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Transcripts

November 3, 2003

Host: Michael Grant
Topics:
· Predatory lending;
· Alan Keyes interview;
· Foster care in Arizona
In-Studio Guests:
· Arizona Attorney General Terry Goddard;
· Kelly Mitchell, adoption specialist from Arizona Action for Foster Children

>>Michael: Tonight on "Horizon," some consumers are in danger of losing their homes to predatory lenders. A former presidential candidate is fighting for the soul of the Republican party. And foster parents could be affected by the legislative special session. Good evening, I'm Michael Grant. As mortgage rates remain low, you may be thinking of buying, improving, or refinancing your home. But beware of predators. Some consumers especially hit hard by predatory lending practices. Here to shed light on the problem, the Arizona Attorney General, Terry Goddard. Terry, it's good to see you again.

>> Terry Goddard: Good evening.

>>Michael: Give me a horror story that will illustrate the contrast between predatory lending and just lending.

>> Terry: I think that's an important point. Most loans out on the market today, the kind of refinancing you're talking about does not involve predatory activity. But there are some actors, unfortunately, in Arizona and around the country who make a loan that is designed to be essentially unrepayable, the exact opposite of what you normally find at a bank. I got alerted to this when I was working for the U.S. Department of Housing and Urban Development and someone gave me a closing statement. I read about with real disgust, an Hispanic female, two children, owned her own home and went in to refinance it. And based upon the closing statement, what she ended up with at the end of day was twice as much debt on her house and essentially a balloon payment in about three years which she would never on her income never be able to pay it off. What this lender had done to her was essentially put her in twice as bad a position and she got no material benefit for it.

>>Michael: She was just looking for the rather immediate benefit of a reduced payment.

>> Terry: I'm quite sure that the original impetus was to respond to one of these ads that was so seductive, which basically says, take the equity out of your house, pay off some bills. She obviously took some short-term financing, she got perhaps $2,000 out of the deal but she lost $25,000 in equity at the end of the day. It was a terrible deal for her. And she is probably going to lose her house.

>>Michael: How did that company almost double her debt?

>> Terry: Every bell and whistle, and this is what we see too often in the predatory lending situation. This lady only spoke Spanish. They obviously made promises to her which were not reflected in the actual documents that she signed. So there's fraud right there. In addition, they added every fee you can imagine, maximum points, a variety of fees to the lender which were not justified. She had good credit, this wasn't a situation of somebody who had very poor credit. This woman owned her house, had substantial equity in the house and, as far as we can tell, had paid her bills regularly. She was in a short-term problem and ended up getting a long-term headache.

>>Michael: So they're adding seven or eight points?

>> Terry: Oh, easily, seven points. Single premium life insurance on the loan was added, all of which was rolled into the total loan amount so that she probably didn't notice if she didn't look very carefully at her documents that she now had a much worse situation than she started with. She would have been much better off with the credit card debt rolling for awhile, paying it off as best she could and not adding it to her mortgage. We find this a lot in parts of town especially where people are not financially sophisticated. These predatory lenders grab hold of somebody. They make a lot of promises but those promises are not reflected in the documents that are actually signed.

>>Michael: You were telling me about people going around selling air conditioners for houses and these kinds of practices also being involved in that.

>>Terry: We just finished a case against a company that had targeted Spanish speakers in south Phoenix. They had gone door to door, selling air conditioning and taking a lien on their house as a result of the financing. We were able in court to prove that this was a violation of the consumer fraud act, substantial penalties, in fact a total of $31 million in penalties because of 1,200 victims we were able to find and a violation of the Civil Rights Act. But the real problem I think…we're able to continue at the Attorney General's Office taking these one at a time. But what's really needed is for some standards to be set for the State of Arizona by the legislature. I hope there will be legislation in the next session to prohibit predatory loans.

>>Michael: You mentioned some racial profiling involved. Are there other high risk, particularly high-risk groups?

>> Terry: Unfortunately, it seems to be many different groups have been targeted and successfully so. I had a couple that I saw their case, college educated, new in the job market, less than perfect credit as the ads often say, but nowhere near as bad as they were treated by a particular lender. Most lenders are highly legitimate. In fact this is a black eye on the whole industry that there are a few people out there behaving in a highly predatory manner.

>>Michael: What are the signs? How do I sort out whether I'm dealing with someone that's okay and not so?

>> Terry: I would think, A, if you have good credit, obviously you want to shop around for loans. For all consumers that's number one. If something stands out, it's going to be because one company piles on all the fees and another one doesn't. The people that we're dealing with primarily who end up being victims don't know they can shop around, don't understand there's a competitive market for loans and end up being basically persuaded by a good salesman they have to sign at the bottom line and their troubles will go away. Of course, when they sign, their troubles are just the beginning.

>>Michael: Now, there's obviously a lot of federal laws on required disclosures, those kinds of things. Is this a function of people not reading their paperwork or are these people actively violating the laws not making the disclosures they are supposed to or what?

>> Terry: Well, sometimes it's that. Unfortunately you get a packet at your loan closing that's pretty thick.

>>Michael: True.

>> Terry: And a knowledgeable reading of that, that's one of the reasons why we believe credit counseling is so important. If people don't know exactly what they are doing, I encourage them to become smarter consumers and talk to some of the excellent credit counselors. They are nonprofit, out in the market today and available for people with questions about the home loan. But usually, unfortunately, people ask the lending officer and of course they get the answer that the company or that individual wants to give them and often it's not in their best interest.

>>Michael: If you catch the problem pretty quickly, do you have some recision rights?

>> Terry: Usually there are but they usually don't get caught until the people are well into the loan or facing a balloon payment they didn't know they were going to have to pay. The "gotcha" part of this usually comes after a few years. It's difficult to live within, you're not within the recision time at that point. And the real problem is we don't have a bar in Arizona, we don't have a standard. The federal rules that you're referring to exist today, truth in lending and so on, and we're still getting these predatory problems. Like North Carolina and New Mexico, a number of states have passed anti-predatory lending statutes. I think Arizona needs to join that fraternity.

>>Michael: Forums on the subject coming up in Phoenix and Tucson?

>>Terry: I think it's so important we're going to have an open debate forum on the 12th at the public library in downtown Phoenix and on the 19th in downtown Tucson. The one in Phoenix will be 6:30 to 8:00, I believe. It's open to the public. We'll have people from the industry, advocates, people thinking it's got to be changed. We've invited legislative members to be there and hear the debate.

>>Michael: Terry Goddard, thank you for the information.

>> Terry: Thank you.

>>Michael: The Supreme Court doesn't want to hear an appeal in the Alabama Ten Commandments case. The court refused the appeal today. Alabama Chief Justice Roy Moore was suspended for defying an order to remove the Ten Commandments monument from an Alabama courthouse. Moore says the justices are ducking their responsibility to clarify the issue of the separation of church and state. A defender of Judge Moore is former UN ambassador and former presidential candidate, Alan Keyes. Keyes is known for his controversial views and provocative rhetoric. He made an appearance at the Greater Phoenix Chamber of Commerce Phoenix Forum. He spoke about what he says is the danger of judicial activism.

>>Reporter: Alan Keyes is apparently happy meeting the Greater Phoenix Chamber of Commerce. He is not happy with the outcome of the California gubernatorial race, he doesn't support fellow Republican Arnold Schwarzenegger.

>>Alan Keyes: He won because of the stupid arguments that people who believe people like moral conservatives should waste their votes and destroy the party by voting for Arnold Schwarzenegger. He could not have won without the support of the moral conservatives. I agree people fell for those arguments. I think it's a tremendous battle in the Republican party, between the pro-life moral forces, like myself, and the forces of indifference and immorality like Arnold Schwarzenegger. We will fight them and hopefully galvanize the moral will of people who represent the Republican party to sustain its commitment to this country's great moral tradition.

>>Reporter: Keyes is defending what he calls the moral tradition by speaking out against judicial activism. The power he says is left to the states in accordance with the 10th amendment.

>>Alan: Courts in the United States have asserted what amounts to a judicial dictatorship. The language of the constitution, they have asserted a right to impose Godlessness on every level of public life, saying you can't pray, you can't have the Ten Commandments in front of the courthouse. This is nonsense. It's contrary to our history and the constitution which left the right, the power to make decisions about the important issue of how people as a whole will express piety. I think it's time for us to fight against this judicial dictatorship and reclaim our rights.

>>Reporter: On the other hand, Keyes does not see a problem when courts become involved in elections.

>>Alan: It seems to me that those kinds of decisions are going to be taken by judges. When there is dispute at the state level how elections have been handled under existing election laws, you have a basis in law and it's the job of courts to interpret the law when disputes arise. The problem in the case of the Ten Commandments, school prayer and things like this are judges are making decisions in absence of any law and absence of constitutional provision that empowered them with the authority to make the decisions.

>>Reporter: Keyes is adamantly pro life.

>>Alan: Since according to the declaration, the principle that allows anybody to claim any rights is that we are endowed by our creator to certain inalienable rights, if we deny that's true, how can the woman have any rights?

>>Reporter: Keyes seems driven to impress upon Republicans and others the value of moral clarity.

>>Michael: As for the election next year, the former presidential candidate says the economy probably won't hurt Bush's re-election chances. He says the president could be vulnerable on the Iraq issue.

>>Michael: Changes in funding for Child Protective Services remain unresolved today in the legislative special session. Governor Napolitano's bill would make the safety of children the top priority. Spending for the bill would be more than $35 million and would include giving more money to foster parents. Producer Larry Lemmons introduces us to a typical foster family.

>>Karen Gillian: Somebody always has something going on. The boys are always wrestling. Somebody's always got something new and exciting, new and improved that they're trying out on mom and dad.

>>Michael Gillian: Not a whole lot of sleep.

>>Reporter: It's obvious that Karen and Michael Gillian love kids. Jonathan and Ethan are their biological kids. Jimmy and Mia were adopted. They're caring for a foster infant, also.

>>Karen: I think we have had a total of 12 children come to our home, for a few days as respite care to three or four months. Then they would move on to like a family member. We do regular foster placements, emergency receiving and respite care along with doing special needs. We do the whole gamut basically.

>>Michael: Every kid that comes into the house, we -- I don't know if I can say this right, we intend to adopt every kid that comes into the house. We understand the case plan is always reunification. We do whatever we can to support the best interests of the child. We have heard any number of stories about children bounced from house to house to house, they might spend six weeks here, there, and before you know it the kid's a teenager and they have spent 10 years in foster care. We will never let that happen to a child. If the kid comes into our house, they have a home.

>>Kelly Mitchell: Karen and Mike are very exceptional foster parents. They are the family that I think we as an agency would like to use as a role model for other families. They do a wonderful job with the children. They are very open in what they'll accept regarding children's ethnicity, behaviors. They really just want to help the children out there that need help.

>>Reporter: The Gillians are somewhat unique that they are able to care for infants. Foster agencies are seeing a rise in the number of infants.

>>Kelly: CPS was allowed to take children into care, young children especially from birth if they are born drug exposed. There are not enough homes to take all the children that are coming into care. Our agency has a guideline that we follow that we don't like for children under the age of three to be in full time day care. We want to stress to parents that take the children, that there is a stay-at-home parent. We feel the children need the nurturing they would receive. They need the nurturing from one caregiver rather than three or four different caregivers which they could experience in day care.

>>Reporter: Karen is able to stay home with the kids.

>>Karen: There is a huge need for more foster parents and families willing to take in children, even the special needs babies that are premature and drug exposed. It's not harder than taking care of your own child, just a little more time commitment.

>>Michael: There's a lot of parents out there that are unable to have their own children. I think those would be outstanding candidates for people to get involved here because they want children, there is no shortage of children in these homes.

>>Kelly: The first year of life is very crucial for a child to learn to bond when they get older. We feel it's important for the child to have a regular caregiver, have a mom and a dad that's going to be there to meet their needs and teach them how to bond and trust people.

>>Michael: The foster parent role, it's so critical because the first year is so important. I want the role of a foster parent to, little emphasis on the foster, big emphasis on the parent.

>>Reporter: A typical foster family receives $11.50 a day to help with expenses. The governor wants to use part of the additional CPS funding she is requesting to help support foster families.

>>Kelly: The money provided to a foster family from the state is minimal, so foster families have to dip into their own pockets to provide for a child and it can be very expensive. CPS allows for clothing expenses but it's not enough to cover everything.

>>Michael: It's meant to cover basic living expenses, keep them clothed and sheltered but there's not a whole lot extra, especially if you have a large family, going and doing things as a group can get expensive. Try to take a family of seven to Bank One Ballpark for a ball game, for example.

>>Kelly: That's part of why families don't become foster families is because they can't afford it. So if there was more incentive, let's say, I think more people would be willing to do that and I think it would help the families that we have that are licensed.

>>Reporter: Being a foster parent is not all play. They deal with issues the rest of us rarely, if ever, consider.

>>Michael: We have been wrestling for awhile, and Karen has been outstanding making sure the kids get what they need. Jimmy has had -- I can't even list the number of people he has worked with over the last few years. Some of the issues are related to the amount of information that foster parents have access to. We'll get a child and okay, we have a 10 to 15 pound lump that has a name. That's about it. It would be useful to know if they have been drug exposed, alcohol exposed, if there is family that are trying to reunify, if there is a medical history. That information is almost covert.

>>Reporter: No doubt, Karen and Michael have a lot on their hands. They say they wouldn't have it any other way. They say they wouldn't be able to do what they do without the support of others.

>>Michael: One of the biggest needs of foster parents aside from services for medical or behavioral, is a strong support network because it is -- date nights are few and far between. And having family and friends who can support you is critical. So the civic organizations, community organizations, churches, I think they have to get involved. And I know they are. I don't have access to all of the numbers or statistics but I want to talk about what we're doing because we have special people helping us out.

>>Michael Grant: To talk more of the challenges faced by foster families, an adoption specialist from Arizona action for foster children, Kelly Mitchell. Kelly, I'm surprised. Are foster families supposed to get that kind of background information on the child that just sometimes doesn't happen?

>>Kelly: Sometimes it doesn't happen. Depending why a child came into care. If a child came into care due to abandonment, it might take a while to get that information, they have to find out where the child was born, get medical records so they can find out if the child was born substance exposed. There are different factors that can play into why a family might not get that information up front.

>>Michael: As a general rule, to the extent the information is available it gets passed along?

>>Kelly: Yes, generally whatever information CPS has they want to get to the family. If the child has an issue that the family is not able to deal with, they need to know that up front so the family can provide for the child like they are supposed to or that they want to.

>>Michael: What's the typical stay, if there is such, of a foster child in a foster family?

>>Kelly: There isn't a typical stay. It varies on why a child came into care. It could be 30 days to a year and a half, it depends on what the case plan is and how active the biological families are in the case plan.

>>Michael: Foster care by definition is a temporary placement?

>>Kelly: Yes, foster care is meant to be a temporary situation. It takes very special individuals to be able to do foster care because you have to be able to deal with the temporary situation, whether it be for 30 days or a year and a half and then let that child go. Whether that child is going to go home to biological parents or other families or be severed and put up for adoption.

>>Michael: How many kids in foster care?

>>Kelly: Right now, there's 6,800 children in the state of Arizona and 3,000 in Maricopa County.

>>Michael: And is that number going up?

>>Kelly: Yes, the number in Maricopa County has gone up 25% in the last year.

>>Michael: Why the increase?

>>Kelly: I think because of changes the governor is doing. Children can come into care straight from the hospital when they are born substance exposed. The governor has said she will back CPS to err on the side of the children. I think that's why more children are coming into care.

>>Michael: What is your group, Arizona Action For Foster Children? What role does it play?

>>Kelly: We are a 27-year-old nonprofit organization that contracts with the Department of Economic Security to provide training and licensing of foster families and training in certification for adoptive families that care for children that are wards of the state.

>>Michael: Are there age groups of children more difficult to place than other children in foster care?

>>Kelly: Generally it's older children. Most people want to care for younger children. Unfortunately, there are more younger children that need placements than teenagers. We receive a weekly list on Thursday morning of the children that need placement. The last list that we received there was over 150 children that needed placement. With all the agencies that contract with DES there was no opening for those children to be placed in. 78 of those children were under the age of five.

>>Michael: How difficult is the recruitment of new foster parents?

>>Kelly: I don't know if it's difficult per se, there are different things that come into play. One, because it is temporary. It is very hard to grow to love a child and create a bond with the child and have to let the child go. The other is the maintenance that's required. Financial maintenance. It isn't very high. On average, a foster parent can receive about $350 to $400 a month for a child, which is $4,400 a year. The USDA says it takes $6,800 a year to care for a child. There's a difference of $2,400. Some families don't have that money accessible to provide. The money provided by the state for a foster family is meant for food and living expenses and additions to electricity bills and things like that to add another member to the family. There isn't things included such as recreational, if they wanted to take karate lessons or dance lessons, there's things you have to try to provide for as a foster family on your own.

>>Michael: Maybe an afternoon at Bank One Ballpark.

>>Kelly: Right, sure, sure.

>> Michael: When did they last receive an adjustment in the reimbursement?

>>Kelly: 1996. It's been seven years.

>>Michael: The current proposal is an increase of?

>>Kelly: It's supposed to go up to about $625, so almost $250 of an increase.

>>Michael: Kelly Mitchell, thank you for the information.

>>Kelly: Thank you. Michael:

>>Michael: Here's what's coming up tomorrow night on "Horizon".

>>Reporter: Responsible for the fiscal planning process, the latest subject of Arizona town hall. Town Hall participants talked more about tax and spending policy as the state faces a $900 million budget deficit, find out how we can improve the process Tuesday at 7:00 on "Horizon" .

>>Michael: Wednesday, we'll have an update on the special legislative session. On Thursday, we'll have our monthly talk with Governor Napolitano. And Friday, please join us for Journalists' Roundtable. Thank you very much for joining us on this Monday evening. I'm Michael Grant. Have a great one. Good night.

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