Cox’s ties to mortgage firms may explain inaction on foreclosures

By Eric T. Campbell
The Michigan Citizen

DETROIT —Evidence is surfacing that home loan institutions have, based on demographic studies, steered minority homeowners into high-risk subprime mortgages. That opens the door to possible prosecution of civil rights violations in addition to the abuse of fair lending laws.

With calls increasing for state attorney generals to sue guilty lenders, Michigan Attorney General Mike Cox may be compromised. His list of campaign contributors includes a number of mortgage interests.

Cox has refrained from taking an assertive position towards lending institutions despite studies showing racial steering into unnecessary subprime loans.

“Cox is holding forums to try and help mortgage fraud victims with many of the same companies that he should be investigating for causing the problem in the first place,” Mark Brewer, chairman of the Michigan Democratic Party said in a recent press release. “Helping victims is fine, but Cox does nothing to go after the wrongdoers.”

Cox is Republican.

Rich Robinson of the Michigan Campaign Finance Network says that campaign contributions do have a direct affect on the policies public officials will pursue.

When asked about Cox’s ties to the mortgage industry, Robinson told the Michigan Citizen that, “it certainly invites the question of the possibility” of the relationship being a policy factor.

According to campaign finance reports, since first running for office in 2002, Cox has received contributions of over $126,000 from political action committees (PAC) tied to banking institutions such as Comerica Bank, Citigroup and Standard Federal.

The Michigan Bankers Association has donated to the Cox campaign on numerous occasions. $29,600 of those contributions have come from David and Kathleen Trott of the law firm Trott and Trott, P.C. Their practice specializes in representation of mortgage servicers, banks, and credit unions in residential mortgage foreclosures.

“It becomes particularly concerning when dealing with an office whose focus is justice,” Robinson said.

A November 4th article in The Nation indicates that, according to federal loan and census records for 2006, two Detroit area neighborhoods with similar median incomes showed vastly different quantities of high-interest home loans.

Homeowners in the primarily Black Detroit neighborhood, with a median income of $49,000, received subprime loans at a rate of 70% in the mostly white Plymouth neighborhood, with a median income of $51,000, subprime loans reached only 17%.

In addition a widely-sited, comprehensive report on the affects of the current foreclosure crisis published by United for A Fair Economy estimates that the total loss of wealth for people of color to be between $164 and $213 billion because of subprime loans taken during the past eight years.

The Michigan Citizen spoke with Jason Moon, spokeperson for the Michigan Office of Financial and Insurance Services (OFIS), which is the department designated with regulation of mortgage fraud. He said that from 2006 through November 2007, three cases of mortgage fraud were presented to the Attorney General’s Office and several more since then. None the cases have been prosecuted.

“It’s up to the Attorney General’s office to prosecute these cases or send them to local prosecutors,” Moon said.

The recent appointment by Governor Jennifer Granholm of Commissioner Ken Ross to head the OFIS may be indicative of a new direction by the state.

Moon says that Ross has made it a priority to send more cases as criminal referrals to the Attorney General.

“We want to help people stay in their homes and work with people to accomplish that goal.”

Moon also pointed to several legislative initiatives currently in committee, including a proposed supplemental appropriation of $1.4 million by the House Appropriation Committee. The money would allow OFIS to hire 34 more mortgage regulators to help prevent fraud.

According to a November article in the Detroit News, there are currently no more than 12 examiners to monitor 2,800 licensed mortgage companies.

Calls to the office of Michigan Attorney General Mike Cox were never returned.