Linking Predatory Loans, Homelessness, and the Dodd-Frank Law

[Author’s Note: The “Godfrey Law,” as previously reported in error, did not emanate from Susman Godfrey LLP. It should have read the “Dodd-Frank Law.” Due to haste and confirmation bias, research took a wrong turn on the strength of one of Susman Godfrey’s successful cases involving mortgage-backed securities that had nothing to do with the Dodd-Frank Law. They should be commended for their great pro bono work on eviction law.]

*This election cycle, a delegation running either for the California State Senate or the Los Angeles County Supervisor seats staged a town hall meeting in the unincorporated Willowbrook community, located just west of Compton. The panel discussion organized and hosted by John Davis and the staff at Magic Johnson Park, took place on Wednesday, February 21, 2024. The moderator was Kevin Gatewood.

The first panel consisting of those running for the senate – Lamar Lyons, Michelle Chambers, Jennifer Trichelle-Marie Williams, James Spencer, Albert Robles, Laura Richardson, and Alex Monteiro – fielded questions from the moderator for a little over 90 minutes; which left no time for the audience (about 130 attendees) to ask questions.

The second panel running for the county supervisor seat – Daphne Bradford, Katrina Williams, and Holly Mitchell – discussed more of the same, which indicated to me that they all know the topics of homelessness and affordable housing are big concerns in our neighborhoods.

There was much talk from both panels about homelessness and affordable housing, but nothing about what caused the surge of homelessness in the first place. Are the financial institutions and mortgage firms being held accountable to help mitigate the homelessness crisis?

Homelessness has been an issue for generations. However, with a downturn in the booming mortgage industry, the year 2008 began an unprecedented homeless crisis in city after city across America due to the subprime loan market. Mortgage companies were making housing more affordable by offering subprime mortgage products and services that hid high costs, fees, and penalties to make the borrower believe it was affordable. Unfortunately, the practice of predatory lending led to thousands of foreclosures that disproportionately impacted minority families throughout the country.

It seems that those responsible for predatory lending, and the U.S. government that benefitted from it should be held more accountable. Does what’s known as the Dodd-Frank Law let them off the hook? Signed into law in 2010 by President Obama, Dodd-Frank authorizes Washington bureaucrats to give large financial institutions “too big to fail” status, thus making them eligible for taxpayer-funded bailouts.

Homelessness continues to outpace affordable housing, and cities like Los Angeles need all the resources they can get.

Along with that, in many cases, developers conduct inadequate impact studies that affect communities throughout the state where low-income rental housing properties are getting a pass (thanks to California’s Assembly Bill 2097) on the required number of parking spaces per unit. In their presentations, they claim that most low-income tenants don’t own cars, but many of them do; and they also have relatives and friends that visit, causing them to park on the street due to inadequate onsite parking. Surrounding homeowners are left with no choice but to illegally park in alleyways or blocks away from their homes. Parking in alleyways disrupts trash pick-up services and makes it hazardous for residents to get in and out of their garages as their view is impaired while watching for speeding vehicles coming from either direction.

The cause and effect of homelessness should be addressed with an urgent “all hands on deck” approach. Will our elected officials push for modification of the Dodd-Frank Law to hold accountable the “too big to fail” entities who power-surged the homeless dilemma?

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