 2003, Pg. E8

Earlier LA: "Banc One's proposal challenged: Consumer groups winning concessions," by Ted Griggs, Baton Rouge Advocate, Nov. 2, 1995

 

ICP's studies of the 2004 HMDA data: first   second   third fourth fifth sixth

AP re ICP's first study  

 

How to Contact Us
 

 

Updated Sept. 25, 2006 -- For further information, click here to contact us

Update of September 25, 2006: On the Gulf Coast, DuPont last week began a new PFOA processing project at its First Chemical plant in Pascagoula, dodging an appeal of the water emissions permit rubber-stamped for First Chemical by the Mississippi Department of Environmental Quality...

            ICP Fair Finance Watch has just filed a 15-page challenge to the proposed announced on May 24 by Regions Financial Corporation to acquire AmSouth for over $10 billion. FFW's comments state that while the merger should be denied on all of thee above grounds, FFW is requesting public hearings because any merger of this size in the still-unrepaired and underbanked zone impacted by last year's hurricanes militates for a required Katrina Zone CRA Lending Plan, and for public hearings. Regions' mortgage lending is mostly subprime -- nationwide, over 77% of its 2005 loans to African Americans were higher cost loans over the rate spread (of 3% over Treasuries on first liens, 5% on subordinate liens). Therefore Regions supposed Community Reinvestment Act plan would only produce more high cost lending.  In comments filed with the Federal Reserve Board in Washington, Fair Finance Watch demands public hearings on the proposal's potential to raise prices, on AmSouth's and Regions' continuing enabling of title lenders and pawnshops, and on the disparities in Regions' 2005 Home Mortgage Disclosure Act data, including disproportionately confining people of color to higher cost loans. AmSouth refused to provide its HMDA-LAR in computer analyzable form, another ground for hearings

            Fair Finance Watch presents in its August 21 challenge an analysis of the 2005 data of Regions' HMDA data-reporting affiliates (referred to as "Regions") and calculating the distribution of loans over the Federally-defined rate spread of 3% over comparable Treasury securities on first lien loans, 5% on subordinate liens (referred to as "high cost loans").

            In its home state of Alabama in 2005, Regions confined 51.66% of its African American borrowers to higher cost loans over the rate spread, versus only 23.15% of its white borrowers. That is, Regions confined African Americans to high cost loans 2.23 times more frequently than whites, while denying 30.69% African Americans' applications for loans, versus only 21.29% of whites' applications.

            In neighboring Mississippi, Regions in 2005 confined 38% of its African American borrowers to higher cost loans over the rate spread, versus only 18.38% of its white borrowers. That is, Regions confined African Americans to high cost loans 2.07 times more frequently than whites, while denying 35.87% African Americans' applications for loans, versus only 24.68% of whites' applications.

            In Louisiana in 2005, Regions confined 54.92% of its African American borrowers to higher cost loans over the rate spread, versus only 27.88% of its white borrowers. That is, Regions confined African Americans to high cost loans 1.97 times more frequently than whites, while denying 30.71% African Americans' applications for loans, versus only 22.27% of whites' applications.

            While FFW directs the regulators most specifically to these three Katrina Zone states, note that nationwide in 2005, Regions confined fully 73.55% of its African American borrowers to higher cost loans over the rate spread, versus only 51.78% of its white borrowers. In Florida in 2005, Regions confined fully 66.97% of its African American borrowers to higher cost loans over the rate spread, versus only 45.98% of its white borrowers. And in North Carolina, headquarters of Regions' subprime unit Equifirst, Regions ion 2005 confined a whopping 88.76% of its African American borrowers to higher cost loans over the rate spread, versus 71.66% of its white borrowers. Regions is presumptively a predatory lender. FFW requesting public hearings, and that Regions' applications be denied.

            Regions and AmSouth have continued supporting other subprime lenders.  The UCC filings attached hereto are evidence of that, to be further explored at the requested public hearings. For example, Regions on July 18, 2005, made a loan secured by all "accounts and proceeds" to Eagle Title Loans, Inc. of Athens, Alabama. Also in Alabama, Regions lends to Twin States Pawn of Butler, AL and Sand Mountain Pawn of Boaz, AL. In Louisiana, Regions lends to LA Pawn Shop of West Monroe, Louisiana. In Arkansas, Regions lends to A-1 Pawn of Russellville, Arkansas.  In Florida, Regions lends to Deerfield Pawn Brokers of Deerfield, FL.

            AmSouth, which has refused to provide FFW with its HMDA-LAR in computer analyzable form, lends to Rent to Own Pasco of Pasco, FL, and Pasco Jewelry and Pawn in the same city. AmSouth cynically insistence on providing its HMDA-LAR only in paper form, and in refusing to answer questions about its lending to fringe financiers, despite its recent violation of anti-money laundering laws, further militates for the public hearings FFW is requesting. Again, FFW's comments state that while the merger should be denied on all of thee above grounds, FFW is requesting public hearings because any merger of this size in the still-unrepaired and underbanked zone impacted by last year's hurricanes militates for a required Katrina Zone CRA Lending Plan, and for public hearings.  Developing...

Update of June 26, 2006: This week we raise a programmatic point, infinitely domestic: whatever happened to the nexus between CRA and the communities hit by Katrina?  There are of course larger questions, of Federal funding and what's become known as the Brownie factor, the good ol' boy's network. But other than a bit of forbearance, what have the banks with CRA duties done?

            We called this programmatic and it will remain. Since Hurricane Katrina we've reported on the HMDA data, mortgage lending patterns and the deep Deep South disparities. But this is a proposal, or a journalistic prediction: in the recently-announced merger of the largest Birmingham-based banks, Regions and AmSouth, a post-Katrina plan should be required. If smart, the banks will include it in their application. If not, it should come at the demand of community groups and regulators. But it should be produced, commented on and improved. And then it should be implemented, and demanded of other lenders.

            There's been CRA slippage. Just as the focus of "Low Income Housing Tax Credits" has been shifted from the poor to anyone at all, so too CRA credit has been given without regard to those most hurt, and those most in need of assistance. The historical redlining in these areas Inner City Press / Fair Finance Watch has documented on applications as far back as Bank One - Baton Rouge in 1995. In AmSouth - First American, ICP was contacted by activists in Louisiana and Mississippi, with proof of First American's predecessor Deposit Guaranty selling out NAACP youth to a local racist sheriff. Of these charges, the Federal Reserve said they were too old to count. But a month later, DOJ announced the settlement of discrimination charges by AmSouth. In SunTrust - NCB, ICP showed SunTrust's extensive enabling of payday and car title lenders. SunTrust responded with a commitment to stop all such loans, due to consumer and reputational harm. That the loan may not have entirely stopped is another matter to follow.

            On Regions - Union Planters, the disparities of the subprime EquiFirst were combined with the banks' support of a payday lender with explicit Mafia connections. Of this the Fed said the organized crime links were from the 1980s, too old to act upon. While the Federal Reserve will consider the main application, the issues must be raised beyond. And then on other banks.

Update of June 19, 2006:

UNITED NATIONS, June 16 (InnerCityPress.com) -- The world is a ghetto. Behind a lengthy PointPoint presentation and thick glossy report of which there were not enough copies, that was the message the UN-Habitat brought Friday to United Nations Headquarters, en route to a World Urban Forum on the topic next week in Vancouver.  At the UN press conference (available here, in Real Player format), Inner City Press inquired into whether Habitat considers the private sector's financing, or lack thereof, of housing and small business in low-income areas, and if Habitat works with the UN Global Compact on the issue of banks' inclusion or exclusion of urban slums from their lending, along the lines of the U.S. Community Reinvestment Act. Agency director Anna Tibaijuka acknowledged that the issue of private finance "is not covered adequately in this report." New Orleans and the disparate impacts of Hurricane Katrina are addressed in one of Habitat's case studies. Analogy is made to Kobe, Japan: "when that city was destroyed by an earthquake in 1995, many residents lived in temporary housing for eight years, and areas of the city that had been affordable for families were rebuilt with housing beyond their financial reach."

Update of June 12, 2006:  EPA's National Environmental Justice Advisory Committee has a Gulf Coast Hurricanes Work Group, which is now calling for EPA to revise its disaster response procedures to address the needs of "vulnerable populations," which could involve changes to the federal National Response Plan and Superfund National Contingency Plan (NCP). The recommendations, drafted by a work group of the (NEJAC), come as environmentalists are considering lawsuits over the response of EPA and other federal and state agencies to the environmental impacts of the disaster. The full NEJAC panel is scheduled to review the report at its June 20-22 meeting in Washington...

May 29, 2006

            Concerned with these disparities in Trustmark's 2004 Home Mortgage Disclosure Act ("HMDA") data, ICP in early 2006 wrote to Trustmark requesting a copy of its 2005 HMDA-LAR, in the .dat format in which such data is filed with regulators and in which virtually all of Trustmark's peers have provided their data to ICP. Trustmark responded with data in anachronistic paper print-out form. ICP wrote and asked Trustmark to explain why it would not provide the data in the format in which it had already filed the data with regulators; ICP stated that it could see no other reason that an attempt by Trustmark to avoid analysis of its 2005 lending record. No explanation has been offered.

            In 2004 in its headquarters MSA of Jackson, MS, Trustmark denied the conventional home purchase loan applications of African Americans 3.12 times more frequently than whites. For refinance loans, Trustmark's denial rate disparity was even worse: it denied the applications of African Americans 3.84 times more frequently than whites.

            Considering loans over the federally-defined rate spread (of 3% over the yield of comparable Treasury securities on first lien loans), in the Jackson MSA in 2004 for conventional home purchase loans Trustmark confined African Americans to loans over the rate spread 3.83 times more frequently than whites.  For first-lien refinance loans, Trustmark confined African Americans to loans over the rate spread 3.23 times more frequently than whites.

            In the Memphis MSA in 2004, Trustmark denied the conventional home purchase loan applications of African Americans 2.03 times more frequently than whites, and denied the applications of Latinos 2.81 times more frequently than whites. For refinance loans, Trustmark's denial rate disparity was even worse: it denied the applications of African Americans 4.20 times more frequently than whites.

Additionally, Trustmark supports higher cost fringe financial services, for example,

-- A DOLLAR CASH ADVANCE, INC. of Ridgeland, MS (relationship running through at least 2010;

-- A-1 CHECK CASHING, INC. of Pearl, MS;

-- CENTREVILLE RENT TO OWN INC of Centreville, MS; and

-- NEWMAN'S PAWN SHOP, INC. of Hazelhurst, MA (relationship secured by all “inventory,” that is, the contents of the pawn shop).

         Based on prior Federal Reserve precedents, questions must be answered, and the responses should be made public, pursuant to Inner City Press v. Federal Reserve Board, 380 F. Supp. 2d 211, and the subsequent denial of the Federal Reserve’s motion for reconsideration, at 2005 U.S. Dist. LEXIS 23376 and in New York Law Journal of October 21, 2005, “Reconsideration Denied as to Federal Reserve's FOIA Disclosure of Bank Merger Documents”).

 Recently the FRB has stopped asking applicants for the names of the subprime lenders they lend to -- the only explanation for this FRB change is the above-referenced court decision, which would require the FRB to release some or all of this information. (See, in the pending appeal in the above-cited case, A-23, Para 6, cited in ICP's reply Brief at n.3 -- the Fed has acknowledged that having the names is "necessary" to "assess the level of risk." The FRB should not limit or change its consumer protection inquiries for such reasons. The questions -- the naming of names -- should resume, on this application.

 

Update of April 17, 2006:  JPM Chase has continued funding and enable high cost lenders, including in the communities impacted by Hurricane Katrina. ICP has submitted to the regulators recent Uniform Commercial Code filings such as:

a Feb. 14, 2006 loan from JPM Chase/Bank One to Big Easy Pawn Shop of 4050 Chef Menteur Highway, New Orleans, Louisiana;

a Sept. 22, 2005 loan from JPM Chase "as successor in interest to Bank One" to LaPlace Pawn Shop of 105 West Airline Highway, LaPlace, Louisiana...

Update of April 10, 2006: Last Tuesday the EPA released test results showing that high lead levels contaminate 14 New Orleans neighborhoods, and that a cancer-causing petroleum constituent is present in a city landfill. The announcement of the presence of the contaminants marks the first time since the start of the seven-month environmental investigation that officials have acknowledged contamination problems in neighborhoods outside of St. Bernard Parish, where a million-gallon oil spill took place...

Update of March 27, 2006: In Louisiana, St. Charles Parish Waterworks Director Robert Brou told the Parish Council last week that its east bank water-treatment plant is in such bad shape it could collapse at any time, shutting off water supplies to residents for months...

Update of March 13, 2006: The U.S. Federal Reserve, despite its talk about fair lending and, post-Katrina, about helping the Gulf Coast by encouraging fair lending and reinvestment, is even more committed to doling out approvals to any proposed merger or acquisition. Last week the Fed approved an application by Whitney to buy 1st National, reciting that Inner City Press / Fair Finance Watch
"alleged, based on 2004 HMDA data, that Whitney Bank and 1st Bank disproportionately denied applications for HMDA-reportable loans by minority applicants in several Metropolitan Statistical Areas... Although the HMDA data might reflect certain disparities in the rates of loan applications, originations, denials, or pricing among members of different racial or ethnic groups in certain local areas, they provide an insufficient basis by themselves on which to conclude whether or not Whitney Bank or 1st Bank is excluding or imposing higher credit costs on any racial or ethnic group on a prohibited basis."

   The "certain disparities" alluded to by the Fed includes these, identified to the Fed by ICP: In the New Orleans MSA in 2004, Whitney National Bank denied the conventional home purchase applications of African Americans fully 3.53 times more frequently than whites. These disparities at Whitney extend into each of its other footprint states: In Mississippi, in the Gulfport - Biloxi MSA, Whitney National Bank in 2004 denied the refinance loan applications of African Americans 5.48 times more frequently than whites. In Alabama, in the Mobile MSA, Whitney National Bank in 2004 denied the conventional home purchase applications of African Americans 3.22 times more frequently than whites. The Fed's approval order also notes that ICP

"expressed concern about Whitney Bank's relationship with a rent-to-own company, which is an unaffiliated, nontraditional provider of financial services. As a general matter, the activities of this type of business are permissible, and such businesses are licensed by the states where they operate. Whitney Bank has implemented a policy for its commercial credit facilities to finance companies or other consumer lenders to fund consumer loans. This policy provides for an evaluation of the practices of such borrowers to identify any potentially predatory lending practices and for ongoing monitoring and management of relationships with such borrowers."

   But it's not at all clear in the record what practices or safeguards Whitney has -- and in previous cases, the Fed has tried to withhold such information (leading to a brief ICP filed last week in the Second Circuit Court of Appeals in the ongoing ICP v. FRB Freedom of Information Act case about Wachovia's enabling of predatory lenders). Our watchdogging continues...

 

Update of February 27, 2006: More buck-passing. The federal Environmental Protection Agency is claiming that assessing public health issues in the wake of Hurricane Katrina is not its job (or problem), that only the Centers for Disease Control can do it. But the EPA and its previous head were just slapped down in a court ruling on their claim they did okay in New York after 9/11/01…

Update of February 20, 2006:   New Orleans-based Whitey has responded, to the comments of Inner City Press / Fair Finance Watch and to follow-up questions of the Federal Reserve. Whitney’s response to ICP didn’t convince even the Fed, which notes that Whitney “indicates that the bank implemented a policy with respect to loans to finance companies or other consumer lenders to fund consumer loans,” and asks Whitney to explain this “policy.” In reply, Whitney acknowledges that it considers “consumer loans either as collateral or a source of repayment for our customer’s commercial loan.” That’s what we mean by enabling – and we note, as the Fed should, that Whitney’s descriptions of its so-called policies have no substance…

Updated February 13, 2006:  On Feb. 8 in Baton Rouge, ex-FDIC Director Don Powell according to the Times-Picayune  “gave vague answers to specific questions. When one participant asked why flooded property owners shouldn't receive 100 percent of theirpre-storm equity since the damage was caused by levees built by the federal government, Powell responded by talking about the importance of flood insurance. Powell mentioned that he bought flood insurance for his house in Amarillo, even though his hometown in the Texas panhandle gets only a fraction of the annual rain that falls in New Orleans.”

Update of February 6, 2006:  For now, regarding the challenge by ICP/Fair Finance Watch to Whitney National Bank, see “Consumer group protests First National sale,” Sarasota Herald Tribune, January 31, 2006

Update of January 30, 2006:  Inner City Press / Fair Finance Watch (ICP) has just filed a challenge to the application by Whitney Holding Corporation to acquire First National Bancshares and 1st National Bank and Trust, in Florida, a proposal announced back on July 27, 2005. Mortgage (HMDA) data reported for 2004 show that Whitney disproportionately excludes and denies African Americans and Latinos and, when loans are made, disproportionately charges African Americans higher prices. ICP also documents Whitney enabling fringe financial institutions such as rent-to-own businesses.

In the New Orleans MSA in 2004, Whitney National Bank denied the conventional home purchase applications of African Americans fully 3.53 times more frequently than whites. These disparities at Whitney extend into each of its other footprint states – first, in connection with this application, to Florida, where in the Tampa MSA in 2004 Whitney denied 100% of the home improvement loan applications it received from Latinos (while making no such loans to African Americans, either).

In Mississippi, in the Gulfport – Biloxi MSA, Whitney National Bank in 2004 denied the refinance loan applications of African Americans 5.48 times more frequently than whites.

In Alabama, in the Mobile MSA, Whitney National Bank in 2004 denied the conventional home purchase applications of African Americans 3.22 times more frequently than whites.

In Texas, in the Houston MSA, Whitney National Bank in 2004 denied the refinance applications of Hispanics 2.56 times more frequently than whites.

Back in Florida, 1st National Bank and Trust, in the Sarasota-Bradenton-Venice MSA in 2004 denied 100% of the home improvement loan applications it received from African Americans, while making no conventional home purchase or refinance loans to African Americans or Latinos either, in this its home MSA.  This must be addressed by the Federal Reserve Board in this proceeding.

Whitney National Bank supports higher cost fringe financial services, such as rent-to-own companies. See attached sample Uniform Commercial Code filing, documenting for the record Whitney National Bank’s relationship with National Rent to Own Incorporated of Slidell, Louisiana.

   This is an issue ICP has raised since last year; in July 2004 in response to ICP's comments, SunTrust announced it will no longer fund fringe finance lenders.  See, <www.fairfinancewatch.org/enforce.html>,  <www.investors.com/breakingnews.asp?journalid=22274151&brk=1>. The Federal Reserve has previously included rent-to-own as alternative financial services. Based on prior Federal Reserve precedents, ICP’s comments argue that at a minimum the following questions must be asked, and publicly answered:

"For any business relationship (e.g. commercial lender, warehouse lender, purchaser, custodian, etc.) that Whitney or 1st National Bank & Trust or any of their affiliates have with any subprime lenders (including providers of non-traditional banking products, such as check cashers, title lenders, pawn shops, or rent-to-own businesses): (i) identify the relevant business parties and (ii) describe the nature of the business relationships... Additionally, to the extent not otherwise covered in your responses to the comments of the Inner City Press Community on the Move & Fair Finance Watch, describe any due diligence that the Whitney or 1st National Bank & Trust typically conducts concerning any such subprime lender's compliance with applicable fair lending and consumer protection laws prior to Whitney or 1st National Bank & Trust entering into these business relationships, including... (c ) any monitoring or other ongoing procedures Whitney or 1st National Bank & Trust has adopted to access compliance with these laws. Provide a copy of such procedures that are used to determine whether third party originators are engaged in, or facilitating, abusive and/or predatory lending practices."

            ICP’s comments state: these questions must be answered, and the responses should be made public, pursuant to Inner City Press v. Federal Reserve Board, 380 F. Supp. 2d 211, and the subsequent denial of the Federal Reserve’s motion for reconsideration, at 2005 U.S. Dist. LEXIS 23376 and in New York Law Journal of October 21, 2005, “Reconsideration Denied as to Federal Reserve's FOIA Disclosure of Bank Merger Documents”). 

Given this record, ICP is requesting public evidentiary hearings, and that, on the current record, Whitney’s applications be denied. Developing…

Update of January 23, 2006: In further Gulf Coast advocacy, ICP/Fair Finance Watch has raised to the Federal Reserve that in the state of Alabama in 2004 for all HMDA-reported first lien loans, Synovus Mortgage Corp. confined African Americans 6.77 times more frequently than whites to higher cost loans over the federally defined rate spread (of 3% over comparable Treasury securities on first liens, 5% on subordinate liens). ICP also controlled for the income of borrowers, but found for example that for borrowers with incomes between 100 and 120% of MSA media, Synovus Mortgage Corp. in Alabama confined African Americans 20.55 times more frequently than whites to higher cost, rate spread loans. Companywide, including all loans without regard to geography, Synovus Mortgage Corp. in 2004 confined African upper income Americans 3.56 times more frequently than whites to higher cost, rate spread loans. Income does not explain Synovus’ disparities.

Update of January 17, 2006:  From the mail bag

Subject: Chase Home Finance
Date: 1/11/2006 3:12:40 PM Eastern Standard Time
From: [Name withheld]
To: JPMChase-Watch [at] innercitypress.org

I wrote in on Dec 5 detailing some of my "Chase Story". (Posted on Dec 12). Just a quick update.  Chase has begun the foreclosure procedures on my home.  They are threatening to take what is no longer there.
  I have received letters stating that my home has been inspected and appears to be unoccupied; that they will secure the property, change the locks and winterize at my expense if I do not contact them immediately.
First: Since Katrina, I have spoken with a Chase representative at least once a week.
Second:  From August 30, I was repeatedly assured my loan was deferred and in good standing, that payments would resume in December.  (They neglected to inform me of their change of policy on November 1 despite several phone calls from November 1 to December 1.)
Third:  I have, again, repeatedly, informed Chase of the structural status of the property.  Each time I speak with them I have to tell them that NO the home is not habitable.
Fourth:  Whomever inspected the property should not be on the payroll.  There are no walls!  There are no doors!  There was no roof until a week ago!  What exactly are they going to winterize? 2x4s??
I have managed to hold the foreclosure process off for another month by paying, in addition to my monthly mortgage, a large sum of money. 
Friends in the area tell me that mine is not the only loan Chase has taken this approach with.  They have us.  The options are, follow the original payment plan agreed to shortly after the storm and have your credit ruined because they will report you for non payment and/or foreclose on the loan; or do it their way and put out funds that could and should be directed toward rebuilding the very properties they threaten to take.  The people in this area have lost everything.  Everything.  If your good credit is all you have left, holding on to it is going to be paramount to your future.  How is it that Chase has the power to take what is left?  They did not inform of their change in policy, will answer to no one about this, and in the end will profit from the loss of those most affected by the largest natural disaster in US history.

Update of January 9, 2006: To the three federal bank regulators, on their proposed Community Reinvestment Act Q&A, Inner City Press / Fair Finance Watch has submitted this, about the Gulf Coast:

On behalf of ICP, this is a timely response to your request for comment on the Interagency questions and answers on the Community Reinvestment Act ("CRA"), 70 Federal Register 68450.   In brief, while most of the proposed Q and A is relatively non-controversial, given the issues surrounding of disaster areas, ICP and FFW urge that disparate subprime lending and other forms of predatory lending be explicitly addressed, and discouraged, in such vulnerable areas, including via the Q&A’s.

         The preamble to the request for comments in the Federal Register states “The proposed guidance next explains that all revitalization activities in designated disaster areas are not considered equally—those that are most responsive to community needs,

including the needs of low- or moderate-income individuals, may be given more weight than other revitalization and stabilization activities.”  This phrasing is incomplete, implying as it does that CRA consideration is only of how much positive CRA weigh to give to a particular activity. But proper enforcement of the CRA includes assigning negative as well as positive weight – negative in the case of predatory lending, for example, or discriminatory lending or other consumer abuse.  For the record, as these relate to the current disaster zone(s), ICP/FFW’s review of the 2004 Home Mortgage Disclosure Act (HMDA) data, including for the New Orleans metro area, focusing particularly on percentages of conventional home purchase and refinance first-lien loans over the federally-defined rate spread (3% over comparable Treasury securities on first lien loans)
Conventional Home Purchase Loans Secured by 1st Liens in the New Orleans MSA in 2004

Whites: 9.17% of loans were over the rate spread
African Americans: 37.48% of loans over the rate spread -- 4.09 times higher than for whites
Hispanics: 16.4% of loans over the rate spread -- 1.79 times higher than for whites

Conventional Refinance Loans Secured by 1st Liens in the New Orleans MSA in 2004
Whites: 18.26% of loans were over the rate spread
African Americans: 48.68% of loans over the rate spread -- 2.67 times higher than for whites
Hispanics: 27.1% of loans over the rate spread -- 1.48 times higher than for whites.

    This compares unfavorably to the nationwide aggregate.

As to particular lenders supervised by your agencies, in the New Orleans MSA in 2004, AmSouth Bank was 11 times more likely to confine African Americans to higher cost rates spread loans than whites. Chase Manhattan Mortgage Corporation was 5.7 times more likely to confine African Americans to higher cost rates spread loans than whites.  National City Bank Indiana was 3.7 times more likely to confine African Americans to higher cost rates spread loans than whites.

         In the wider state of Louisiana, Union Planters Bank (now owned by Regions, as permitted by the Federal Reserve Board despite outstanding issues including disparate mortgage lending and the support of highly controversial high-cost car title lenders) was 5.2 times more likely to confine African Americans to higher cost rates spread loans than whites.
   In Alabama, Synovus Mortgage Corporation was 6.8 times more likely to confine African Americans to higher cost rates spread loans than whites.
  In Mississippi, Citigroup’s CitiMortgage was 5.4 times more likely to confine African Americans to higher cost rates spread loans than whites.

The cumulated Citigroup, in the New Orleans MSA:
 Whites: 1461 applications, leading to 484 denials (33.13% denied) and 605 originations; 179 [or 29.59%] exceeded rate spread.
African Americans: 1492 applications, leading to 747 denials (50.07% denied, 1.51 times higher than whites) and 406 originations; 285 [or 70.2 percent] exceeded rate spread [2.37 times higher / more likely to be over rate spread than whites].
Latinos: 129 applications, leading to 59 denials (45.74% denied, 1.38 times higher than whites) and 35 originations; 22 [or 62.86 percent] exceeded rate spread [2.12 times higher / more likely to be over rate spread than whites].

Please take all appropriate actions.  We’ll see.

Update of January 2, 2006: The EPA and the Louisiana Department of Environmental Quality claim that post-Katrina there are no long-term health risks from environmental contamination in southeast Louisiana, with the single exception of an oil spill that is now undergoing cleanup. "In general, the sediments located in areas flooded by the hurricanes in Orleans, St. Bernard and Plaquemines Parishes are not expected to cause adverse health effects, provided people use common sense and good personal hygiene and safety practices," the agencies’ joint report claims. To reach this conclusion, the EPA for example used more lax state screening standards for arsenic…

Update of December 26, 2005:  Reinvestment? Last week Regions Financial Corp. bragged that it has brought in $1 billion of deposits from people displaced by Hurricane Katrina.  D. Bryan Jordan, Region’s CFO, said that about half of those funds are checking accounts. The incoming funds are typically tied to early insurance proceeds or to funds that have been wired in to needy residents, he said. "We've opened quite a few new accounts for customers who have relocated in the marketplace" to cities such as Baton Rouge, Mr. Jordan said. He said that the first 90-day deferrals tied to Hurricane Katrina are coming to an end, and that Regions is dealing with those on a case-by-case basis…

Update of December 19, 2005: Inner City Press / Fair Finance Watch commented last week to the FDIC, opposing the agency’s proposal to like the OCC preempt state consumer laws. ICP used as an example of a problematic FDIC-supervised lender, specifically in the Katrina-impacted state of Alabama, Synovus Mortgage Corp, which in Alabama in 2004, for all HMDA-reported first lien loans, confined African Americans 6.77 times more frequently than whites to higher cost loans over the federally defined rate spread of 3% over comparable Treasury securities on first liens, 5% on subordinate liens). What will the FDIC do? We’ll see.

Update of December 12, 2005:  Inner City Press / Fair Finance Watch (ICP) has just filed a challenge to the application by Alabama-based Compass Bancshares, Inc. to acquire TexasBanc Holdings Co. and TexasBank, a $464 million proposal announced on September 19, 2005. See ICP’s Community Reinvestment Report this week for more. And now from the mailbag:

Subject: Chase Home Finance
Date: 12/6/2005 3:03:58 PM Eastern Standard Time
From: [Name withheld]
To: JPMChaseWatch [at] innercitypress.org

My home is located in Hancock County Mississippi.   Hurricane Katrina devastated southern Hancock County causing over 90% of homes and businesses catastrophic damage.  My home was one with catastrophic damage.

Shortly after the hurricane I contacted Chase to inquire about payment options.  I was told that based on the damage and my federally declared zip code that I would not have to make payments for three months.  In December I was to assume payments and the months of September, October and November 2005 would be added to the loan without penalty.  On September 29 I received a bill from chase detailing my missed payment as past due.  I called and spoke to a representative named Andrew who assured me the bill was automatically computer generated but that the system did not identify my loan as late.  I again called in October and November when I received my bills.  I was told the same thing.  On November 22 I received a letter from chase requesting information about intent to rebuild. 

Again I called, again I was reassured that my credit would not be affected and I would owe but one payment in December.

Today, December 5, I called to make my scheduled payment and was told that not only do I owe four months of payments but that I would be reported to the credit borough starting January if not paid.  I asked to speak to a supervisor who told me that Chase made the decision not to honor full deferrals on November 1, 2005 and anyone I spoke to after that misinformed me.  Between November 1 and November 29 I had no less than six conversations with Chase Representatives; all of them assured me I was fine.  The supervisor advised me that payment plans were being set up to bring people current with their mortgages but I do not qualify for such since I am unemployed (Katrina destroyed my place of employment as well).  She told me to make my December payment and call back in January.  She could offer no assurance that my credit then would not be affected if I am unable to come up with the almost $4000 it would take to make me current.

I have four children, my home is destroyed, my insurance company is not paying for damages, I am unemployed and I feel I have been deliberately misled by Chase.   I was told one thing and at the last moment everything regarding my loan changed.

Update of December 5, 2005: Another Gulf Coast disparate lender is Cendant, which in 2004 in Alabama confined African Americans 4.29 times more frequently than whites to higher cost loans over the rate spread (defined below), and in Mississippi confined African Americans 4.22 times more frequently than whites to higher cost loans over the rate spread…

Update of November 28, 2005:  Inner City Press / Fair Finance Watch is analyzing Gulf Coast mortgage lenders in the Katrina-zone, identifying those which in 2004 had the worst disparities between the percentage of African American and white borrowers who were charged higher costs, over the Federally-defined rate spread of 3% over comparable Treasury securities on a first lien loan, 5% on subordinate liens.  Some interim results, one lender per state, and more in New Orleans:

   In Mississippi, Citigroup’s CitiMortgage was 5.4 times more likely to confine African Americans to higher cost rates spread loans than whites.

   In Alabama, Synovus Mortgage Corporation was 6.8 times more likely to confine African Americans to higher cost rates spread loans than whites.

   In Louisiana, Union Planters Bank (now owned by Regions) was 5.2 times more likely to confine African Americans to higher cost rates spread loans than whites.

    And (a trifecta), in the New Orleans Metropolitan Statistical Area, AmSouth Bank was 11 times more likely to confine African Americans to higher cost rates spread loans than whites. Chase Manhattan Mortgage Corporation was 5.7 times more likely to confine African Americans to higher cost rates spread loans than whites.  And (see below), National City Bank Indiana was 3.7 times more likely to confine African Americans to higher cost rates spread loans than whites.

   Beyond disparate high-cost lending, now Gulf Coast area residents using settlements to pay off mortgages are being hit with pre-payment penalties.  For example at National City, owner of the subprime lender First Franklin: St. Bernard Parish resident Melissa Sass told New Orleans CityBusiness that National City “told me that I could use the money from my insurance to pay on the mortgage but there will be a penalty of 30 percent of the interest they will lose out on. They told me that the only way I can pay off my mortgage in full without the penalty is to wait for that 10-year period."

   Given the change to explain, National City’s spokesman said: "We have relatively few loans that have prepayment penalties in the first place. For hurricane victims, we are pretty much waiving prepayment penalties across the board." Note the “pretty much” qualifier. More justification was given by their trade association "These guys are required to pay the bondholders the return on the bond investment," said Bruce Coffman, president of the Louisiana Mortgage Lenders Association. "They couldn't begin to consider not meeting their obligation to the bondholders or they would be out of business. They have to pay the bondholders so they are funding that shortfall out-of-pocket. If you are talking about $100 million worth of bonds, the shortfall that has to be made up by the mortgage company can run into millions of dollars. They can get coldhearted real quick." Yep… Louisiana’s AG office says that residents have paid penalties as high as $14,000 for paying off mortgage loans in the wake of Hurricane Katrina.

Update of November 21, 2005:  In more Gulf Coast pollution news, an oil tank vessel traveling from Houston to Tampa, Fla., last week spilled about 10,000 gallons of No. 6 fuel oil off the coast of Port Arthur after debris punctured the barge, the Coast Guard has disclosed...

  HSBC in London last week announced making “a $206 million provision during the third-quarter in its US operations for hurricane Katrina. HSBC’s third-quarter results from its US operations showed net income in the three months ended September 30 fell to Dollars 688m against Dollars 755m in the same period a year ago.  HSBC Finance, which includes Household, made a Dollars 180m provision and HSBC USA made a Dollars 26m provision due to hurricane Katrina.”   That shows the ratio of HSBC subprime to prime lending in the Gulf Coast region: seven-to-one subprime...

Update of November 14, 2005: Whitney Holding Corp., which owns banks across the Gulf South, saw its third-quarter earnings drop as it took a $34 million provision for possible loan losses stemming from hurricanes Katrina and Rita

Update of November 7, 2005: Wells Fargo has set aside $100 million to cover the impact that Hurricane Katrina might have on its loan portfolio. Howard Atkins, Wells' CFO, told the WSJ that the bank continues to evaluate the impact of Katrina. "We may find we don't need the $100 million," he said.  Dubious indirect (mis-) use of the Community Reinvestment Act, from last week’s American Banker:

“The fund, Access Capital Strategies LLC, is marketing Liberty's certificates of deposit to other banks across the country with the goal of raising at least $40 million for Liberty in the next few months. Ron Homer, Access Capital's CEO, said a coalition of industrial loan companies in Utah has already pledged $4 million. Access Capital is doing all of the marketing and outreach for Liberty, and City National Bank of New Jersey in Newark is processing the CDs. Banks that buy them will receive CRA credit.” Hmm... To get CRA “credit,” why not help / lend directly?

Update of October 31, 2005: Hibernia announced on October 27 that its “management team” will move back into its New Orleans headquarters on Monday. Last week the bank announced that its nonperforming assets rose 48% from a year earlier, to $111.8 million, because Hibernia transferred several large commercial credits to nonperforming status as a result of the hurricanes. In addition, delinquencies rose from $65 million to $300 million. Shareholders are still scheduled to vote on November 14...

Update of October 24, 2005: Hibernia last week admitted a large third-quarter loss after incurring nearly $200 million of costs related to Hurricanes Katrina and Rita. One-third of Hibernia's 326 branches were affected by Katrina, and one-fifth suffered major damage. Thirty-seven of Hibernia’s branches remain closed. The bank was "severely impacted by the evacuation of large portions of the population, widespread property damage and the disruption caused by these factors on the operations and revenue-generating capacity of local businesses and government," CEO Herb Boydstun said-in-a-statement. Pre-judging Hibernia’s shareholders’ / owners’ views, Boydstun still expects on Nov. 16 to close the twice-delayed (and price-reduced) $5 billion takeover by Capital One. Hibernia has set a Nov. 14 shareholder vote for the merger, originally expected to close September 1. We’ll see...

Update of October 17, 2005:  Katrina fall-out, vaguely described to the Securities & Exchange Commission by Hibernia, which is trying to complete its $5 billion acquisition by Capital One (which has already cut the price from $5.3 billion). In its SEC filing, Hibernia says it will “experience increased costs, including the costs of rebuilding or repairing branches and other properties, and replacing equipment and other property, some of which will not be covered by insurance... Hurricane Katrina may continue to affect Hibernia's loan originations and loan portfolio quality into the future and could also adversely impact Hibernia's deposit base.” Hibernia also said that Katrina could have a positive effect through ``future economic activity from government, private and philanthropic investment'' that ``could increase funds available for deposit and create increased opportunities for loan originations.'' The merger vote has been delayed twice and now is scheduled for November 15...

Update of October 10, 2005: The use of Katrina for deregulation: in Congress, Senators Inhofe and Vitterer have proposed legislation that would give the EPA administrator authority to waive or change any law under EPA's jurisdiction or that applies to any activity in the nation carried out by the agency for up to 18 months....

Update of October 3, 2005: With Katrina and Rita now passed, the two federal agencies with lead environmental roles, the Environmental Protection Agency and the Centers for Disease Control and Prevention, have released lists of “roadblocks,” including dealing with 22 million tons of debris. None of the wood debris can leave because that might spread Formosan termites, which have infested New Orleans since the mid-1960s, eating away at homes, cables, trees and dock pilings. Open burning is usually against the rules. So is dumping billions of gallons of untreated, contaminated water into Lake Pontchartrain. The EPA has already waived such rules. A bill by Senator James Inhofe of Oklahoma, chairman of the Senate environment and public works committee, would let the EPA suspend its standards for four months during the Katrina cleanup, with extensions possible for 18 months or more...

 From a first-person report in the September 30 Slate: “My conversation with Chase Home Finance was even less reassuring. When I ventured, delicately, to suggest that Chase might forgive its debtors who were ruined by Katrina, or perhaps cooperate with FEMA to that effect, my interlocutor became strident, as though I'd borrowed the money from him personally. Sir, you owe that money. Chase has given you that money and now you have to pay it back!” Great...

            Arrogance and impatience: now Capital One and Hibernia plan to hold the required shareholders’ vote on Cap One’s 9-percent post-Katrina cut in deal price on November 14 -- then “consummate” the deal two days later...

Update of September 26, 2005: Inner City Press / Fair Finance Watch has reviewed mortgage records, in the New Orleans Metropolitan Statistical Area, of  Citigroup, including not only denial rates but also the new information concerning which loans are subject to a rate spread (3% higher than comparable Treasuries on a first lien, and 5% on a subordinated lien) --

 Whites: 1461 applications, leading to 484 denials (33.13% denied) and 605 originations; 179 [or 29.59%] exceeded rate spread.

African Americans: 1492 applications, leading to 747 denials (50.07% denied, 1.51 times higher than whites) and 406 originations; 285 [or 70.2 percent] exceeded rate spread [2.37 times higher / more likely to be over rate spread than whites].

Latinos: 129 applications, leading to 59 denials (45.74% denied, 1.38 times higher than whites) and 35 originations; 22 [or 62.86 percent] exceeded rate spread [2.12 times higher / more likely to be over rate spread than whites].

Update of September 19, 2005:  Last week, the Federal Reserve finally released aggregate mortgage lending data for 2004, including for the New Orleans metro area. The picture is not pretty, considering percentages of conventional home purchase and refinance first-lien loans over the federally-defined rate spread (3% over comparable Treasury securities on first lien loans) --

Conventional Home Purchase Loans Secured by First Liens in the New Orleans Metropolitan Statistical Area in 2004

Whites: 9.17% of loans were over the rate spread

African Americans: 37.48% of loans over the rate spread -- 4.09 times higher than for whites

Hispanics: 16.4% of loans over the rate spread -- 1.79 times higher than for whites

Conventional Refinance Loans Secured by First Liens in the New Orleans Metropolitan Statistical Area in 2004

Whites: 18.26% of loans were over the rate spread

African Americans: 48.68% of loans over the rate spread -- 2.67 times higher than for whites

Hispanics: 27.1% of loans over the rate spread -- 1.48 times higher than for whites.

    This compares unfavorably to the nationwide aggregate...

   On August 29, 2005, Hurricane Katrina hit the Gulf Coast. Damage caused by the hurricane itself is one thing; disparate treatment by government and corporations is something else.  The Gulf Coast region is for example one of the most redlined by banks. The nation's largest bank, Citigroup, virtually withholds its normally-priced mortgages from the region. In 2004, over 70% of Citigroup's mortgages in Mississippi were over the Federal high-cost rate spread (3% over Treasury securities on a first lien, 5% on subordinate liens). Meanwhile, less than 10% of Citigroup's 2004 mortgage in Massachusetts were higher-cost. By race, over 75% of Citigroup's loans to African Americans in Louisiana were higher-cost, compared to under 40% of Citigroup's loans to whites.

Update of September 12, 2005: Deal-making in the disaster zone: last week Capital One cut the price it would pay for Hibernia by $350 million. Some had predicted Capital One would hold off, concerned about bad press. But Cap One is already being sued for defrauding consumers nationwide, with fake no-interest offers. To them, what’s short-selling a three state region? The banks statement said 47 of the Hibernia branches in the affected area have been reopened, and the bank is working to open more. Of the 60 branches yet to be reopened, 21 outlets accounting for 5% of Hibernia's deposits have sustained "significant damage,” said the statement. The question remains: money or people? Also involved in this post-hurricane card game: “Credit Suisse First Boston is advising Capital One, which is receiving legal advice from Cleary Gottlieb Steen & Hamilton LLP. Hibernia's financial advisers are J.P. Morgan and Bear, Stearns & Co. and law firm Wachtell, Lipton, Rosen & Katz.” Any of the fees being donated for disaster relief?

Sept. 4 -- Beyond banking, an insurance problem looms. Of those who were insured, the policies that many have are flood damage, with an exclusion for hurricane damage. If the past is any guide, some insurers were argue the damage was due to winds, not water. Other insurers will offer fast but under-valued payouts in exchange for release of claims.  And home repair scams are sure to follow, accompanied with predatory loans, if the past is any guide. We’ll be watching...

   On the environmental front, there are, or were, 140 petrochemical plants along the 80 miles of the Mississippi river between New Orleans and Baton Rouge. Post-Katrina, with rainbows on the river, the damage has yet to be assessed. Beyond hydrocarbons, the run-off of pesticides and fertilizers starves the water of oxygen and creates the world's largest "dead zone" off the Louisiana coast. This year, even prior to Katrina, it expanded to an estimated 8,000 square miles. Going forward, here’s a contact for advocacy: Louisiana Office of Environmental Assessment, Regulation, Box 4314, Baton Rouge, LA 70821-4314 -- fax (225) 219-3582. Click here to view Inner City Press' Environmental Justice Report.

   Earlier in 2005, the sell-out of New Orleans-headquartered Hibernia National Bank to Capital One was challenged by Inner City Press / Fair Finance Watch. ICP had found that in the New Orleans area in 2003 for conventional home purchase loans, Hibernia National Bank denied African Americans 3.75 times more frequently than whites (higher than the industry's 2.3 denial rate disparity), while Hibernia made 10 loans to whites for every loan to an African American (versus the industry's 5-to-1 ratio).

  In the first of its two articles on ICP's filing, BizNewOrleans.com reported that

"Neither Capital One CEO Richard Fairbank nor Hibernia CEO Herb Boydstun could be immediately reached for comment on ICP’s filing. A Hibernia spokesman said that Boydstun was out of town and had not yet seen or been advised of ICP’s challenge...  A Hibernia official responded today to allegations made by ICP in regard to the company's home mortgage lending practices. Hibernia Executive Vice President Willie Spears, who was out of town this morning, said in a telephone interview that the company has conducted “aggressive outreach” programs aimed at boosting Hibernia’s home purchase financing among minority and low- and moderate-income buyers.

"Spears said Hibernia has conducted workshops to educate first-time home buyers and worked to get home ownership grants for families of moderate means. He said the bank’s community development corporation 'has developed a number of houses and in some cases subdivisions' for such buyers. 'Not only do we provide financing and grants, but in a lot of cases we go out and build the homes,' he said."

  We'll see...   For further information, click here to contact us

   In Alabama, impacted counties include Baldwin, Choctaw, Clarke, Escambia, Mobile, Monroe, Sumter and Washington. AmSouth Bank's weak record on anti-money laundering and fair lending have plagued the bank (and the area). AmSouth refused to provide ICP its 2004 mortgage data in analyzable form. Over 54% of Washington Mutual's loans to African Americans in Alabama in 2004 were higher-cost, compared to 20.5% of WaMu's loans to whites: a disparity of 2.63.

In Mississippi -- a state which Washington Mutual Finance Group abandoned, after losing a $73 million predatory lending verdict -- impacted counties include Hancock, Harrison and Jackson (in which BancorpSouth closed all its branches).   Over 85% of Citigroup's loans to African Americans in Mississippi in 2004 were higher-cost.

Inner City Press / FFW's findings regarding NOLA's Hibernia National Bank

   Mortgage lending (HMDA) data reported for 2003 show that Hibernia National Bank disproportionately excludes and denies African Americans. For example, in 2003 in New Orleans Metropolitan Statistical Area ("MSA"), for conventional home purchase loans, Hibernia National Bank denied African Americans 3.75 times more frequently than whites (higher than the industry's 2.3 denial rate disparity), while Hibernia made 10 loans to whites for every loan to an African American (versus the industry's 5-to-1 ratio). In the Baton Rouge MSA, Hibernia denied African Americans 2.4 times more frequently than whites (higher than the industry's 2.16 disparity), while Hibernia made 12.2 loans to whites for every loan to an African American (versus the industry's 6-to-1 ratio.

    Hibernia is disparate beyond Louisiana. In the Dallas, Texas MSA in 2003, for conventional purchase loans, Hibernia denied African Americans 5.96 times more frequently than whites (much higher than the industry's 2.17 denial rate disparity). Hibernia denied Latinos 4.75 times more frequently than whites (much worse than the industry's 1.95 denial rate disparity).

    Hibernia's higher-than-aggregate denial rate disparities are not explained by any greater-than-normal outreach with normal-priced credit to African Americans or Latinos. In 2003 in this Dallas MSA, among African Americans, Latinos and whites, 4% of Hibernia's conventional home purchase loans were to African Americans and 5.2% of Hibernia's loans were to Latinos. For these three groups, the aggregate made 8.2% of its loans to African Americans, and 12.3% to Latinos. For Hibernia, the figures were much lower: only 4% of loans to African Americans, and 5.2% to Latinos.

    Hibernia is disparate in refinance lending too. In the Dallas, Texas MSA in 2003, for refinance loans, Hibernia denied African Americans 4.78 times more frequently than whites (much higher than the industry's 2.05 denial rate disparity). Hibernia denied Latinos 2.47 times more frequently than whites (higher than the industry's 1.97 denial rate disparity).

    Again, Hibernia's higher-than-aggregate denial rate disparities are not explained by any greater-than-normal outreach with normal-priced credit to African Americans or Latinos. In 2003 in this Dallas MSA, among African Americans, Latinos and whites, 2.2% of Hibernia's refinance loans were to African Americans and 1.7% of Hibernia's loans were to Latinos. For these three groups, the aggregate made 7.6% of its loans to African Americans, and 9.6% to Latinos. For Hibernia, the figures were much lower: only 2.2% of loans to African Americans, and only 1.7% to Latinos. Hibernia is more disparate than the industry in market after market, as ICP confirmed in Hibernia's 2004 data, which indicates that Hibernia's denial rate for African Americans was 42.91%, fully 2.41 times higher than its denial rate for whites, 17.81%. Hibernia's denial rate for Latinos was 38.95%, 2.19 times higher than for whites.

    Of Hibernia's higher cost, "rate spread" loans, 7.25% of Hibernia's loans to African Americans were such higher cost loans, 1.73 times higher than Hibernia's percentage for whites (4.20%).

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