Daily Archives: September 25, 2012

One in five borrowers receives conflicting credit score reports: CFPB

Consumers buying new homes may find themselves accepting loan transactions that either overvalue or undervalue their credit histories, potentially leading to poor credit choices.

The Consumer Financial Protection Bureau released a report Tuesday, saying one in five consumers receive credit scores from mainstream credit bureaus that conflict with scores used by lenders. A homebuyer’s credit score contributes to the overall interest rate on a mortgage, and can impact affordability issues.

The CFPB was charged by the Dodd-Frank Wall Street Reform Act to study the differences between commercial credit reports and those used by lenders to determine the effects on mortgage holders and consumers taking out lines of credit.

The CFPB analyzed 200,000 credit files from TransUnionEquifax($46.30 -0.32%) and Experian and concluded that while most consumers obtain similar credit reports from both sources, there is a substantial minority who end up with conflicting scores.

The bureau warns that this is bad for consumers who may end up accepting substandard deals based on credit reports that may be either too positive or negative than their actual credit level.

Read on.

Who should regulate banks better: Agency created by Glass–Steagall Act (FDIC) or agency within the US Treasury (OCC)?

In her new book, former FDIC chief Sheila Bair raises a good point. With the disasterous results from the government’s housing plan, dyfunction handling of the banks by the regulators  and federal agencies, and the continue abuse by the banks, who should regulate the banks better and equally protect the banks and consumers’ interest: FDIC or OCC. Keep in mind that FDIC was created by theGlass–Steagall Act of 1933 as an independent agency. OCC, too, is an independent agency but an agency under the US Treasury. Here is what Bair had to say about OCC:

4. The OCC should be abolished
Time and again, Bair portrays the Office of the Comptroller of the Currency as far too close to the banks it regulates. She said she was alarmed by efforts from then Senate Banking Committee Chairman Chris Dodd in 2009 to consolidate regulators into a single banking agency. While Dodd intended to eliminate the OCC, Bair says it instead would have empowered it. It also would have addressed the wrong problem, she says.

“Our three biggest problem institutions among insured banks—Citigroup, Wachovia, and Wamu—had not shopped for charters; they had been with the same regulator for decades,” she writes. “The problem was that their regulators did not have enough independence from them. Consolidating all of the power with the OCC, the weakest regulator along with the OTS, would make things worse, not better.”

The solution, she says, is to do away with the OCC altogether, putting all bank supervision with the FDIC—and leaving holding company supervision with the Fed.

“Let’s face it, the OCC has failed miserably in its mandate of ensuring the safety and soundness of the national banks it regulates.”

British Bankers’ Association agrees to be stripped of role in setting Libor

Martin Wheatley, the incoming head of Britain’s new market regulator, is expected to recommend this week that the lobby body lose its supervisory role in the setting of the rate.

“If Mr Wheatley’s recommendations include a change of responsibility for Libor, the BBA will support that,” the BBA said on Tuesday:

The review was announced following revelations three months ago that big banks were had been attempting to rig Libor for years.

Read on.

They’re back! Welcome to Lehman Brothers. We’re Open for Business

Of the many debts that John Suckow would like to unwind from Lehman Brothers Holdings, the first might be shame.

Stigma, baggage, jokes about zombie banks back from the dead—Suckow would like to jettison all that, just as Lehman is liquidating what remains of its assets, four years after the bank’s failure sent the financial crisis into overdrive. There are deals to do, and creditors impatient to get pennies on the dollars owed them. Dwelling on the strangeness of Lehman’s ongoing existence isn’t going to get the work done faster.

“What might surprise you here a little bit,” says Suckow, Lehman’s president and chief executive officer, sitting in shirtsleeves in a conference room on the 40th floor of the Time & Life Building, “is that if you walked in and walked around these floors, this is an operating company.”

A tour of the place confirms that. What might seem bizarre to outsiders—Wait, didn’t Lehman go bust?—long ago became ordinary for the 340 or so employees who work here. Lehman exited bankruptcy in March, after three and a half years, and now exists solely to return money to creditors. The estate still controls tens of billions in assets, and if you would like to purchase any of it—a real estate property, say, or part of a private equity deal—its lawyers and traders will gladly take your business. Each transaction they complete moves the firm one step closer to shutting its doors for good, sometime around 2017. If Lehman Brothers is alive, then it is living on borrowed time.


Read on.

Banks That Flunked Servicing Tests Face Watchdog

Mortgage firms including Bank of America Corp. (BAC)that repeatedly ignored rules meant to improve service for struggling homeowners said they’re on the verge of complying with standards ordered in a $25 billion settlement.

After failing to adhere to at least two separate sets of servicing guidelines since 2010, lenders are preparing for more than 300 rules that take effect next month on loan modifications, fees, foreclosures, and the treatment of military personnel. For the first time, banks face a watchdog dedicated to keeping them honest, Joseph A. Smith, North Carolina’s ex- commissioner of banks.

The latest attempt by U.S. regulators to change the way the biggest mortgage servicers treat their customers will test how effective the $25 billion industry accord is in helping distressed homeowners. Previous guidelines, including those for the Home Affordable Modification Program, that required speedy responses for customers were ignored as banks lost paperwork or otherwise stalled applications, said Diane Thompson, an attorney at the National Consumer Law Center in Boston.

“They have had some of these rules in effect for years now, they just haven’t complied,” Thompson said. “Smith will be crucial in holding the servicers accountable; he has the power to take them to court if they’re in noncompliance. But whether that is enough remains to be seen.”

Read on.

New Jersey Foreclosures Crisis: Chris Christie Not Using $300 Million In Federal Funds To Help Distressed Homeowners, WABC Reports

Huffington Post:

Is Chris Christie doing enough to help residents of New Jersey stave off foreclosure? A new report from WABC’s Jim Hoffer suggests the answer might be “no.”

In 2011, New Jersey accepted $300 million in federal money to start the Homekeeper Program, which would, as its website advertises, promote “neighborhood stability in New Jersey communities by providing financial assistance to eligible homeowners in danger of foreclosure.”

More from WABC reporter Jim Hoffer:

So why has New Jersey been so slow to get the money to families? Eyewitness News put the question to Governor Christie.

“Why has it taken so long, more than a year to get the money out to families?” Hoffer asked.

“Because the courts placed a moratorium on foreclosures,” Governor Christie answered.

“No the dispersing of the money. The $300 million?” Hoffer asked.

“The courts placed a moratorium on foreclosures so our policy was put on hold, waiting to see what the courts were ultimately going to do regarding foreclosure. And that’s why we haven’t moved any more quickly than we have already,” Governor Christie answered.

“The moratorium did not stop other states from helping families already facing foreclosure.” Hoffer said.

When Hoffer tried to press the Governor on this, it’s clear he had no real answer.

“Governor, this is an issue facing the state, why are you blowing it off?” Hoffer asked.

“Michael, please help me ignore him, go ahead,” Christie said.

“A lot of people facing foreclosure,” Hoffer said.

While the governor refuses to answer, families face losing their homes as the denial letters keep coming.

“What did you think when you got that denial letter?” Hoffer asked.

“It really set me back to hear that I was denied,” Celeste Wright said.

Eyewitness News tried for a month to get an interview with the head of the state agency that oversees the foreclosure funds, but they declined our requests.

A spokesperson says new reforms are being implemented that will ease qualification requirements and speed up the application process.

Sheila Bair: The OCC should be abolished because it is too close to the banks it regulates

Pretty explosive information from former FDIC chief Sheila Bair but I look forward to have better solutions implemented in a plan to reform to the original the lender-homeowner relationship and not the current relationship: mortgage servicer-homeowner relationship.

WASHINGTON — Sheila Bair comes out swinging in a new book released Tuesday, blasting Treasury Secretary Tim Geithner as the “bailouter in chief,” while detailing fierce regulatory battles before, during and after the financial crisis.

The former Federal Deposit Insurance Corp. chairman’s nearly 400-page “Bull By the Horns” is chock-filled with meaty details about the behind-the-scenes debates over the 2008 bailouts, the Dodd-Frank Act and beyond.

Although American Banker is still reviewing the full text, following are several new revelations from the book:

Read on.