Tag Archives: subprime

Uber pushes drivers into shady subprime auto loans

Geovanie Rosario signed the lease because it was easy. Tower Auto Mall came recommended by Uber, as one of four dealers the ride-hailing company partnered with in New York City to offer “flexible and affordable” rentals and lease-to-own contracts to drivers. Rosario went to see Tower one morning in May 2016 and started driving a black Lincoln MKS, New York City’s standard car-service vehicle, a week later. His contract included a $3,000 service fee and weekly payments of $495 for 159 weeks, or just over three years. Tower would take the payments directly out of his Uber earnings every Monday.

Rosario had quit his position as an assistant manager at Rent-A-Center, a job with benefits and a 401(k), to drive for Uber in March 2015. Rent-A-Center paid $12.25 an hour, and, based on Uber’s ads, he figured he could double that by becoming a driver. He had tried a couple of car rental options and, by the time he went to Tower, felt confident he could make enough to come out ahead.
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Citigroup (C) to Sell Subprime Lending Unit in Canada

Citigroup Inc. (CFree Report) entered into an agreement to sell CitiFinancial, its subprime lending unit in Canada, to an investor group led by private investment firm, JC Flowers and Värde Partners.

This is part of Citigroup’s strategy to emphasize on growth in core businesses through restructuring, expense management and streamlining operations internationally.

The divestiture is subject to regulatory approvals and is anticipated to close in the first half of 2017. While the amount for the sale remained undisclosed, this transaction is not likely to affect Citi’s financials.

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Nine executives had been recommended for 2008 mortgage meltdown criminal probe by FCIC

Former Treasury Secretary and Citibank Chair Bob Rubin was cited by a special congressional panel as someone who should have been the subject of a criminal investigation for activities related to the 2008 subprime mortgage meltdown.

The Financial Crisis Inquiry Commission (FCIC) had told the Justice Department that it should open an investigation of Rubin, Treasury Secretary under President Bill Clinton, for alleged securities fraud perpetrated as a member of Citibank’s board.

Rubin was among nine executives recommended for a criminal probe by the FCIC that were cited in a letter sent Thursday from Sen. Elizabeth Warren (D-Mass.) to Justice Department Inspector General Michael Horowitz.

Warren asked the department auditor this week to look into why zero criminal inquiries were launched as a result of the FCIC recommendations, which were publicly disclosed for the first time earlier this year.

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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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Former Subprime Lender NovaStar Files for Bankruptcy

Bizjournals:

The subprime lending roots of Kansas City-based Novation Cos. Inc. (OTC: NOVC) finally have caught up to the company, playing a role in its recent decision to file for Chapter 11 bankruptcy protection.

Novation is the successor company to NovaStar Financial Inc., a major subprime lender during the housing bubble that at one time originated more than $11 billion in mortgage loans a year.

Deutsche Bank : must face U.S. lawsuit over subprime disclosures

4Traders:

A U.S. judge on Monday said Deutsche Bank AG must face part of a lawsuit claiming it defrauded investors who bought $5.4 billion of preferred securities by concealing its exposure to the fast-deteriorating subprime mortgage market.

U.S. District Judge Deborah Batts in Manhattan said the plaintiffs may pursue claims with respect to offerings in November 2007 and February 2008, but not with respect to offerings in May 2007, July 2007 and May 2008.

Freddie Mac must face revived lawsuit over risk disclosures

4Traders:

A federal appeals court on Wednesday revived a lawsuit accusing Freddie Mac and several former top officials of defrauding shareholders by concealing its subprime mortgage exposure and its inadequate risk management prior to the 2008 financial crisis.

The 6th U.S. Circuit Court of Appeals said a lower court judge erred in concluding that the Ohio Public Employees Retirement System did not sufficiently allege that its losses were caused by Freddie Mac’s disclosure shortfalls.