Loanstar home lending subsidiaries1/20/2024 ![]() The Times found evidence that supported this suggestion. The volume of complaints “suggests that these are not isolated incidents but rather a clear part of Lone Star’s business model,” according to the report. That foreclose-and-evict business model-employing predatory lending products-could be why housing counselors in Chicago found Lone Star so problematic. It cites numerous Consumer Affairs complaints charging that Caliber took homeowner payments without applying them to their accounts, and that the company initiated foreclosures without notice or after a single late payment. “Lone Star Funds appears to have a pattern of intentionally pursuing foreclosure of homeowners, failing to offer sustainable loan modifications, and aggressively driving up evictions,” according to the report. Because they don’t offer real relief, “modifications from Caliber are less likely to preserve homeownership than loan modifications from many of the other large servicers in the country who follow better standards,” according to the report. Those kinds of loans “diverge” from federal and industry standards, according to a report by the Center for Popular Democracy and the ACCE Institute. That’s a recipe for keeping homeowners paying on their mortgages-and then kicking them out of their homes anyway. Instead they featured five-year interest-only loans, with balloon payments covering the entire principal at the end. In one six-month period reviewed by Fitch Ratings, they allowed no loan modifications with permanent principal reduction. Lone Star and its subsidiary, Caliber Home Loans, didn’t do that. That’s the best way to help homeowners stay in their homes and keep paying off their mortgages. ![]() ![]() Let’s recall that this situation was created by big financial institutions that bundled subprime mortgages into pools that were sold as highly overvalued bonds.Īccording to the Times, the Department of Housing and Urban Development expected that funds purchasing the government-backed mortgages-which were acquired at steep discounts-would provide loan modifications that reduced the amount of principal owed by homeowners. That means they have the highest proportion of “underwater” mortgages, where homes are worth less than the amount owed by the homeowner. ![]() Lone Star “has emerged as a lightning rod” for housing advocates who are critical of a federal program, intended to stabilize communities, which sold large pools of delinquent government-insured mortgages to private equity and hedge funds, according to the New York Times.ĭistressed mortgages are disproportionately located in working-class communities of color, which have been systematically targeted for more expensive loan products, and which have suffered the greatest loss of home equity following the housing crash. It turns out that one of the two main investors for Lincoln Yards is Lone Star Funds, a $60 billion Dallas-based private equity firm that specializes in acquiring distressed mortgages-and has faced criticism for predatory lending and unfairly kicking families out of their homes. In final act, Emanuel cements legacy of tolerating corruption, promoting segregation Danny Solis, who’s under federal investigation for the way he handled development assistance, helped shepherd the 78 toward approval.īut there’s one more question to ask: who exactly is profiting from these huge taxpayer subsidies? RELATED: On top of that, both of these projects are tainted by association with the allegedly corrupt Ald. There’s also the lack of any plan to preserve family-supporting jobs in light industry that remains in the former planned manufacturing district. In the case of Lincoln Yards, Mayor Rahm Emanuel and developer Sterling Bay want to construct a massive high-rise district in an area that’s already hopelessly congested. They’ll subsidize thousands of units of luxury housing in a city where population continues to shrink and working-class neighborhoods are desperate for investment. ![]() Together they will divert $2 billion into TIF districts at a time when the city is in dire financial straits. There are plenty of reasons to be concerned about these proposals. At the urging of the lame-duck mayor, the lame-duck City Council is set next week to consider redevelopment agreements for two megaprojects, Lincoln Yards on the Near North Side and the so-called “78,” south of Clark and Roosevelt. ![]()
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