Reflections on being God's people, following Jesus, and walking in the Spirit while living in Durham, NC, and teaching theology and ethics (at Shaw University Divinity School, Raleigh, NC)
Mike hopes to see the world turned upside down through local communities banding together for social change, especially churches which have recognized the radical calling to be good news to the poor, to set free the prisoners and oppressed, and to become the social embodiment of the reign of God on earth as it is in heaven.
For those of you who check in here now and then, you probably know that in 2009 a group of theological professors in North Carolina and South Carolina distributed a working paper, "Theological Reflection on the Economy." It was an early step in a series of actions and campaigns through which faith communities have organized around economic justice in the current economic crisis. Since that time, I have occasionally communicated with the group of professors about active campaigns, particularly the "10% Is Enough" work on usury pertaining to credit cards and other consumer interest. This week, I sent a note to update them on the range of actions and campaigns in which North Carolina United Power has continued to organize in the past year and a half. Here is an excerpt of the note I sent them.
Hey, folks,
A year and a half ago I was sending you lots of emails as we started work on a major organizing campaign dealing with economic justice issues. As theological scholars and servants of the church, we recognize our responsibilities to follow Jesus in the task of serving the poor, offering ministry of relief, building ecclesial structures to reshape economic life in our neighborhoods, and seeking justice in the face of economic powers. Thus, the theological reflection leading to the "Theological Reflection on the Economy" of 2009 was an exercise of our vocation which helped to provide grounding for faith-based people's movements which have gone many directions. The document has been studied in churches, in minister's conferences, in seminary classes, and far beyond North and South Carolina.
The paths of discipleship continue to open before us even now. Let me highlight some of the work linked to our efforts of 2009.
1. The "10% Is Enough" campaign in the Eastern US, London, and Berlin, has continued to bear fruit. We did not convince banks to voluntarily cap credit card interest rates, nor did with convince Congress to cap consumer interest rates. But we have built relationships with bank executives which are paying off in continued access and influence. Moreover, leaders of the "10% Is Enough" campaign have met with Dr. Elizabeth Warren to help shape the Consumer Financial Protection Agency. Caps on interest rates continue to be a lively topic, in part because of the strong work of MetroIAF, of which we have been a part.
2. The "6% Is Enough" campaign to protect military families from predatory credit practices and foreclosure has been an overwhelming success. This is a NC United Power campaign, and we have worked with Wachovia/Wells Fargo and Bank of America. B of A held ongoing conversations with us for over a year. Last summer they agreed to everything we were asking for, extending benefits beyond the legal requirements for nine months of protection from rising interest rates. For several months, they were reluctant to admit publicly that they had changed their policies in response to negotiations with NCUP. This month, in a surprise turn, CEO Brian Moynihan publicly thanked NCUP and Gerald Taylor for our work in this crucial area. Our fellow signatory, Dan Rhodes, was present to meet personally with Moynihan, the first time he has met personally with members of our organization.
3. The effort to bring justice to the foreclosure crisis has taken off in recent months, in part because of the attention that NC Attorney General Roy Cooper has given to foreclosure fraud as President of the National Association of Attorneys General. For this work, NCUP (also going by the name IAF-SouthEast) has made partnership with People Improving Communities through Organizing (PICO), National People's Action (NPA-US), Alliance for a Just Society, and the Alliance of Californians for Community Empowerment (ACCE), all faith-based community organizing groups, stretching our organizing from the west coast to the east coast, from the Rocky Mountains to the midwest to the south. We have met with key leaders, including Iowa AG Tom Miller and NC AG Roy Cooper, all the while keeping our efforts alive with Bank of America. One summary of our proposals, "The Homeowner's Bottom Line," has gained significant interest, and most of its proposals remain on the table in the nationwide AG's investigation and potential settlement with the major banks to improve the foreclosure process.
4. In conversation with a major funding organization (no funding yet) for theological education research, I have piloted a course at Shaw University Divinity School, "Pastoral Readiness for Economic Crises." We covered financial literacy and financial freedom for pastors as well as a form of Christian formation for churches and their communities. We looked at a wide range of theological sources on money, possessions, economics, and consumption from the earliest churches down to our times. We looked at tools for churches to evaluate their relationships with banks that may or may not be serving poor communities. We looked at models of community development, such as the Christian Community Development Association model of ecclesial politics of neighbor love. Finally, we looked at faith-based community organizing. With this trial run under our belt, I am hoping to work with some of you as partners in developing a proposal for adapting this sort of clergy training to other seminaries and to continuing education programs for current pastors.
5. The predatory practices of payday lenders and car-title lenders will not die without a fight. From Texas to North Carolina, from Mississippi to New Hampshire, strong lobbying efforts to open the door to astronomical interest rates on small dollar loans are alive and well in the state legislatures. I've testified before legislative committees in Texas, mentioning you all and our work. Just this past week, a bill was introduced in the NC legislature to reopen the door to usurious rates. When there is the chance of ripping people off legally, there will always be people trying to do it. Contact your legislator right away to stop the progress of HB 810. South Carolina, having passed important reforms in 2009, seems not to have any pending legislation at this time.
On two matters I am seeking your response to moving forward with this work.
First, . . . we are considering a clergy witness [at an upcoming event], with particular attention to dealing justly in the foreclosure crisis.
The text of Micah 2:1-11 is directly relevant to this matter (not to ignore Isaiah 5:8-17). The injustice of Samaria and Judah included coveting and seizing houses, ruining people financially (v2). The powerful put people out of their homes (v9). All the while they continue to practice the trappings of faith. Predictably, they demand that anyone who might preach judgment against their greed should stop saying that stuff (v6). The prophet says they only want a preacher who says, "Go on and get drunk. Live it up!" (v11), while they "rise up against my people as an enemy" (v8).
We hope we might gather 100 clergy and seminarians to speak a word of witness about the injustices of foreclosing on people whose financial security was destroyed by the greed, risks, and fraud of bankers, brokers, and insurers. . . . Details of when and where to meet will be forthcoming, depending on whether we believe we can gather an appropriate-sized group for witness.
Second, I will be trying to convene a meeting of some of you professors in late May. If you would be interested in meeting for three or four hours to evaluate the course I put together and to brainstorm about expanding clergy training for economic life, let me know. . . .
For more information, see
News coverage of recent NCUP action: here and here
Last night, I fell asleep looking at a news story about the bombshell budget proposal whose poster boy is Rep. Ryan, R-Wisconsin. Then I woke up this morning thinking about it, so I finished reading the article. Then, as the day went on, I kept reading and kept getting more upset.
As has been the case with the Party of NO for the past few years, Social Security, Medicare, and the social safety net have been held up as bankrupting the country. There is no doubt that the cost of health care is at the heart of what is destroying the people of the US and the economy. But Medicare and Medicaid are not the cause. Medicare and Medicaid are expensive because the health care industry is operating with out-of-control greed, and the health care industry lobbyists are running the government.
Pres. Obama and his advisers offered ideas about reform, but before reform could get started the pharmaceutical industry, the insurance industry, the hospital industry, and on and on had derailed real reform. What we got was, I think, a step in the right direction. But it did not do what was needed to slow the growth of health care costs. Its opponents also have no interest in slowing the growth of health care costs. They only want to make American safe for health care profits. So if health care is going to cost more and more, they want to make sure that taxpayers are not paying for the poor and elderly to get some. That might require the wealthy to pay their fare share of taxes, and the sinister dementia of current right-wing politics is that the wealthy deserve all that they have gotten, and the rest of us deserve to do without.
As you can tell, I have been getting madder as the day has gone on. I have tormented my facebook friends with post after post, which of course they have been free to ignore. So I decided I would collect them all into one blog post for those who want to think through this with me.
around 11 am
Thank you, government of the corporations, by the corporations, and for the corporations. Don't forget, corporations are people, too. In fact, they are special people who get a better deal than the rest of us lowly human people. Mr. Obama, Mr. Ryan, stop posturing and FIX THIS!
f you or I were running a small business and we kept one set of books showing how much money we were making and a second set for the IRS that painted a picture of an enterprise on the brink of bankruptcy, we'd end up behind bars.
But that's standard operating procedure for corporate America.
around 3 pm
Let's see: spinach, hamburger meat, peanut butter, chicken, tomatoes, and besides food there's lead paint on toys, radioactive compounds in toys. All in all, doesn't Ryan's budget make sense when it fires all the inspectors? Mr. Obama and Mr. Ryan--tell the truth, serve the people, do what is right, FIX THIS.
WASHINGTON, D.C. -- Consumers Union, the nonprofit publisher of Consumer Reports, urged Congress to support funding for the Food and Drug Administration (FDA)s food safety functions in advance of a House hearing on the FDA budget.
around 3:30 pm
I gave some effort but should have tried harder at my kids' high schools. Let's hear it for this Atlanta group's recruitment for non-violence.
Stephenson High school invited Student Career Alternatives Program to their first spring career fair, which took place today. This marked our second visit to the Stone Mountain high school. One striking thing that we again noticed today that the student body is over 99% African American, which seems to further confirm the fact that Atlanta Metro school have become resegregated over the past 20 years.
We were all impressed with the counseling staffs dedication to the students and their post high school careers. So many high school counselors cave into parents request to hold career fairs after school instead of during school. The fairs that take place during school hours are so much more accessible to students.
We had hundreds of students come talk to us through the course of the fair. Students explored ways to serve their country, travel the world, find adventure, get money for college, develop artistic skills, and other job skills training without out having to join the military.
Straight talk from soldiers, veterans and their family members tells what is missing from the sales pitches presented by recruiters and the military's marketing efforts. Produced by Telequest, Inc with support from AFSC. See http://youth4peace.org/ for more info.
around 4 pm
Here is the Congressional Budget Office's analysis of the Bill to Massively Increase Senior Adult Medical Bankruptcy presented by Rep. Ryan.
That is what headlines would look like if the United States had an independent press. After all, this is one of the main take aways of the Congressional Budget Office's (CBO) analysis of the plan proposed by Representative Paul Ryan, the Republican chairman of the House Budget Committee.
still around 4 pm
The budget debate is between those who would reign in the mountains of money going to pharmaceutical corporations, physicians, for-profit and "non-profit" hospitals, and private insurance companies, and those who would keep letting them rob the rest of us to pay bonuses to their top executives. Mr. Ryan and Mr. Obama, tell the truth, stop the "giant sucking sound" of money going from the people to the corporations.
The New York Times apparently missed the elections last fall. This is the only possible explanation for its assertion that the budget debate in Congress "is likely to spur an ideological showdown over the size of government and the role of entitlement programs like Medicaid and Medicare."
The people serving in Congress got their jobs because they are effective politicians. This means that they have the ability to appeal to powerful interest groups; there is no requirement that they have any background in, or adherence to, any political philosophy.
The debates over competing plans for Social Security, Medicare, and Medicaid are most obviously about the distribution of income between the wealthy and the less wealthy.
a little later, around 4 pm
Look at the third graphic line from the bottom: this is the projected percentage of health care cost turned back upon the retiree on fixed income in Ryan's plan. Of course, if most of the seniors go bankrupt, then we can put them on Medicaid instead--oops, that will be gone, too. Sorry, Mom and Dad, but we're better off if you die. Ryan says this will save the taxpayers $400 billion over 10 years, which may or may not be accurate. Ten years of war in Afghanistan has cost $400 billion, and eight years in Iraq has cost $800 million. This year $119 billion is budgeted for Afghanistan alone. Ron Paul, where are you when we need you? Cut the cost of these wars and bring the troops home. That way we can keep medical care available for seniors. Cutting the cost of medical care is essential, but this is not the way to do it.
around 7:20 pm
Calculating the costs of killing--Cadillac Death Machines and Yugo Safety Nets
MLK, Jr., speaking about the war in Vietnam in 1967: "You may not know it my friend, but it is estimated that we spend $500,000 dollars to kill each enemy soldier, while we spend only $53.00 dollars for each person classified as poor. And, most of that $53.00 dollars goes to salaries for people who are not poor."
Available data on enemies killed per year in the past three years is sketchy, ranging from under 2000 (Army data in mid 2009) in a year to about 4000 (Wikileaks) to 5225 (Afghan government). At a cost of over $100 billion a year that would mean somewhere between $20 million and $50 million dollars to kill each enemy soldier. Grisly. Sickening. Expensive.
Who is benefiting from such an outsized cost for the blood and guts of war? Not the taxpayers. Not the soldiers. Not the seniors on Medicare or the malaria sufferers of Africa.
So there you have it. Mad. Sick and tired. The world is not the church. Too often, the church is not the church. The phrase "hell in a handbasket" comes to mind.
Lord, make me an instrument of your peace. Where there is despair, let me sow hope. Where there is darkness, let me sow light. Where there is sadness, let me sow joy.
A month ago I gave testimony at a Texas Senate committee concerning bills to close a loophole in Texas lending law. Last week I had another opportunity to speak before the Texas House of Representatives Committee on Pensions, Investments, and Financial Services. The loophole has allowed an abuse of the Credit Service Organization (CSO) law, designed to regulate businesses who help people with bad credit "repair" their credit. To operate, they need to charge fees, and this law sets the terms for their operation. They are not lenders, but provide a service.
Unscrupulous lenders came along and decided to create a business model which would make use of this law to prey on borrowers who believe they cannot get traditional loans from banks, credit unions, or consumer credit storefronts. These lenders claim to be CSOs. Officially, they are not the lenders. They have a cozy relationship with a lending organization which operates under the restrictions of the usury laws. Therefore, the borrower gets a loan at a low rate of interest around 1% per month. THE CATCH is that in order to get this loan, the payday lender or car title lender charges a CSO "fee" of $20 per $100 for a 10-day or 14-day or 30-day loan.
That "fee" is really interest, masquerading as a CSO fee. The loans cannot be paid in installments. If they can't repay the whole amount of the short-term loan, the "CSO" can arrange another loan for another "fee." Let's get this straight. On a regular schedule, the borrower pays a "fee" in order to keep a loan from going into default. The principal does not decrease, and a "new loan" replaces the "previous loan." Again, the borrower is forced to come up with the entire principle within a few days or face another "fee" to get a "new loan." I'm setting a record for scare quotes here. That is a bunch of technicalities and paperwork to bury the truth that lenders are charging usurious interest rates on short-term loans designed to be hard to pay off.
If I pay a $20 (20%) fee to use $100 for a month, the annualized rate is 240%. On this business model, if I am living close to the edge in my finances and the month lasts longer than the money, I could end up paying $240 in a year without paying off any of my $100 debt. The average short-term payday loan is $300 to $500, so the amounts would be three to five times as much as this case: $720 to $1200. But that is for a 30-day term, while most payday loans can recycle two or three times a month, charging "fee" after "fee" after "fee."
Pastors, priests, and church community ministers from around the state delivered testimony about the effects of payday lending on their parishioners and neighborhoods, along with the Better Business Bureau, United Way, and City Government: Del Rio, San Antonio, Houston, Midland, Dallas, Austin, Fort Worth, Palestine, LaPorte, El Paso, and all around the state. Thanks go out to Suzii Paynter of Texas Baptists, to Texas IMPACT, and to the Texas Catholic Conference for their leadership in this effort. Only two lobbyists stood up to oppose the bill. I guess they could see what was coming and decided to do their work behind the scenes. We found out that day that $8 million has been spent by the payday lending industry to kill this legislation, so I was not fooled into thinking that they were conceding this fight. In fact, it seems they are increasing their efforts.
Sadly, the chair of the committee, Rep. Vicki Truitt of Tarrant County, who treated us all with respect on the day of the hearing (even if she did think I was talking too loud), has come out against closing this loophole in the name of "finding a compromise which can keep these lenders in business." In other words, she is caving in to the industry demand for higher interest rates even though there is no credible evidence that people using these predatory financiers would not be able to get a loan if the loophole is closed. Maybe some kinds of lending businesses would close, but the lending will go on at rates less likely to create a system of permanent indebtedness. If fairer lending goes on, then the jobs the lending provides will not go away. Reps. Ken Legler of Harris County, Rafael Anchia of Dallas County, and Marc Veasey of Tarrant County all seemed very knowledgeable about this issue, but it was not clear where on the committee there was strong support for closing this loophole.
What these businesses do is target communities of very low income working poor. In Austin, they targeted school teachers when the press was claiming as many as 30% of teachers could be laid off before the coming school year. They locate in clusters in order to make as many short-term loans as they can to people who are led to believe they have no other options. They feed off each other's business because people take out a second loan down the street to pay off the fees on the first loan. In the process, we hear what Ross Perot once called a "giant sucking sound." That is the sound of low- and middle-income paychecks being sucked out of their communities into the executive bonuses of the payday lending corporations.
This entire recession is about that giant sucking sound. It started with mortgage-backed securities, and when the demand for those grew, it became a feeding frenzy of sub-prime lending, speculative real estate pricing, and a housing bubble. Then it matured into a labyrinth of credit default swaps and bonus-incentivized selling of toxic assets, creating an unregulated house of cards which crashed on the backs of the middle class workers.
What follows is the testimony I offered on March 22. It is similar to what I said at the Senate committee in February, but reorganized and tweaked at a few points. You can hear it down below.
My name is Dr. Mike Broadway. I am a Baptist minister and theological professor living in Salado. I come representing myself and any citizen offended by predatory lending.
I have been working for the past two years with pastors, seminary professors, and all sorts of church people to address economic injustices pertaining to predatory lending and usury in its many forms, from high credit card fees, to foreclosure abuse and fraud, to tax refund loans, to predatory payday lending.
My colleagues and I have met with top executives of Bank of America and Wells Fargo/Wachovia, with AGs Tom Miller of Iowa and Roy Cooper of NC who are leading the national investigation into foreclosure fraud, and with congressional leaders in various states and Washington, DC. Predatory lending is a national problem, and it is a local problem, that has to be addressed on every front. I’m here today because you have a chance to make a difference for the citizens of Texas.
The biblical tradition makes a clear statement concerning usury, or unjust lending practices. It says that no society can be a just society if it allows lending practices that create and maintain a permanent debtor class. Laws against usury go back at least four thousand years, more broadly than the Jewish and Christian traditions. Yet the writing of new laws in Texas and across the US as recently as 1979, 1980, and 1987 has ignored the wisdom of millennia and allowed the protections against usury to be swept away.
Lenders claim when they speak to you and to the press that they have to be able to charge usurious rates to stay in business. They must be terribly inept financiers, because for four thousand years financial institutions have flourished under regulations against usury. Why do these people need to make so much more in interest? They don’t. There are many current business models which flourish serving the communities where payday lenders do their predatory work, but without preying on their customers.
Payday lending as we know it is a new financial form of sharecropping. It is debt sharecropping. Just like the unfair systems which kept sharecroppers always indebted to the landowners whose land they cultivated, payday lending places barrier after barrier in the way of borrowers in order to maintain a subscription to their future income.
The business plan is perpetual indebtedness for those who are struggling to make ends meet. Portraying themselves as a friend who is doing a service, they draw people into the trap of usurious borrowing. Under the guise of being a CSO, these lenders are “the guy who knows a guy who can get you the money right away, but it’ll cost you.” We all know what to call this kind of lender: the term is loan shark.
The current law allows this trap to be set. The law has a loophole, and predatory lenders squeezed through it and stretched it wide. One of their favorite deceptions is the doublespeak that calls interest by another name—a fee. But if I borrow money from you, and you charge me for borrowing the money, then that is interest, no matter what you call it.
The ancient text of Deuteronomy makes it very clear that usury is usury, whether you collect a fee up front, you charge it along the way, or you claim it at the end of the agreement. Playing with the words, this smoke and mirrors, uses a loophole in the letter of the law in order to disregard the spirit of the law. It also ignores what Jesus called the weightier matters of the law, justice and mercy.
Rampant injustice in CSO lending is why you must close this loophole. Stand in the heritage of Texas, a heritage of protecting workers and homeowners from usury, protecting us from large national corporations who suck the life out of neighborhoods so that they can pay huge bonuses to executives who have devised these schemes of debt sharecropping.
I should follow up on the previous entry about servant church. I wrote a letter to my state representative, Ralph Sheffield from Bell County, asking for specific action to prevent massive cuts to the education budget in Texas. One of those actions was to support the use of a "rainy day fund" to plug the gaps in education funding. If this recession isn't a rainy day, I don't know what would be.
I got a call yesterday from one of Rep. Sheffield's staff. This is pretty unusual, I think. I've not gotten very many such calls in my lifetime. He told me that Rep. Sheffield was one of four legislators who had signed on to a bill to use the rainy day fund for education a couple of weeks ago. As he explained, this was even before the Governor had come out in favor of using money from the rainy day fund. Apparently, they were paying attention to our letters.
I went on to talk with him about HB 410 and closing the loophole in the law that has allowed payday lenders and car-title lenders to twist the law and charge "fees" that amount to 500% and more for short-term loans. I'll follow up later to see how he stands on that legislation.
On Sunday, March 13, I attended servant church in Austin. Everly and I were staying in Austin at Ruth and John's house while they went on vacation. I was glad for a weekend in Austin so I could go to another church and learn some more about Austin's eccesial communities.
I chose servant church because a friend of mine is the pastor. Eric Vogt is a fellow traveler of mine. We first met when I was passing through Jackson, MS, one summer Sunday, and he was the guest preacher at Voice of Calvary Church. Eric had been in a summer internship with the CCD ministries in Jackson, working with John Perkins and others who had forged a new model of faithful church life among the poor of Mississippi. It turned out Eric was a student at Duke Divinity School in Durham, where I also lived at the time. Before going to Duke, he had participated in another creative experiment in church life in Austin, TX. A small start-up congregation had at that time been meeting in the building of First Baptist Church, where another friend of mine is pastor, Roger Paynter.
As our life stories had already intersected in many ways, eventually Eric enrolled in a class I was teaching at Duke Divinity, called "Church and State: Modernity, Liberalism and the Nature of Political Engagement." My friend Willie Jennings thought up the title to make it grab the attention of Duke Divinity students. But I digress.
Church growth technocrats would be happy about at least one feature of servant church: it is not hard to find. A few blocks into residential neighborhoods on a street that has an exit from the interstate, I found my way straight to the location. Signs outside assured me that I was at the right location, a Methodist church site where two congregations are meeting. Without difficulty, I parked and made my way to the location. I stumbled into a prayer meeting already in progress, but was greeted warmly and located the coffee without difficulty. Yes, it was another coffee-drinking-allowed-and-encouraged congregation.
Wearing my standard uniform (guayabera and jeans), I was a little overdressed for this crowd. Besides a couple of women in what my gramma would have called "everday dresses," jeans and t-shirts were the rule. Oh, yeah--one guy had khaki pants on. At 53 I would have to say that I was the senior adult of that Sunday's gathering. As my daughter Naomi loves to remind me, I was probably at the distant end of the "cool" continuum as well. Not being clued in to much of the Austin culture, I learned during conversations that the insider's way to refer to the big music festival is the shorthand "South By." I was proud to know that later in the week when a NC public radio broadcaster, in a halting voice, called it "Ess Ex Ess Double-you" (SXSW--South By SouthWest). Again, I digress.
I was blessed to sit next to a young woman who grew up in Austin and had recently married in servant church, with Eric officiating at the ceremony. She was warm and sincere, and worshiping alongside her and her husband made me right at home. I could tell I was in a university town by the sound of the congregational singing. My experience in Waco, Austin, Durham, and other university towns is that there are an abundance of people who have vocal training, and with the Austin music industry that gets magnified. Lots of folks were willing to cut loose and experiment with harmonies, exactly how I like to sing. The guest worship musicians for the day were two young women. The lead played acoustic guitar and the other played soft percussion. There was a kind of Emily Saliers feel to the singing.
The music impressed me, as it had at Ecclesia Church in Houston. Many familiar hymns formed the core of the singing, along with some contemporary worship songs (but not the mindless repetition of emotive states). The lyrics were posted to help the uninitiated. The rest of the liturgy may have relied a bit too much on a single projection screen, and sometimes there were too many words on the screen at once, meaning the font may have at times been too small. That sort of minor issue goes with the territory of being a very new congregation, still charting its ways.
Eric's sermon addressed the lectionary text from the Gospel of Matthew, the narrative of Jesus' temptation. The central theme of the sermon was that Jesus did not choose the easy way, but was willing to suffer for doing right. It was a respectable interpretation and reflection, so his Duke teachers should be satisfied. The call for a response to the Word included coming to the Lord's Table, bringing prayer needs to the altar, writing letters to leaders about the state or national budget as a moral document, using art supplies to explore one's faith response, or looking for ways to become more part of the life of servant church. Tables with appropriate materials were strategically located around the room, with paper and "talking points" for letter writing, a place to write out and place prayer requests or to light a candle in prayer, announcement boards and sign-up sheets, and art supplies.
This congregation is definitely on the youthful side, as congregations go. Young adults, married and unmarried, with and without children, and a children's area for smooth movement in and out of the formal worship made this a comfortable setting for those who find certain patterns of traditional worship unnecessary or out-of-date. Yet it was not a rush to contemporaneity for its own sake. The traditional liturgy remained the backbone of the service. Biblical and theological texts shaped the sermon and reflective conversations. Ancient symbols of the faith remained prominent.
I was proud to see what this congregation had done and what my friend Eric was helping to lead. If you are in Austin on Sunday, don't be timid about "hanging out" at servant church.
(With apologies to St. Francis for the adaptation of his blessed prayer of peace)
This morning I read the news of the launch of 110 Tomahawk missiles to destroy key anti-aircraft defenses in Libya. Not mentioned were the people living, working, and playing in the vicinity of those targets, nor the people whose misfortune was to be near missile strikes that hit something besides a military target. Nor was their mention of the cost to taxpayers of 110 Tomahawk missiles, which themselves were only a downpayment on further escalating military spending.
A Tomahawk missile costs $756,000, a bargain by aircraft standards. Of course, it is a single-use item. Those 110 missiles cost a total of $83,160,000. The first thought I had was that blowing up cruise missiles was another stimulus package targeted at the weapons industry. The executives are counting their bonuses now and giving thanks to the god of war.
Then by a perverse turn of imagination, the words of St. Francis of Assisi came to my mind, and the play of parodied lyrics got underway. It's not elegant, but here is what I wrote down.
Lord Mars, let me make instruments of destruction;
Where there is hatred, let me sow weapons;
Where there is injury, carnage;
Where there is error, annihilation;
Where there is doubt, true believers;
Where there is despair, electronics and explosives for suicide bombers;
Where there is darkness, fire and smoke;
And where there is sadness, weeping for Rachel's and Hagar's children.
O divine Mammon,
Grant that I may not so much seek
To have convictions, as to be convincing;
To be understood, as to incite fear;
To be loved, as to love money.
For it is selling that we receive;
It is in pardoning that we lay off workers;
And it is in their dying that we are borne to eternal profit.
Amen.
Finally, let me tip my hat to Bruce Cockburn's "Call It Democracy," where he showed he saw the big picture:
Padded with power here they come--
International loan sharks backed by the guns
Of market hungry military profiteers,
Whose word is a swamp and whose brow is smeared
With the blood of the poor,
Who rob life of its quality,
Who render rage a necessity
By turning countries into labour camps--
Modern slavers in drag as champions of freedom.
Today my dad, W. D., and I went to the Episcopalian Ash Wednesday Service at noon in St. Joseph's Chapel in Salado. Each of us had found our way into such unheard-of settings in the years since I left home, but this is the first time we ever shared an Ash Wednesday service. It was obvious to me that we were in Texas when the celebrant reached a point in the liturgy when he repeated three times, "LammaGod, who takes away the sins of the world." Of course, that is what the shift to vernacular languages is all about.
The Litany of Penitence pressed our hearing ears toward the personal and corporate sinfulness that brought down the economy.
Our self-indulgent appetites and ways and our exploitation of other people, we confess to you, Lord.
Our anger at our own frustration, and our envy of those more fortunate than ourselves, we confess to you, Lord.
Our intemperate love of worldly goods and comforts, and our dishonesty in daily life and work, we confess to you, Lord.
I was forced to remember that an entire culture and milieu fed the speculative, overreaching consumption of the past few decades. I have been guilty of spending what I did not have, willing to buy underpriced goods and commodities while turning a blind eye toward the exploitative global systems of low wages, workplace dangers, and child labor. I have to admit the temptation to muse about how much better I would do with millions of dollars than the greedy Wall Street bandits have been--no doubt a dangerous self-deception. There is plenty of blame to go around.
For the wrongs we have done: for our blindness to human need and suffering, and our indifference to injustice and cruelty, accept our repentance, Lord.
For all false judgments, for uncharitable thoughts toward our neighbors, and for our prejudice and contempt toward those who differ from us, accept our repentance, Lord.
For our waste and pollution of your creation, and our lack of concern for those who come after us, accept our repentance Lord.
Even so, with plenty of blame to go around, this week's interactions in Washington, DC, between the Showdown in America movement, the state attorneys general, federal regulators, and bankers, bring our attention to the abuse of structures by robber barons. One of the most troubling absences of moral conscience is the attitude of brokers and financiers who operated on the assumption that they would "get theirs" before the house of cards began to collapse. Too many were willing to stretch the system to its breaking point with little concern that children and families would lose their homes, that elderly people would lose their pensions, that workers would be laid off, and that many banks would fail.
One of the most haunting interviews I heard was on This American Life, in a program called "Crybabies." The relevant part of the show is Act One, "Wall Street: Money Never Weeps." It took place in a bar filled with financial executives who a year after the economy crashed were angry with government for proposing regulations on their freedom to do whatever the hell they want to do to make a dollar. None of the Wall Street executives and managers interviewed would accept any of the fault for the economic collapse and its effects on millions of people. None of them felt that there might be an injustice in the fact that their bonuses got bailed out while millions more who had nothing to do with killing the economy lost homes and jobs. Instead, one man had the gall to claim that it was right to bail out his job because he is smarter than everyone else and deserves to continue to be in charge of the economic fortunes of the rest of us.
We have been deaf to your call to serve, as Christ served us.
We have not been true to the mind of Christ.
We have grieved your Holy Spirit.
Have mercy on us, Lord.
Bloomberg reported on Saturday that Bank of America and Wells Fargo/Wachovia, the biggest mortgage lenders, are anticipating significant fines, penalties, and legal costs to come from the many current investigations into questionable mortgage lending and foreclosure practices. This news comes as the "Homeowner's Bottom Line" campaign has been meeting with states' attorneys general across the country to press for justice in the foreclosure crisis.
Of course, the devil is in the details. What will and will not be addressed in the results of the foreclosure investigation has yet to be seen. However, these big banks see enough significant impact coming that they felt the need to inform the public in a recent report filed with the Securities and Exchange Commission.
I've finally finished breaking down the proposals in the "Homeowner's Bottom Line." In the meantime, the campaign has continued to progress.
Around the country, citizens groups met with their state Attorney General during the past week to discuss the ideas in the "Homeowner's Bottom Line." On Thursday and Friday, from Massachusetts to California, they pressed the agenda to be included in the potential settlement between the state Attorneys General, the thirteen federal agencies with a horse in the foreclosure derby, and the powerful banking interests. In North Carolina, fourteen leaders, representing six broad-based organizations with over 250 congregations, institutions, and community groups, met with the NC Attorney General's senior staff. We came from Charlotte, Davidson County, Winston-Salem, Guilford County, Orange County, Durham, and Raleigh, and our constituents stretch across most of the state. We are blacks, whites, and Latinos seeking the common good.
Attorney General Roy Cooper currently serves as the President of the National Association of Attorneys General. In that office, he has played an important role in pressing for a fifty-state investigation into foreclosure fraud. We were pleased to find that a new staff member who oversees the Consumer Protection Division is now devoting much of his time to this foreclosure fraud investigation. The AG's staff were well-informed on our proposals and demonstrated a commitment to pursue an agenda very similar to ours. Since AG Cooper was one of the instigators in bringing about this investigation, we were not surprised to find that to a great extent, our leaders and his staff were on the same page. Good exchanges of information and assistance were followed by agreements for continued cooperation.
We have a follow-up meeting with AG Cooper himself scheduled for April. The investigation on foreclosure fraud is apparently moving very fast, and it could be that significant announcements will appear within the next month. When I hear reports from other states, I will post again about this Day of Action.
The "Homeowner's Bottom Line" concludes by addressing a few additional concerns. The issue of appeals echos earlier concerns with transparency. This process cannot be left to autocratic decisions by banks and mortgage servicers. The formulas they are using, the comparisons they are making, the documents they are relying on--all of these need to be available for examination by homeowners and their advocates. Moreover, if a decision seems unfair to the homeowner, there must be an appeals process for reexamining the decision to foreclose.
Second, the insistence on loan modifications and principle reduction should not become a point of contention between homeowners facing foreclosure and other homeowners who have been able to continue paying their mortgages. This crisis, and the lending feeding frenzy that led up to it, has harmed the entire economy. Speculative, inflated prices of real estate harm entire neighborhoods, not only the homeowners facing foreclosure. If houses in a neighborhood face sharp devaluation, underwater mortgages, and foreclosure, it hurts everyone there. Neighborhood devaluations spread to entire municipalities as housing values drop. People who bought homes during the housing bubble may have payed inflated prices and interest rates. To get the housing and mortgage market back to a rational level of valuation, we recommend loan modifications be made available to all homeowners. Mortgage principle and mortgage interest rates should be reset at the current market levels for all borrowers who want loan modifications, whether or not they are facing foreclosure.
Finally, the reckless, devious, and unscrupulous actions of some mortgage brokers, bankers, and other financial executives betrayed their primary fiduciary responsibilities to homeowners, workers, investors, and the common good. Some have committed criminal acts. As in the investigation of the savings and loan scandal, appropriate authorities at state and federal levels should bring criminal charges against any and all persons responsible for contributing to this crisis of credit, unemployment, foreclosure, and economic collapse.
Problem: Under the current system, borrowers who are denied for loan modifications do not have access to any kind of appeals or escalation process to have the decision reviewed for accuracy.
Solution:
Every borrower must have the right to appeal to an independent third party-a court, mediator or public agency-that can review the servicer's loss mitigation effort. Foreclosure must be stayed during the appeal.
Problem: Mortgage fraud has caused a ripple effect of negative consequences for families, communities and government, including reduced property values, negative equity for millions of American homeowners, widespread job loss, and massive state revenue shortfalls.
Solution:
Allow homeowners to refinance at current interest rates and market values.
Problem: Throughout the entire mortgage process, from origination to servicing and modification, banks and bank executives have consistently broken the law.Bank executives knowingly made and purchased deceptive and predatory mortgage loans; fraudulently packaged those risky loans as AAA high quality investments; ignored the securitization rules they themselves wrote; and systematically falsified loan documents in a rush to foreclose on families. But so far, not a single bank or bank executive has had to face justice or pay for their crimes.
Solution:
As the top law enforcement officials in our states, Attorneys General must seek criminal penalties as they discover bankers and servicers who broke the law.Banks and bank executives are not above the law and should not escape the consequences for their illegal actions.
The relentlessness of the current foreclosure crisis can push one to despair. There is endless talk about solutions, but too many people get their hopes up only to see nothing change. Many striving for some way to keep their homes wait and wait until the time and opportunities run out and their homes are taken.
There have been many stories of improper foreclosure proceedings through which people who had not missed any house payments found their homes sold at auction. They were told that since it was a legal sale, they could do nothing about it. Even more people, guided through a loan modification process and assured by a bank that the modification is forthcoming, have awoken one day to discover that their homes will be sold at auction anyway. This does not even take into account the foreclosures completed by banks and servicers who have not produced any proof of their right to foreclose on the home.
In the meantime, millions more homeowners are facing foreclosure in the coming year. A loan modification solution needs to be available soon so that these foreclosures will not continue to drive people from their homes and further undermine and harm the housing market. Yet fairness requires that those whose homes have been fraudulently foreclosed have recourse to recover their home and investment. A just solution must take all of this into account.
Problem: Because of entrenched problems and long-standing fraudulent practices, many families who should have received a loan modification have already been harmed, including the loss of their homes.
There are two basic categories of homeowners who have been harmed by servicers' malfeasance: (1) those who have lost their homes; and (2) those who are still in their homes, but have been denied a loan modification, pushed into default, or merely had improper fees tacked onto their account.
Solution:
• Remedies for Those Still in Process
For homeowners who have not yet lost their home in a foreclosure sale, servicers should institute a supervised, full review of every file marked in default. This review must include a review of the payment history, including the timing and application of payments and the validity of fees charged.
Homeowners found not to be in default should be removed from foreclosure, corrections of credit reporting status must be provided to the credit bureaus, and accounts should be fully corrected.
All pending foreclosures should be halted while this review takes place, and dual track processing must be stopped on all loans so that the modification review can be completed.
Fees should be rolled back and limited to reasonable and necessary ones.
Recalculation of principal balances should be done to account for improperly assessed fees or overcharged interest.
• Remedies for Those Whose Foreclosures Have Been Completed
The servicers should also be required to undertake a review of all completed foreclosures to identify any cases where the foreclosure was executed on the wrong home, where the homeowner was not in default, and where the foreclosure was completed without completing the loan modification review process, providing a written denial to the homeowner, or failing to offer a qualifying homeowner an appropriate modification.
If the home has not yet been sold to bona fide third party, the servicer should offer to restore the mortgage, with a reduction of the principal balance to account for all assessed foreclosure fees, as well as any improper fees. If the homeowner cannot afford the current mortgage payments, they should be assessed properly for a loan modification under the procedures established above. Servicers must further provide corrected credit reporting to the credit bureaus to mitigate the negative credit reporting. A restitution fund should be established, funded by the servicers, to provide damages to this class of injured party.
If the home has already been sold to a third party or if the homeowner no longer wishes to retain the home, the servicer should be required to refund to the homeowner all foreclosure fees assessed against the homeowner's account, plus the amount by which the valuation the servicer relied on exceeds the foreclosure sale price. Servicers must also take steps to repair the homeowner's credit in these situations. A restitution fund should be established, funded by the servicers, to provide damages to this class of injured
party.
If the homeowner who was subject to a wrongful foreclosure cannot be located, the servicer should be required to deposit the money that would otherwise be paid to the homeowner into the fund for legal services and housing counselors.
The last post in this series will cover a few final concerns, including the criminality of foreclosure fraud.
One of the efforts for economic justice of which I have been a part in recent months goes by the name Showdown in America. On February 22, the showdown made its way to a committee hearing in the Capitol of Texas. An overflow crowd packed into the Committee on Business and Commerce of the Texas Senate, lining up to give public comment on legislation designed to eliminate a loophole in the Texas credit laws which has allowed payday lenders and car title lenders to avoid regulation and charge "fees" and interest rates amounting to APRs of 300%, 395%, 529%, 740%. It is almost a reverse limbo dance: "How high can you go? It's the payday lending rock."
Things got pretty hot when the CEO of a national payday lending business testified, and in the process was unwilling to go beyond the party line: if Texas applies any new controls or interest caps on the "short-term, small principle" lending business, we will all go out of business. The senators finally had their fill of this vague, undocumented scare tactic. They demanded that credible documentation and good faith negotiation had better come fast from this industry if they want to have a say in how this legislation turns out. It was a sight to see.
After a break for the Senate to do some business, the committee reconvened in the afternoon. Suddenly, more forthcoming witnesses discussed a path toward mutual interest in regulating these businesses. Forced to admit that their businesses are profitable in many states where regulations are much more strict, industry representatives offered to dialogue further on the kinds of regulation that would allow them to stay in business.
I hit a few key points that have been recurring themes of my public work on usury in the past year. Below see my remarks and a video of my testimony that was broadcast live on the Texas legislative television coverage.
Remarks presented to the Texas State Senate
Committee on Business and Commerce
February 22, 2011
Rev. Dr. Mikael Broadway, Associate Professor of Theology and Ethics, Shaw University Divinity School, resident of Bell County, TX, http://mbway.blogspot.com
My name is Dr. Mike Broadway, and I am a Baptist minister and theological professor living in Salado. I am representing myself as a citizen.
For the past year and a half I have been working with a wide range of church people, including pastors and seminary professors, to address economic injustices which have become increasingly acute in the wake of the mortgage security debacle and the burst housing bubble.
Along with other leaders, I have met with the top credit and mortgage executives of Bank of America and Wells Fargo/Wachovia to address usury and justice issues. I have also joined leaders from around the nation to meet with Attorney General Tom Miller of Iowa to articulate our concerns for justice pertaining to a national investigation of foreclosure fraud perpetrated by major national and regional banks, of which he is the lead investigator. Only last week we sent a letter to all the state attorneys general, including Texas Attorney General Greg Abbott, to outline a path toward economic justice in housing.
I give you this background because I want to emphasize that the struggle against usurious lending is not only a Texas struggle, but a nationwide struggle. In many states, legislators like you have worked diligently with citizen leaders to try to clean up the predatory lending practices that continue to spring up in our cities, towns, and neighborhoods.
All of you can agree with me that lenders and borrowers need to operate in a system built on fairness. That is what the millennia of historical usury laws has been about. Under this assumption, for four thousand years financial institutions have been able to succeed and flourish under the careful regulation of interest rates to protect people from usury. Yet for some reason we now find ourselves, because of laws made in 1979, 1980, and 1987, operating with few legal protections from usury. Perhaps contemporary humans have overestimated our maturity in failing to listen to the wisdom of four millennia, which recommends strong usury laws.
Of course, there have always been people who believe they should be able to charge as much as they want to lend money. In saner times, we knew what to call them: loan sharks. Nowadays, they pass as respectable business operators. When a legislature musters enough moral courage to try to prevent the worst forms of usury, these predators search the fine print and locate every loophole in the letter of the law. Exploiting these loopholes, they find new and creative ways to abuse borrowers and scoff at the spirit of the law. The latest way is to pretend that interest is not interest by calling it a fee. The current abuse of payday lending and car title lending is an egregious example of this bald-faced lie.
If I borrow money from you, and you charge me for borrowing that money, then that is interest. The ancient text of Deuteronomy makes it very clear that usury is usury, whether you collect a fee up front, you charge it along the way, or you claim it at the end. The heart of the legal tradition’s bias against usury is that it is wrong to victimize the poor and weaker members of the community by creating lending practices which prey upon their weakness.
Payday lenders may claim that closing this loophole will make it impossible to do business. It will make it impossible to do business the way they do it. But from my observations around the country, let me say that it will not make it impossible to operate a fair lending business among people of low and moderate income. Numerous workable business models exist, from non-profits like Grace Period of Pittsburgh, PA, to microlending banks, to community banks and credit unions. These businesses can make fair, non-usurious loans to fill the need of people who patronize payday lenders.
One of the shameful practices of the recent past in our nation was known as sharecropping. Theoretically, it was a way for people to apply their labor to improve themselves and benefit the landowner, whose land they farmed, at the same time. In reality, it was often a trap to keep people in debt to the landowner, living as debt slaves, perpetually indebted. The biblical tradition opposing usury has at its core the assumption that no society can be just if it creates and maintains a permanent debtor class. There must be a way out of debt. Payday lending as we have it now is debt sharecropping . . . debt sharecropping. Its business plan is perpetual indebtedness of its borrowers. Please close this loophole and help our state take another step toward economic justice in consumer credit.
Thanks to my infinitely lovable brother-in-law Jim Lowder for the gift of a Capresso coffee grinder. I had burned out and fixed and burned out again my coffee grinder almost a year ago, so I was back to depending on getting my coffee ground before I brought it home. I was a bit perturbed by reading opinions and reviews of coffee grinders and had given up on getting one.
Jim has had long experience grinding his beans for coffee, and he had the kindness to solve my dilemma with a Christmas gift. I've used up my ground coffee stocks, so I started a couple of weeks ago grinding beans with a bag of Larry's Beans Holiday Blend. One way I know the coffee is really good (which means really strong) is that no one else in the house can stand it.
Anyone who has negotiated a price for a car knows what happens next. Having agreed upon a price, the salesperson or clerk starts filling out an invoice and adding more fees, charges, and items over and above the agreement. A whole new round of negotiations starts, and unless the buyer is willing to walk away from the car, she or he may be stuck with paying these "mandatory" fees.
Banks and other lenders have taken a page from the car dealer's book, and they must have entire departments devoted to thinking up charges and fees with fancy and official-sounding names. With the passage of reforms for the credit card business and other consumer credit, these fee inventors have redoubled their efforts to replace outlaws charges with new ones.
If there is any fairness in the consumer credit industry, then this ability to arbitrarily and independently add fees and charges has to be reigned in. Borrowers need to be able to enter discussions on modifications with at least the presumption that the process has their interest as a concern along with the lender's interest. We want the attorneys general to enforce procedures which help maintain a balance of power in the loan modification and foreclosure process.
Problem: Servicers take unfair advantage of borrowers in default by charging multiple fees, sometimes for services that are unnecessary, and sometimes for costs that are disproportionate to the service being performed (in some cases by affiliated companies).
Solution:
All Fees Must Be Reasonable and Transparent
Allservicer fees must be bona fide and reasonable and fully disclosed to the borrower. Lender attorneys fees charged to borrowers may not exceed bona fide and reasonable fees for work. Fees may only be collected for services actually rendered or for work actually performed.
Forced-place Insurance Severely Limited
The use afforce-placed insurance must be limited to reasonable application, affordable payments and only after other options, including borrower's option to purchase on open market, have been exhausted.
Problem: For any requirements (including those already in place), adequate enforcement provisions and staff must be put in place so servicers are not able to ignore the requirements with impunity.
Solution:
Each settlement should contain the creation of an ombuds-office under the AG that will investigate violations of the agreement. Fines should be imposed for violations of the agreement if servicer refuses to cure. Also, the AGs should have the right to issue a "cease and desist" letter to halt foreclosure activity during the investigation.
A portion of any monetary funds from the settlement should be directed to legal aid and housing counseling groups to assist with modifications and enforcement of agreement including foreclosure prevention litigation.
In addition to assigning each borrower a single case manager, a single team should be created in house at each servicer as part of the settlement to oversee loan modification activity under the settlement.
The next post will deal with which people should have relief and recourse in dealing with foreclosure fairness and foreclosure fraud.
For numerous years, a fight has been going on from state to state and on a national level to curb and stop usurious payday lending. This loan-sharking business exists by finding the cracks in the laws. They hire sophisticated lawyers to find the legal loopholes, and slick PR firms to explain why they fill a need in the credit market. They prey on desperate people and pretend to be a friend of the people who need credit. The real nature of their business, however, is to be debt sharecroppers. They gain an interest and claim on a person's future income in perpetuity. It is a business designed to entrap borrowers so that they can never get out of debt.
I'll get a chance to speak about this predatory business at a public hearing on Tuesday, February 22, at the Texas Senate Committee on Business and Commerce. I am impressed with the work of Texas Faith for Fair Lending, at whose invitation I will be speaking. Some of these folks are the ones I used to work with as a wet-behind-the-ears seminary graduate in the mid-1980s. In those days, these organizations were working to protect and provide for children in poverty and trying to hold off the tsunami of state-sponsored victimization through gambling businesses. Suzii Paynter of the Texas Baptists Christian Life Commission will be part of the fight, and I am proud to get to work with such a distinguished drum major for justice. The quoted material below comes from the Texas Faith for Fair Lending web site. You can read the original at this link.
Payday Lenders and Car Title Lenders Evade Existing Texas Lending Laws
Although Texas lending laws provide generous regulatory and fee structures, payday lenders and car title lenders sidestep these provisions by posing as credit services organizations (CSOs), giving them an unfair advantage in the lending landscape. As CSOs, payday and car title lenders operate outside of the bounds of the rules set for all other consumer lenders in the state and exploit a state law designed to protect consumers from seeking credit repair help. Both payday and auto title lenders could operate under Ch. 342. For the smaller loans, auto title lenders could use the rate computations under 342F (or 342E). For larger loans, they could operate under 342E.i
Below is a comparison of Texas's existing lending law which payday and car title lenders evade, and a snapshot of their abusive practices permitted by the CSO loophole.
It's Time to Level the Playing Field.
The state's CSO statute was designed to protect consumers from abuse when seeking credit repair help, not as a vehicle for loans that result in long term indebtedness. After more than 5 years of permitting this evasion of state law to continue, it is time for legislators to close this loophole, and ensure that these lenders operate under the Texas lending laws in place for all other consumer lenders. It's time to close the loophole.
__________________
i The maximum loan under subchapter F is $1,240. Under subchapter E, loans of up to $15,000 may be made.
ii Under existing Texas lending laws, finance charges for payday loans are set by the Texas Office of Consumer Credit Commissioner (OCCC). Texas OCCC's authority to set these rates comes from TFC § 342.007, which allows the finance commission to establish rules for payday loans, and in TAC § 83.604(c) which incorporates the fees by reference. For current Texas OCCC rates, see http://www.occc.state.tx.us/pages/int_rates/Index.html and click on the link for “Deferred Presentment Transaction Rate Charts.” However, instead of complying with this law intended for them, payday lenders operate as CSOs, for whom there is no limit on finance charges, and rates reach upward of 500% APR (and higher) fur a loan that typically has a 14-day term.
iii Under existing Texas lending laws, car title loans can carry finance charges consisting of a $10 set fee, plus $4 per $100 a month installment charge. Car title loan finance charges are authorized under TFC § 342.253, which incorporates the fees permitted by TFC § 342.252 (3). In addition to these finance charges, under existing Texas lending law, TFC § 342.502 (b) (5) expressly permits a “fee for recording a lien on or transferring certificate of title to a motor vehicle offered as a security for a loan.” (The recording fee is not included in APR calculations because they are excludable from inclusion in the finance charge under the federal Truth in Lending, Act, Reg. Z § 226(e) (l).) However, instead of complying with these state lending laws intended for them, car title lenders operate as CSOs, for whom there is no limit on finance charges, and rates reach upwards 300% APR fur a loan that typically has a 30-day term.
iv Regardless if the cost is classified as "interest” or “fees” under state law, the cost to the borrower is the same. The federal Truth in Lending Act requires that both interest and fees be combined and disclosed to borrowers as an Annual Percentage Rate (APR). Federal law requires the cost of the all credit to be disclosed in terms APR, regardless of whether the loan is for two weeks or two years.
v Existing Texas laws expressly permit payday loans to use a borrower's post-dated check as collateral for the loan, and expressly permits car title loans to use a borrower’s title to her car as collateral. For payday loans, see TAC § 83.604 (b) (“The check given in the [payday loan] transaction may serve as security for the payment of the loan.”). For car title loans, car title as security is not expressly prohibited under TFC § 342.503 and is stated as a permitted practice for authorized fees in TFC § 352.502 (b) (5). However, even though the CSO statute does not expressly allow any of these collaterals, these payday and car title lenders operating as CSOs use checks and car titles as collateral respectively, as well as electronic access to a borrower’s debit account and a letter of credit issued by the CSO.
vi Under existing Texas lending law, payday lenders and car title lenders, just like all other consumer lenders and brokers, are subject to oversight by the Texas OCCC. Although CSOs are subject to private litigation and oversight of the Attorney General, these provisions have proven insufficient to protect consumers against abusive high cost lending. CSOs are the only entities engaged in consumer lending transactions that escape oversight and compliance requirements of the OCCC.
I'll let you know how it goes. This will be a first for me.
When a bank working on a possible mortgage modification tells a borrower to stop making payments in order to allow the modification to proceed, usually in another office of the bank a red flag flies up to say that the foreclosure clock must start ticking. One mouth says stop making payments and become delinquent in order to get paperwork moving. Another says don't stop payments unless you want another set of paperwork to start moving. Case after case in the past year has found homeowners receiving notification of a modification offer almost simultaneously with notification of a foreclosure sale. By now you are all thinking about an old saying having to do with a left hand and a right hand.
This kind of carelessness and lack of concern for customers has characterized the current foreclosure crisis. Admittedly, banks do not traditionally have enough staff to handle the current volume of potential loan modifications or the current volume of potential foreclosures. In trying to ramp up while also keeping staffing numbers down, the result has been libraries of lost paperwork, constant restarting of the process, and a different answer from the servicer every time a homeowner makes contact. Getting the banks to clean this up would seem to be in their interest, but when banks are as large as Wells Fargo and Bank of America, there is also a kind of internal struggle over which departments get to do what they should and which ones just do what they can. We think that it is more than reasonable for homeowners to expect better. What follows is a second part of what we are asking the Attorneys General to do.
Problem: Servicers proceed with the foreclosure process at the same time as they are conducting a loss mitigation process. This leads to borrower confusion and further complicates the process and the communication between borrower and servicer. It also leads to unjust foreclosures before due diligence is completed in the loan modification process.
Solution:
Mandatory and Standard Loan Modification Review
Foreclosures should not be initiated until the servicer does a complete review of a borrower's file. If the borrower is already in foreclosure when he or she requests a review, the foreclosure process (and not just the final sale) must be suspended until the review is completed.
a. This review must include the complete payment history; the contact log; and any other relevant information to determine whether the borrower is actually in arrears.
b. This review must include a determination that all loss mitigation requirements (as set out by HAMP, investors, FHA, GSE's, etc.) have been met, and the servicer must disclose to the customer all inputs and calculations done to establish qualification for a loan modification (see NPV transparency above).
c. Servicers must develop a protocol for evaluating Pooling and Servicing Agreements for investor restrictions and must seek a waiver if necessary.
Written Confirmation of Review to Borrower
If a borrower is not offered a loan modification, the servicer must provide a sworn affidavit to the borrower, disclosing the reasons for denial, including
a. any calculations done to determine loan modification eligibility; and
b. if the denial is due to investor-imposed restrictions, the specific language in the PSA prohibiting the modification, instructions on how the borrower can view the full PSA, and a written log of the servicer's efforts to obtain a waiver of this restriction.
Borrower Appeals Process
The denial letter must provide the borrower with an opportunity to appeal this determination to a neutral party. Foreclosure can only be resumed after written denial has been provided and time for an appeal has passed. If an appeal is pending, no foreclosure can be resumed.
No Legal Foreclosure Without Proof of Due Diligence
Servicers should be required to file a certification of loan modification procedures as a precondition to a foreclosure sale. In the case of a non-judicial foreclosure, the government official responsible for recording deeds and other transfers of property in the jurisdiction in which the property is located shall not permit the recordation of a deed transferring title after a foreclosure without certifying that the party conducting the sale has demonstrated that the requirements of this section have been met. A sale of property in violation of this subsection is void.
Consistent Communication with Consistent Staff
Upon contacting the servicer, the borrower must be assigned a case manager that will remain with that borrower throughout their loss mitigation experience. This case manager will have decision-making authority and access to the highest levels of management in the company. It is permissible for additional line staff to assist the case manager, as long as the case manager is always accessible to the borrower.If a servicer is temporarily incapable of providing this adequate staffing level, the servicer must refer to a licensed special servicer until adequate staffing levels are reached.
The next post will deal with the imbalance of power that leads banks to multiply additional fees and get by with ignoring the law.
I worshiped at Ecclesia on Taft St. in Houston today. It has some of the expected features of emergent-type congregations:
a repurposed building,
a coffee shop and coffee drinking in the service,
people worshiping in casual clothes,
a worship band and large-screens for lyrics and video,
a slight techie feel combined with functional furnishings,
a sense that the setting is an impermanent stop on a longer journey,
an ambivalent relationship with popular culture,
one foot in the ancient Christian tradition,
a fair share of small beards and goatees, and
conversational worship leadership and preaching.
My dad (Rev. Dr. W. D. Broadway), aged 80 and a Texas Baptist preacher for over 60 years, would call this type of church a "Rock Church." I'm sure that is language harking back to my teen years when a youth movement of evangelical Jesus Freaks and Catholic folk masses were challenging the fixed norms of worship practice across many denominations. Dad still uses the term to refer to most "praise and worship" style worship services with a worship band, especially those that sing unfamiliar songs with indeterminate melodies, led by CCM wannabe soloists that seem to be imagining they are performing to ticket-purchasing fans rather than leading congregational singing (I agree that he is right to be disgusted by that kind of deformed church service). But the latter does not describe the worship at Ecclesia. Dad would probably have found this kind of Rock Church worshipful.
The first thing I noticed was that the worship band and read-along screens were leading the congregation in singing traditional hymns. It was not just one hymn thrown in as a token for the old fogeys. Both of the first two songs were hymns folks would recognize from baptist or other protestant hymnals, if not beyond. Later, they introduced more contemporary songs, of a different type of lyrical and musical style. What I noticed, however, was that plenty of people were singing along. It was not a soloist blasting us out. I suspect the songs were familiar to regular attenders. Moreover, there was some theological depth to these songs rather than merely repeating statements of personal feeling ad infinitum. So I suspect Dad would think that part of the service was acceptable.
The conversational preaching probably would have gotten Dad's blessing as well. Chris Seay, the pastor, indicated that he was continuing a series of reflections on heaven in this sermon. His opening discussion revealed that people in the congregation are perhaps wary of what heaven might be. One of the great comments he made pertained to his 8-year-old son's reticence about growing up, since he loves playing with Lego's so much, but his dad is so busy with so many other things. By comparison, adults who love what they are doing and people they share their lives with may not be so eager to change it for the unknown joys of heaven.
He focused a good deal around Jesus' words from Matthew 25, "Well done, good and faithful servant." However, the text analyzed more carefully came from Hebrews 11:32-12:2. His concern was to emphasize that heaven as a state of existence and a state of affairs is not some kind of narrowly religious place and activity, as much contemporary Christianity might portray it to be, but a place and activity of joyously sharing in the justice and mercy of God that Jesus proclaimed as the Reign of God.
To illustrate his argument, he showed a video clip relating to The Advent Conspiracy and their work to fund clean water for the people of Mt. Barclay, Liberia. Many of the people, especially children, had been dying of water-borne diseases, gathering their water from a stream. Clean water from wells turned around the health conditions of the community. The ministers and others from Mt. Barclay who reflected on the work of God in their community included one who said that the clean water had brought heaven down to earth for them. You would not be surprised, considering the name of this blog, that I agreed with Bro. Seay that those words will preach.
Finally, I should remark that although it is clearly a young adult dominated congregation, they are not merely detached and carefree. I could go into a number of ways in which they show signs of taking their place in the struggles of human existence, but I will focus on only one thing here. This sermon followed a day in which one of the young women of the congregation had been buried. Without telling us a lot of details, it was clear that she had been facing a life-threatening disease and that her expected time to continue fighting the condition had been cut dramatically short.
Under these conditions, Bro. Seay offered a hopeful reflection on heaven, in which those who have gone before us are watching and pulling for us in the struggles we face. Heaven is not the same as our lives here, nor is it a locus of complete wish fulfillment. It will take some adjusting to the differences, he said, but it will be better than we can imagine. That is a pretty good riff on the biblical language, as I see it. Dad knows good preaching when he hears it, and I think he would be passing on some things he heard if he had been there today. Thanks to Curtis Freeman for telling me about these folks.
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