P
Patriot Games
Guest
http://elections.foxnews.com/2008/0...n-manager-serves-on-board-of-bankrupt-lender/
As Clinton Talks Housing Crisis, Campaign Manager Serves on Board of
Bankrupt Lender
Saturday, March 29, 2008
WASHINGTON - While Hillary Clinton campaigns for the Democratic presidential
nomination in neighborhoods where many have lost their homes in unscrupulous
lending schemes, her campaign manager, Margaret "Maggie" Williams, sits on
the board of one of the nation's once-largest and now-bankrupt sub-prime
mortgage lenders.
Williams joined the board of directors at New York-based Delta Financial
Corporation in 2000, one month after a federal settlement was reached with
Delta Financial over discriminatory lending practices.
As of September 2007, Williams owned 12,500 shares of Delta's common stock,
and by 2007 had earned at least $175,000 for her board obligations,
according to company filings available in the Securities & Exchange
Commission online database.
Clinton's Tough Stand on Housing Crunch
Intently focused on the nation's housing crisis in recent appearances,
Clinton has been clear that sub-prime mortgage lenders, particularly in
poor, working class urban neighborhoods shoulder much of the blame for the
credit crunch.
"I am reminded every day as I meet with families and listen to their stories
that the effective functioning of our financial markets isn't just about
Wall Street. It's about Main Street," she said recently.
In a proposal last week, Clinton suggested giving "a $30 billion lifeline to
avoid a crisis for Wall Street banks" by providing assistance to at-risk
communities and families facing foreclosure. In a speech earlier this week,
the New York senator suggested protecting lenders from lawsuits by investors
who bought mortgages expecting big profits off high interest rates.
"Many mortgage companies are reluctant to help families restructure their
mortgages because they're afraid of being sued by the investment banks, the
private equity firms and others who actually own the mortgage papers,"
Clinton said.
"This is the case even though writing down the value of a mortgage is often
more profitable than foreclosing," she said, offering legislation "to
provide mortgage companies with protection against the threat of such
lawsuits."
Delta's Sub-Prime Lending
But as it turns out, Clinton's top aide is on the board of what had been -
until its bankruptcy - the ninth-leading sub-prime lender in the nation,
handling almost $800 million worth of sub-prime lending in the third quarter
of 2007 alone, according to National Mortgage News.
Delta Financing - and subsidiary Delta Funding - made much of its money by
turning around and selling its loans at a profit - either through
securitization or straight sale. Financial statements and federal filings
indicate that Delta made huge profits between 2004 and 2007 mostly by
refinancing loans to homeowners with moderate and middle incomes, in urban
neighborhoods.
In 2006, it reported a net income of $28.8 million compared to $18 million a
year earlier. It also originated a record $4 billion in loans that year, a 5
percent increase over 2005. In 2006, it had increased its line of credit by
$500 million to a total of $1.75 billion.
The average interest rate on a 30-year mortgage is 6.25 percent. Financial
sources and the company's public records show that in the last decade Delta
brokered thousands of fixed-rate refinancing loans with rates of anywhere
from 11.3 to 13.6 percent.
Reports provided by the Federal Financial Institutions Examination Council
(FFIEC), an inter-agency body that proscribes standards for U.S. financial
institutions, found that in 2006 the vast majority of Delta's refinancing
loans had rates of around 13.3 percent. The average rate on home mortgages
was 14.9 percent.
"They were basically trying to extract whatever blood they could get away
with and then sell their loans on the secondary market," said Irv
Ackelsberg, a Philadelphia attorney who assists homeowners in complaints
against lenders and brokers.
Industry experts say the company's demise did not come from its struggle
against various lawsuits or foreclosures, but its being a victim of the
credit market. The value of its loan-backed securities plummeted at the same
time its investors stopped buying new loans. Delta's creditors soon came
calling and the company couldn't keep up with its own financing agreements.
Delta's status is in the hands of a federal bankruptcy judge. All operations
out of its Woodbury, N.Y., headquarters have ceased.
The Williams Difference
Williams joined Delta's board less less than a month after one federal
official said Delta's practices were "turning the American dream of
homeownership into a nightmare."
At the time, Delta had a 5 percent foreclosure rate nationwide - double the
industry standard - and was in the midst of settling several state and
federal lawsuits that alleged predatory and discriminatory lending
practices.
Williams, now 53, was between jobs with the Clintons when she got the
overture to join the board at Delta. She had worked as the former first lady's
chief of staff from 1993 to 1997, and had just become president of Fenton
Communications, one of the largest public relations shops in the country in
2000. It made her the highest-ranking African-American woman in a top 50
public relations firm in the country. Williams joined Bill Clinton's Harlem
office in 2001. She later became a partner in management consulting firm
Griffin Williams.
The Clinton campaign did not return requests for comment from FOXNews.com,
but according to a June 2000 article in Directors and Boards magazine,
Williams spent the six months prior to her decision to join the board asking
a lot of questions and making a flurry of calls to Hugh Miller, president
and CEO of Delta Financial Corp.
It was the period of time when Delta was embroiled in the state and federal
lawsuits. According to the magazine, Williams said she was convinced that
the company was enabling individuals who would otherwise not qualify for
mortgages to get loans.
"There are people who miss payments and have bad credit for all kinds of
reasons," she told the magazine. "It is a very middle-American kind of
problem, although I believe it does affect poor people disproportionately."
Miller told the magazine he was most attracted to Williams' skill at
anticipating "issues and problems before they come up and then develop(ing)
a battle plan. It's something that we've previously been remiss in doing."
Delta company officials would not elaborate on Williams' role other than to
say that "like other board members, Ms. Williams served in an advisory and
oversight role and did not have a role in the day-to-day operations and
management of the company." A 2002 annual report, the only one found with
this figure, shows Williams attended at least 70 percent of the company's
board meetings.
Predatory Practices
Delta, which declared bankruptcy in December 2007, settled lawsuits with
both federal and state regulators in 2000, before Williams' era, but has
maintained dubious lending practices, allege consumer advocates in New York
and Philadelphia.
"They were one of the worst and most abusive sub-prime lenders in New York
City," said Josh Zinner, co-director of the Neighborhood Economic
Development Advocacy Project (NEDAP).
Zinner helped bring a 1999 lawsuit against Delta Funding through the New
York State Banking Department and then-state Attorney General Eliot Spitzer's
office. The case was settled with an agreement that included $12 million in
payouts to borrowers. It has been caught up in court ever since over the
price tag.
A separate class action suit against Delta by some 67,000 New York borrowers
in 1998 is also ongoing, according to attorneys for Lopez v. Delta Funding
Corp. In that case, the company agreed to settle on claims that Delta
violated federal and state statutes governing fair lending practices. The
plaintiffs are appealing for additional restitution.
In March 2000, the federal government charged Delta with violating consumer
protection and fair lending laws by approving and funding loans regardless
of the borrowers' ability to pay, paying unearned fees and kickbacks to
brokers and disproportionately charging African-American females higher
rates and fees than "similarly situated" white males.
The immediate settlement of the suit filed jointly by the Department of
Justice, Federal Trade Commission and Department of Housing and Urban
Development did not result in restitution to anyone but an agreement by the
company to adhere to stricter, fairer lending standards and to submit to
greater governmental oversight.
Delta never admitted any wrongdoing in the New York or federal cases, and
not everyone believes the company was as nefarious as the headlines made it
out to be. Jonathan Pinard, a lending expert and president of the Empire
State Mortgage Bankers Association, said Delta "stayed in the agreement" set
out in the federal settlement and kept its nose clean. Later, when the
sub-prime lending market went sour, Delta was "painted with a broad brush"
as one of the bad guys, he said.
But since Williams joined the board, Ackelsburg has assisted clients
embroiled in predatory lending schemes that involve Delta.
"(Delta) didn't have as big a market share as they did in New York,"
Ackelsberg said. "But the most unscrupulous brokers tended to work with
Delta."
He pointed to a near million-dollar settlement presided over by the
Pennsylvania Human Relations Commission in 2002, in which an
African-American brokerage firm linked to Delta was found guilty of
predatory lending and discriminatory practices in predominantly black
Philadelphia neighborhoods.
In six of the cases named in the Taylor, Poindexter v. McGlawn & McGlawn and
Reginald McGlawn lawsuit, the loans were signed with Delta Funding. At least
four of the 10 loans had originated in 2000 or afterward.
Each of the individuals who received Delta loans through McGlawn & McGlawn
also filed complaints with the PHRC against Delta Funding, according to
commission sources. Those cases were all settled, but terms of the
agreements are confidential. Delta officials did not respond to multiple
requests for comment by FOXNews.com.
"I would say Delta Funding, in the '90s in particular, sort of epitomized
predatory lending," said Zinner, who worked for the Foreclosure Prevention
Project at South Brooklyn Legal Services at the time of the New York suit.
After the 2000 settlement, Zinner said his group "didn't get the high volume
of calls (about Delta loans) . but we definitely got quite a few
complaints."
As Clinton Talks Housing Crisis, Campaign Manager Serves on Board of
Bankrupt Lender
Saturday, March 29, 2008
WASHINGTON - While Hillary Clinton campaigns for the Democratic presidential
nomination in neighborhoods where many have lost their homes in unscrupulous
lending schemes, her campaign manager, Margaret "Maggie" Williams, sits on
the board of one of the nation's once-largest and now-bankrupt sub-prime
mortgage lenders.
Williams joined the board of directors at New York-based Delta Financial
Corporation in 2000, one month after a federal settlement was reached with
Delta Financial over discriminatory lending practices.
As of September 2007, Williams owned 12,500 shares of Delta's common stock,
and by 2007 had earned at least $175,000 for her board obligations,
according to company filings available in the Securities & Exchange
Commission online database.
Clinton's Tough Stand on Housing Crunch
Intently focused on the nation's housing crisis in recent appearances,
Clinton has been clear that sub-prime mortgage lenders, particularly in
poor, working class urban neighborhoods shoulder much of the blame for the
credit crunch.
"I am reminded every day as I meet with families and listen to their stories
that the effective functioning of our financial markets isn't just about
Wall Street. It's about Main Street," she said recently.
In a proposal last week, Clinton suggested giving "a $30 billion lifeline to
avoid a crisis for Wall Street banks" by providing assistance to at-risk
communities and families facing foreclosure. In a speech earlier this week,
the New York senator suggested protecting lenders from lawsuits by investors
who bought mortgages expecting big profits off high interest rates.
"Many mortgage companies are reluctant to help families restructure their
mortgages because they're afraid of being sued by the investment banks, the
private equity firms and others who actually own the mortgage papers,"
Clinton said.
"This is the case even though writing down the value of a mortgage is often
more profitable than foreclosing," she said, offering legislation "to
provide mortgage companies with protection against the threat of such
lawsuits."
Delta's Sub-Prime Lending
But as it turns out, Clinton's top aide is on the board of what had been -
until its bankruptcy - the ninth-leading sub-prime lender in the nation,
handling almost $800 million worth of sub-prime lending in the third quarter
of 2007 alone, according to National Mortgage News.
Delta Financing - and subsidiary Delta Funding - made much of its money by
turning around and selling its loans at a profit - either through
securitization or straight sale. Financial statements and federal filings
indicate that Delta made huge profits between 2004 and 2007 mostly by
refinancing loans to homeowners with moderate and middle incomes, in urban
neighborhoods.
In 2006, it reported a net income of $28.8 million compared to $18 million a
year earlier. It also originated a record $4 billion in loans that year, a 5
percent increase over 2005. In 2006, it had increased its line of credit by
$500 million to a total of $1.75 billion.
The average interest rate on a 30-year mortgage is 6.25 percent. Financial
sources and the company's public records show that in the last decade Delta
brokered thousands of fixed-rate refinancing loans with rates of anywhere
from 11.3 to 13.6 percent.
Reports provided by the Federal Financial Institutions Examination Council
(FFIEC), an inter-agency body that proscribes standards for U.S. financial
institutions, found that in 2006 the vast majority of Delta's refinancing
loans had rates of around 13.3 percent. The average rate on home mortgages
was 14.9 percent.
"They were basically trying to extract whatever blood they could get away
with and then sell their loans on the secondary market," said Irv
Ackelsberg, a Philadelphia attorney who assists homeowners in complaints
against lenders and brokers.
Industry experts say the company's demise did not come from its struggle
against various lawsuits or foreclosures, but its being a victim of the
credit market. The value of its loan-backed securities plummeted at the same
time its investors stopped buying new loans. Delta's creditors soon came
calling and the company couldn't keep up with its own financing agreements.
Delta's status is in the hands of a federal bankruptcy judge. All operations
out of its Woodbury, N.Y., headquarters have ceased.
The Williams Difference
Williams joined Delta's board less less than a month after one federal
official said Delta's practices were "turning the American dream of
homeownership into a nightmare."
At the time, Delta had a 5 percent foreclosure rate nationwide - double the
industry standard - and was in the midst of settling several state and
federal lawsuits that alleged predatory and discriminatory lending
practices.
Williams, now 53, was between jobs with the Clintons when she got the
overture to join the board at Delta. She had worked as the former first lady's
chief of staff from 1993 to 1997, and had just become president of Fenton
Communications, one of the largest public relations shops in the country in
2000. It made her the highest-ranking African-American woman in a top 50
public relations firm in the country. Williams joined Bill Clinton's Harlem
office in 2001. She later became a partner in management consulting firm
Griffin Williams.
The Clinton campaign did not return requests for comment from FOXNews.com,
but according to a June 2000 article in Directors and Boards magazine,
Williams spent the six months prior to her decision to join the board asking
a lot of questions and making a flurry of calls to Hugh Miller, president
and CEO of Delta Financial Corp.
It was the period of time when Delta was embroiled in the state and federal
lawsuits. According to the magazine, Williams said she was convinced that
the company was enabling individuals who would otherwise not qualify for
mortgages to get loans.
"There are people who miss payments and have bad credit for all kinds of
reasons," she told the magazine. "It is a very middle-American kind of
problem, although I believe it does affect poor people disproportionately."
Miller told the magazine he was most attracted to Williams' skill at
anticipating "issues and problems before they come up and then develop(ing)
a battle plan. It's something that we've previously been remiss in doing."
Delta company officials would not elaborate on Williams' role other than to
say that "like other board members, Ms. Williams served in an advisory and
oversight role and did not have a role in the day-to-day operations and
management of the company." A 2002 annual report, the only one found with
this figure, shows Williams attended at least 70 percent of the company's
board meetings.
Predatory Practices
Delta, which declared bankruptcy in December 2007, settled lawsuits with
both federal and state regulators in 2000, before Williams' era, but has
maintained dubious lending practices, allege consumer advocates in New York
and Philadelphia.
"They were one of the worst and most abusive sub-prime lenders in New York
City," said Josh Zinner, co-director of the Neighborhood Economic
Development Advocacy Project (NEDAP).
Zinner helped bring a 1999 lawsuit against Delta Funding through the New
York State Banking Department and then-state Attorney General Eliot Spitzer's
office. The case was settled with an agreement that included $12 million in
payouts to borrowers. It has been caught up in court ever since over the
price tag.
A separate class action suit against Delta by some 67,000 New York borrowers
in 1998 is also ongoing, according to attorneys for Lopez v. Delta Funding
Corp. In that case, the company agreed to settle on claims that Delta
violated federal and state statutes governing fair lending practices. The
plaintiffs are appealing for additional restitution.
In March 2000, the federal government charged Delta with violating consumer
protection and fair lending laws by approving and funding loans regardless
of the borrowers' ability to pay, paying unearned fees and kickbacks to
brokers and disproportionately charging African-American females higher
rates and fees than "similarly situated" white males.
The immediate settlement of the suit filed jointly by the Department of
Justice, Federal Trade Commission and Department of Housing and Urban
Development did not result in restitution to anyone but an agreement by the
company to adhere to stricter, fairer lending standards and to submit to
greater governmental oversight.
Delta never admitted any wrongdoing in the New York or federal cases, and
not everyone believes the company was as nefarious as the headlines made it
out to be. Jonathan Pinard, a lending expert and president of the Empire
State Mortgage Bankers Association, said Delta "stayed in the agreement" set
out in the federal settlement and kept its nose clean. Later, when the
sub-prime lending market went sour, Delta was "painted with a broad brush"
as one of the bad guys, he said.
But since Williams joined the board, Ackelsburg has assisted clients
embroiled in predatory lending schemes that involve Delta.
"(Delta) didn't have as big a market share as they did in New York,"
Ackelsberg said. "But the most unscrupulous brokers tended to work with
Delta."
He pointed to a near million-dollar settlement presided over by the
Pennsylvania Human Relations Commission in 2002, in which an
African-American brokerage firm linked to Delta was found guilty of
predatory lending and discriminatory practices in predominantly black
Philadelphia neighborhoods.
In six of the cases named in the Taylor, Poindexter v. McGlawn & McGlawn and
Reginald McGlawn lawsuit, the loans were signed with Delta Funding. At least
four of the 10 loans had originated in 2000 or afterward.
Each of the individuals who received Delta loans through McGlawn & McGlawn
also filed complaints with the PHRC against Delta Funding, according to
commission sources. Those cases were all settled, but terms of the
agreements are confidential. Delta officials did not respond to multiple
requests for comment by FOXNews.com.
"I would say Delta Funding, in the '90s in particular, sort of epitomized
predatory lending," said Zinner, who worked for the Foreclosure Prevention
Project at South Brooklyn Legal Services at the time of the New York suit.
After the 2000 settlement, Zinner said his group "didn't get the high volume
of calls (about Delta loans) . but we definitely got quite a few
complaints."
