By Catherine Cortez Masto
Nevada was one of the hardest hit states in the country during the financial crisis. We had the highest foreclosure rate for sixty-two straight months. As Nevada’s Attorney General at the time, I saw firsthand as banks and mortgage lenders took the homes of more than 219,000 families through foreclosure. Foreclosures caused by predatory lending and subprime loans from unscrupulous banks hit our rural Nevada communities hard.
While Attorney General, I sued the Big Banks because they were defrauding consumers with misleading teaser loan rates, hitting homeowners with expensive fees and participating in discriminatory lending practices. I sued these banks and received approximately $1.9 billion to protect our residents whose lives were ruined by the financial crisis and keep Nevadans all across our great state in their homes.
In response, federal lawmakers passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to guarantee that what we saw in 2008 never happened again. Wall Street Reform was not perfect, but it took important steps to ensure banks treated borrowers fairly when they applied for a mortgage. The bill strengthened requirements under the Home Mortgage Disclosure Act which requires all banks and credit unions to report detailed loan and borrower characteristics. Access to this data is vital in order to make sure that borrowers in rural areas with similar credit scores, incomes and loan characteristics receive similar loan terms to borrowers in urban areas and are not discriminated against.
A recent study from the Federal Reserve of Minneapolis reported that homeowners in some rural communities are more likely to be denied mortgages than their urban counterparts even when they have similar credit scores, incomes or risk profiles. According to the Urban Institute, single women pay more for a mortgage, even with better credit scores, bigger down payments and a more consistent loan repayment history. And, elderly homeowners are especially susceptible to being tricked into taking out risky, high cost loans from predatory lenders and other dishonest financial institutions.
Ensuring that all credit unions and banks continue to provide data on the loans they provide to consumers – information that they already track – gives community advocates, state attorneys general and the Consumer Financial Protection Bureau (CFPB) the tools they need to monitor and protect communities from predatory and discriminatory lending. The CFPB’s work has clearly shown that when we have the tools and the data available, consumers can fight back – and win. Since its founding, the CFPB has rightfully returned more than $30 billion dollars to more than 29 million consumers who were wronged.
This month, I stood up against efforts in in the Senate to rollback important protections for homebuyers in rural communities, women and communities of color. Sadly, the Senate voted to repeal these rules that were put in place to keep the big banks in line. They voted to exempt 85% of banks and credit unions from reporting the characteristics of the loans and the borrowers, impacting between 20-50% of loans in rural communities.
I support providing relief from frivolous regulation on community banks and credit unions, but not at the expense of homeowners. Asking all banks, no matter their size, to report the demographic data they already collect helps ensure fair housing practices vital to the growth of Nevada’s housing market. While the legislation that passed the Senate included a few measures that would help some small community banks and credit unions, it mostly benefited the Big Banks that I sued for taking away the homes of thousands of Nevadans throughout the Silver State. I couldn’t ignore the work I did as Nevada’s Attorney General, and that is why I voted against it.
Nevadans shouldn’t have to worry about a system rigged against them simply because of where they live. I’ve made it a priority of mine to fight in the Senate to strengthen the CFPB, keep big banks and corporations in check and to protect consumers across the country. As your Senator, I will continue to fight for fair and equal lending and protections for everyone.
Catherine Cortez Masto is a United States Senator representing the state of Nevada.