Daily Archives: August 23, 2016

Wells Fargo fined $3.6M over student loan practices

Wells Fargo must reform its practices and pay a $3.6 million fine for actions that federal consumer protection officials say misled student loan borrowers and resulted in some paying unnecessary fees.

In the order filed Monday leveling the penalty, theConsumer Financial Protection Bureau said the bank acted illegally, charging on-time payers with late fees, failed to inform borrowers of steps they could take to minimize fees and left credit report errors uncorrected.

“Wells Fargo hit borrowers with illegal fees and deprived others of critical information needed to effectively manage their student loan accounts,” bureau Director Richard Cordray said in a statement. “Consumers should be able to rely on their servicer to process and credit payments correctly and to provide accurate and timely information.’’

Read on.

Bank Of America To Pay $1.9M To Settle Calif. OT Claims

Law360, Los Angeles (August 22, 2016, 10:21 PM ET) — Bank of America NA reached a settlement for $1.9 million with a class of 100 employees in California federal court on Monday, potentially putting an end to a case filed last fall over customer service representatives getting shorted on pay.

Candice Williams brought the action on behalf of dedicated service directors at Bank of America’s Brea, California, location alleging that the bank wrongfully classified the workers as administrative employees in order to avoid paying overtime.

The parties reached a $1.9 million settlement in May, according to…

Source: Law360

Lawmakers Overseeing Wall Street Given Bigger, More Favorable Loans Than Others: Study

It is good to be king, as the old saying goes — and apparently it’s also good to get a seat on a congressional committee that oversees the finance industry. According to a new study, those lawmakers tend to get larger loans and at more favorable interest rates right when they get appointed to those powerful panels. Researchers suggest the evidence is no random coincidence: They say the trend may in fact expose a conduit of influence peddling in which powerful lawmakers are using their position to extract favors — and whereby Wall Street firms may be using stealth perks to increase their legislative power.

The analysis from London Business School professors Ahmed Tahoun and Florin Vasvari analyzed how the personal finances of congressional lawmakers changed once they were appointed to the Senate Finance Committee, the Senate Banking Committee or the House Financial Services Committee. It also evaluated how their finances compared with other lawmakers who are not on those panels.

In evaluating lawmakers from 2004 to 2011, the researchers found that finance committee members’ personal borrowing tended to jump in the first year they were appointed to the panels — a trend not seen for other lawmakers who were given seats on other powerful committees. Similarly, the data show that upon joining the finance panels, lawmakers tended to be given 32 percent more time — or on average 4 and a half years more — to pay back those new debts than loans they previously had and that other members of Congress have.

The study found that lawmakers also “report more favorable debt terms when they join the finance committee, relative to other years and to the terms other congressional members obtain including those on other powerful committees.”

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2nd Circ. Won’t Rethink Tossing BofA $1.3B Mortgage Fine

Law360, New York (August 22, 2016, 7:20 PM ET) — The Second Circuit on Monday refused to rehear its decision tossing a roughly $1.3 billion penalty against Bank of America for a financial crisis-era mortgage program, rejecting a request by the U.S. Attorney’s Office in Manhattan, which said the ruling overlooked important evidence.

The appeals court rejected the government’s request for a rehearing pushing back against a three-judge panel’s May finding that it hadn’t presented enough evidence that Bank of America subsidiary Countrywide Financial and a former executive had defrauded Fannie Mae and Freddie Mac. (Credit:…

Source: Law360

Loan officer successfully sued Trump Mortgage, but judgement came too late

Trump admits mortgages “not a business I particularly liked or wanted to be part of”

 

In the brief 18 months that it was in the world, Trump Mortgage managed to inspire at least one successful lawsuit against it, according to an article in Bloomberg by Heather Perlberg.

In the article, Jennifer McGovern, 44, described that she worked in the boutique part of the business, where people housed in their own offices dealt with high-end real estate agents and attorneys.

From the piece:

McGovern sued Trump Mortgage in early 2007. She had brokered a $26.5 million commercial loan that should have given her a $238,000 payment, she said. Trump Mortgage told her to accept a $10,000 commission instead.

When she refused, she said Ridings fired her on the spot. McGovern won a court judgment in 2009 awarding her a payout close to $300,000. But by then the company had no assets, no office and no phone number.

Trump Mortgage launched in the spring of 2006 with much fanfare, and closed just 18 months later, leaving behind unpaid bills and broken promises.

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Former Fannie Mae CEO reaches final $100,000 subprime mortgage settlement

The final chapter in the government-sponsored enterprise executive financial crisis saga is over, once again following the same pattern of the previous accounts.

Former Fannie Mae CEO Daniel Mudd announced in a filing on Monday that he reached a settlement with the U.S. Securities and Exchange Commission for $100,000 over his role in the run-up to the financial crisis as the head of one of the mortgage funding giants, an article in Reuters by Patrick Rucker and Nate Raymond stated.

According to the article, Mudd was the last of six executives at mortgage funding giants Fannie Mae and Freddie Mac sued by the SEC in 2011 to reach a settlement.

From the article:

Like Mudd, the other five defendants reached relatively small settlements, none exceeding $250,000, despite facing SEC suits in what were among its biggest cases to arise from the financial crisis and mortgage meltdown.

Under the settlement, the court papers said Mudd would contribute or cause to contribute $100,000 to an account with the U.S. Treasury Department. The settlement leaves open who will pay the amount.

The article noted that Mudd did not admit to wrongdoing in settling.

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Banks want to cut bank branches, consumers say no

Banks keep pushing consumers toward online technology, but consumers aren’t ready to give up having a local retail branch an arm’s length away.

According to a Reuters article by Dan Freed, U.S. customers are not ready to give up regular visits to their nearest branches, which is complicating bank efforts to cut costs.

From the article:

U.S. banks have trimmed the number of branches by 6% since it peaked in 2009, according to Federal Deposit Insurance Corp data. The 93,283 branches open at the end of last year was the lowest level in a decade.

Yet analysts who have examined the data say banks should have done more to offset the pressure on revenue from low interest rates and regulatory demands.

Read on.