Monthly Archives: September 2015

Fifth Third Bank Accused of Bias in Lending

CINCINNATI (CN) – Fifth Third Bank allowed auto dealers to hike interest rates on car loans to black and Hispanic buyers, the Justice Department claims in a lawsuit.
According to a complaint filed in Federal Court on Monday, the bank’s policy was done “in a hidden manner not based on the borrower’s creditworthiness or other objective criteria related to borrower risk.”
The lawsuit says the bank’s policy was done “in a hidden manner not based on the borrower’s creditworthiness or other objective criteria related to borrower risk.”
An investigation by the Consumer Financial Protection Bureau revealed the policy has been in effect as far back as 2010.
The agency says Fifth Third’s “lack of compliance monitoring” meant “the average African-American victim was obligated to pay over $200 more during the term of the loan because of discrimination, and the average Hispanic victim was obligated to pay over $200 more during the term of the loan because of discrimination.”

Read on.

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Senator Warren to Join Call to Alter Sales of Distressed Loans

Housing advocates have attracted a prominent ally in their push to change the federal government’s policy of selling distressed mortgages at a discount to private equity firms and hedge funds.

Senator Elizabeth Warren, Democrat of Massachusetts, joined other lawmakers, advocates and community activists on Wednesday in a Washington rally to oppose the loan sale program.

The senator called on the Department of Housing and Urban Development and the Federal Housing Fianance Agency, the overseer of Freddie Mac and Fannie Mae, to make it easier for nonprofit organizations to bid for the bundles of distressed mortgages put up for auction.

Read on.

The White House fights back to save CFPB

CFPB is under attack by Congress!

The House Financial Services Committee is considering several bills to change Wall Street reform today, including changing the Consumer Financial Protection Bureau, a move the White House is quick to fight back on.

Jeffrey Zients, director of the National Economic Council and Assistant to the President for Economic Policy,published a blog on the White House’s website, trying to refute any plan to change the CFPB, along with two other deals on the table.

These bills include efforts at the behest of Wall Street to undermine the people’s watchdog — the Consumer Financial Protection Bureau (CFPB); an attack on American families’ retirement security by blocking the proposed Conflict of Interest Rule; and a step backward on transparency and accountability for public firms’ CEO compensation.

The main issue related to housing that the blog addresses is running the CFPB by Commission.

Today, the Committee is considering a provision to install a commission structure at the CFPB, instead of a Director. Opponents of the CFPB view a commission structure as a maneuver designed to tie the CFPB in knots, limiting the Bureau’s effectiveness. Congress designed the CFPB to respond rapidly to changing market conditions and to react quickly to new threats to consumers and determined the CFPB would operate most effectively with a single leader.

Richard Cordray, director of the CFPB, sat in front of the House Financial Services Committee for his semi-annual report Tuesday morning, facing attacks from Republicans and paeans from Democrats.

Now one day later, the White House is showing where it stands on the issue.

Source: White House

83% of Mortgages Sold by Government to Banks and Hedge Funds End in Foreclosure

A government program launched following last decade’s mortgage crisis to help struggling homeowners has mostly helped banks and hedge funds, and not Americans in danger of losing their houses.

Five years ago, the Department of Housing and Urban Development (HUD) launched a mortgage sales program called the Distressed Asset Stabilization Program (DASP) so it could unload teetering mortgages to the private sector.

DASP was supposed to not only help HUD improve its finances, but also assist homeowners facing the risk of foreclosure work out new terms with the banks or hedge funds buying the mortgages. But things haven’t worked out that way for the vast majority of homebuyers.

DASP has resulted in more than 98,000 mortgages—representing more than $16.7 billion in total debt—being sold to investors “at times as little as 41 percent of the mortgages’ collective value,” the Center for Public Integrity reported. The struggling Federal Housing Administration, which insures mortgages, became solvent as a result of the sales. However, only 16.9% of the mortgages sold between 2010 and 2014 avoided foreclosure.

Read on.

UBS To Pay $33.5M Over Probes Of Puerto Rico Fund Sales

Law360, New York (September 29, 2015, 1:33 PM ET) — Wall Street regulators on Tuesday slammed a UBS affiliate in Puerto Rico with orders to pay $33.5 million to settle claims that it failed to supervise a representative who allegedly misled investors into using borrowed money to buy up closed-end bond funds offered by the broker-dealer.

According to the SEC, a representative for a UBS affiliate in Puerto Rico engaged in a $2.8 million scheme by misleading investors. (Credit: AP) Claims were brought by the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority….

Source: Law360

JPMorgan Investors Win Cert. In ‘London Whale’ Suit

Law360, Los Angeles (September 29, 2015, 9:50 PM ET) — JPMorgan will have to face a class of potentially hundreds of thousands of investors accusing the bank of misleading them about the riskiness of derivatives trading before the $6 billion “London Whale” trading fiasco, a New York federal judge ruled Tuesday.

A New York federal judge shrugged off on Tuesday JPMorgan’s contentions that some of the class members who bought their shares after the bank partially disclosed some losses were differently situated. (Credit: AP) The investors, led by a group of retirement funds, won their bid…

Source: Law360

San Francisco proposes plan to address skyrocketing housing costs

It’s about time!

The city of San Francisco is moving to combat its rapidly rising housing costs with a new plan that will offer more moderately pricing housing in exchange for allowing builders to exceed the city’s current building height restrictions.

According to a report from the San Francisco Chronicle, San Francisco Mayor Ed Lee is set to propose a plan to encourage the building of more affordable housing in the city.

From the Chronicle:

Neighborhoods across the west side of San Francisco could see thousands of new housing units under a measure Mayor Ed Lee is proposing that would allow builders to exceed current height restrictions in exchange for including more affordable units.

The affordable housing bonus program, which will be introduced at the Board of Supervisors Tuesday, would allow an extra two stories of height on projects that include 30 percent affordable units and an extra three stories on 100 percent affordable developments.

Unlike state and federal affordable housing programs, the measure is primarily directed at encouraging builders to provide units for middle-income families rather than low-income. It calls for 18 percent of the units to be affordable to families making between 120 and 140 percent of area median income, which is $122,000 to $142,000 for a family of four. The remaining 12 percent would cater to low- to moderate-income people.

And with San Francisco housing looking potentially bubblicious, more affordable housing can’t come soon enough.