Predatory lending practices chewing up small businesses across America

Look out, the stranger on the phone warned. They’re coming for you.

The caller had Janelle Duncan’s attention. Perpetually peppy at 53, with sparkly jewelry and a glittery manicure, Duncan was running a struggling Florida real estate agency with her husband, Doug. She began each day in prayer, a vanilla latte in her hand and her Maltese Shih Tzu, Coco, on her lap, asking God for business to pick up. She’d answered the phone that Friday morning in January hoping it would be a new client looking for a home in the Tampa suburbs.

The man identified himself as a debt counselor. He described a bizarre legal proceeding that he said was targeting Duncan without her knowledge. A lender called ABC had filed a court judgment against her in the state of New York and was planning to seize her possessions. “I’m not sure if they already froze your bank accounts, but they are RIGHT NOW moving to do just that,” he’d written in an email earlier that day. He described the lender as “EXTREMLY AGGRESSIVE.” Her only hope, the man said, was to pull all her money out of the bank  immediately.

Read on. (Hat tip from Bloomberg)

How Confessions of Judgment Work

 

Small Business

Wants a loan

The Confession

Borrower signs a confession of judgment as part of the application, agreeing to lose any dispute

Lender

Sends money to borrower

The Dispute

Borrower misses a payment, or so the lender claims

County Clerk

Lender sends confession to clerk,

who rubber-stamps it

New York City Marshal

Demands money from borrower’s bank

Bank

Hands money over to lender

Lender

Gets money back, with interest and fees tacked on.

Wells Fargo knew for years that auto insurance was hurting customers, lawsuit says

New York (CNN Business)Wells Fargo executives were warned that the bank’s auto insurance program was harming customers four years before it was shut down, according to a lawsuit.

Wells Fargo admitted last year to charging hundreds of thousands of borrowersfor auto insurance they didn’t need. Some customers even had their vehicles repossessed because of the needless charges.

Members of Wells Fargo’s executive risk management committee were alerted in April and July 2012 to “critical issues” about the insurance program known as collateral protection insurance, or CPI, a complaint unsealed by a judge on Monday alleges.

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Wells Fargo admits more than 500 customers lost their homes due to ‘calculation error’

After an internal review, the troubled bank said it found that 870 customers were erroneously denied mortgage changes, with 545 of them losing their homes as a result of the error. The bank first reported the mistake in August, but said only 645 eligible borrowers were denied and of those, 400 lost their homes. The bank added that it had fixed the glitch and put $8 million aside to compensate borrowers this summer, but it hasn’t updated that number since admitting more customers have been impacted.

Reuters, which first reported the news, cited an underwriting error that internally prompted the bank to reject home loan modifications instead of helping them.

In an email to FOX Business, Tom Goyda, a Wells Fargo spokesperson said: “We’re very sorry that the errors occurred and have assigned a single, dedicated point of contact to ensure that each customer is engaged with and assisted individually.”

Read on.

Wall Street moves to gut post-crisis financial rules

ON THE CAMPAIGN trail, Donald Trump frequently pledged to “dismantle” the Dodd-Frank financial reforms passed in the wake of the 2008 financial crisis. On Wednesday, with the Federal Reserve’s release of a proposal to roll back capital and liquidity requirements, he caught his big whale.

Those requirements, imposed by the Dodd-Frank Act, were put in place to ensure that critical financial institutions could weather economic storms. The liquidity ratio was only finalized in September 2014. And yet, just four years later, on October 31, the Federal Reserve announced proposed changes that would reduce liquidity requirements by almost a third for banks such as Capital One and Charles Schwab with assets of $250 billion to $700 billion. Smaller banks would have even fewer restrictions.

In the lone dissent on the Fed’s four-member board, Lael Brainard said she could not support the proposal, which, among other things, would “weaken the buffers that are core to the resilience of our system.”

Read on.