1. National Community Reinvestment Coalition
A Lifetime of Assets Asset Preservation: Trends and Interventions in Asset Stripping Services and Products
Josh Silver
Vice President
of Research and Policy
National Community Reinvestment Coalition
Marva Williams, Ph.D.
Senior Vice President
Woodstock Institute

2. Disparities in Asset Development: Implications for Public Policy
Income Disparities
Low and stagnating wages
Community Impacts: Areas of concentrated poverty
Adverse Public Policies
Lack of tax advantages for lower-income consumers
Inadequate Savings and Investment Products
Poor Access to the Financial Mainstream
Prevalence of High Cost Financial Services
Significant Financial Management Skills Gap

3. Lower-Income and Minority Consumers Disproportionately Impacted by Asset Stripping Products:
Predatory Consumer Loans
Payday Loans
Auto Title Loans
Refund Anticipation Loans
Overdraft Protection
Credit Cards
Subprime and Non-Traditional Loans

4. Community Impacts
Un- Or Under-Employment
Less Disposable Income
Foreclosures
Decrease in Property Values

5. Distribution of Cases by State
NY and OH were among the first states in which the Program originally operated.
Distribution of Cases by State
State NY OH FL NC TX VA GA MD PA CA IL IN MA NJ NV TN WI
N/A
Total
Number 62 13 4 2 1 7
112
Percent
55.4
11.6
3.6
1.8
0.9
6.3
100

6. 2004 and 2005 had the most cases in the sample

7. by Minority Level of Neighborhood
CRF sample included a disproportionately large portion of borrowers residing in minority neighborhoods
Distribution of Cases
by Minority Level of Neighborhood
Minority Level of Neighborhood
Number
Percent
Not substantially minority 38
33.93%
Substantially minority 62
55.36%
N/A 12
10.71%
Total
112
100.00%

8. Distribution of Cases by Income Level of Neighborhood
Borrowers in LMI tracts were disproportionately targeted by abusive lenders in the CRF sample
Distribution of Cases by Income Level of Neighborhood
Income Level of Neighborhood
Number
Percent
Low 7
6.25%
Moderate 46
41.07%
Middle 32
28.57%
Upper 15
13.39%
N/A 12
10.71%
Total
112
100.00%

9. Great majority of CRF borrowers were African-Americans

10. Distribution of Cases by Income of Borrower
The great majority of CRF borrowers were low- and moderate- income people
Distribution of Cases by Income of Borrower
Income of Borrower
Number
Percent
less than $15,000 6
9.84%
$15,001-25,000 14
22.95%
$25,001-35,000 16
26.23%
$35,001-45,000 15
24.59%
$45,001-55,000 5
8.20%
$55,001-65,000 2
3.28%
$65,001-75,000 1
1.64%
$75,001-85,000
Total 61
100.00%

11. Analysis of loan terms before and after refinance
CRF program helped to: - decrease average mortgage rate by 3.8 percentage points - save on average $276.5 a month, $3,318 yearly, $100,000 over life of loan - 1,000 CRF customers, $100 million in equity saved by CRF program
Analysis of loan terms before and after refinance
Principal Amount
Prior Mortgage Rate
New Mortgage Rate
% points difference
Old Monthly Payment
New Monthly Payment
$ Savings
Average
$156,986.2
9.58%
5.74%
3.84%
$1,198.4
$922.0
$276.5
Median
$161,280.4
9.38%
6.00%
3.38%
$1,165.8
$941.7
$224.1

12. Higher front-end and back-end ratios show that loans were beyond the consumer’s ability to pay
Front-end Ratio
Back-end Ratio
Average
40.77%
50.28%
Median
35.43%
49.78%
Standard underwriting ratios
28%
36%

13. Multiple Abuses on Abusive Loans
Fraud
Lack of Tangible Net Benefit
Targeting/Discrimination
Predatory Appraisal
Balloon payment
Equity stripping
Home improvement scam
Misrepresentation
Stated income
Yield spread premium
Abusive servicing practices
Unfair terms
Fee packing
Exotic mortgages (piggyback loans, risk layering)
Asset-based lending
Forced placed insurance
HOEPA loan
Mandatory arbitration
Prepaid credit insurance
Abuse of right to cancel
Abusive collection practices
Default interest rate
Excessive prepayment penalties
Insincere co-signers
Loans made in excess of 100% LTV
Negative amortization
Flipping

14. CRF Influence on Best Practices and Policy Reforms
Servicing Best Practices and FTC Guidelines
OTS AMTPA Rule – No evading state laws on prepayment penalties
Combating Appraisal Fraud
Uncovering Broker Abuse and Discrimination

15. Expansion of CRF Programs
Participation of More than One Lender to Support 100% LTV ratios
Early Delinquency Intervention
Home Preservation Counseling as Well as Home Buying Counseling
Pennsylvania’s HEMAP Program
CRA credit for banks to participate in programs like CRF and HEMAP

16. Contact Information
NCRC
(202)
Woodstock Institute
(312)