Headlines
Search Headlines
Loading
Browse Headlines
- TCF to Give Customers a Choice on Covering Overdrafts
American Banker 03 Feb 2012
TCF Financial of Wayzata, Minn., recently announced that it will soon offer customers another option for paying overdraft fees on checking accounts. Beginning on March 20, customers will be able to choose to pay overdrafts on the normal per-item basis or by paying a single daily fee to cover all overdrafts for a specific day. TCF spokesman Jason Korstange said the bank has been testing the option in Michigan for the past year and decided to roll it out to save customers from paying several fees when they overdraw their accounts. Those who choose the new option will have to pay the daily overdraft fee the next business day, so it may not be ideal for all customers. - Sallie Mae to Credit Suspension Fee
Washington Post 03 Feb 2012
Private student loan provider Sallie Mae recently announced that it will change its policy on charging struggling borrowers who seek to defer their loan payments. The company said it will continue to charge borrowers the $50 fee but will instead put the payment toward the borrower's loan balance after payments are resumed and on time for six consecutive months. The shift in policy came after an online petition collected 77,000 signatures to encourage the company to eliminate the fee, which is not imposed by federal student loan providers. Sallie Mae said the policy will be retroactive to forbearances granted on or after Jan. 1, 2012. - Payday Loan Cases Will Remain in Provo
Provo Daily Herald 02 Feb 2012
In Utah, the Senate business and labor committee on Feb. 1 squashed legislation that would have forced payday lenders to settle litigation in the county where the loan was issued, rather than in the Provo justice court. "What we've seen are instances where payday lenders are using fine print in a contract to require that any litigation for a loan is filed in one county in one court in Utah," said Sen. Ben McAdams (D-Salt Lake City). "I think it is reasonable that if a lender has a physical location to make a loan in a certain county that it is not unjust to ask them to handle litigation in that county where the loan was made." A study conducted last year by the Coalition of Religious Communities, a multi-faith group that advocates on poverty-related issues, found that roughly 80 percent of the 24,707 small claims cases in Provo's district court between Jan. 1, 2005, and June 30, 2010, were tied to payday loans. McAdams asserted that the practice of trying cases in Provo was giving the payday lender the upper hand over those who face a lawsuit because it could require them to take time off work to travel to Utah County to defend their case. The Senate committee rejected his proposal, however, after he was unable to substantiate his claim that borrowers from St. George were not appearing in court cases in Provo. - Obama Announces New Housing Refinance Plan
Washington Post 02 Feb 2012
The Obama administration on Feb. 1 offered more details on a series of proposals designed to help struggling borrowers reduce their mortgage payments and to curb persistent home-price depreciation. The cornerstone of the effort, which needs congressional approval, is legislation that aims to make it easier for almost any homeowner with a credit score above 580 and current on mortgage payments for the last six months to take advantage of today's historically low interest rates. Other components of the plan include using closing cost assistance as a carrot to encourage homeowners who refinance to take on shorter-term loans and use the savings to rebuild equity; the Treasury Department tripling incentives paid to banks that forgive a share of homeowner debt; and selling groups of foreclosures through the Federal Housing Finance Agency to investors, who would rent them out. After failing to achieve the desired level of success with several previous initiatives to help homeowners and prop up the housing market, the president's new plans are being met with some skepticism on Capitol Hill -- particularly among the GOP. - Tax Refunds: Yours to Keep, Not Lose to High-Cost Lenders
Westside Gazette 02 Feb 2012
Every year, tens of millions of moderate- and low-income U.S. households spend about $11 billion on high-cost tax services such as Refund Anticipation Loans (RALs) and Refund Anticipation Checks (RACs). Providers advertise these products as helpful and convenient to customers, though they typically charge interest rates as high as 150 percent. According to a survey of self-reported RAL users by FINRA Investor Education Foundation, 13 percent of African Americans reporting getting a RAL in the past five years, while only 6 percent of whites did. Underbanked and unbanked individuals are most vulnerable to expensive RAL and RAC services -- but they also are eligible for the federal Earned Income Tax Credit (EITC), which ranges from $464 to $5,751 this tax season, depending on family size. According to the Federal Deposit Insurance Corporation, Latino and African-American communities together account for more than 60 percent of all unbanked households in the country. Rather than throwing a percentage of tax refunds away on RALs and RACs, consumers would get a fairer shake by using one of the free tax services available, which can be found online at http://rspnsb.li/wxAmeA. Local IRS offices also offer to help individuals or direct them to a qualified preparer. - Study: If Would-Be Home Buyers Have to Put 20 Percent Down, 60 Percent of Them Ain't Buying
Time 02 Feb 2012
Higher minimum down-payment requirements would put a serious hurting on the U.S. homebuying market, according to new research from the Center for Responsible Lending. The study, "Balancing Risk and Access: Underwriting Standards for Qualified Residential Mortgages," acknowledges that demanding 20 percent down from buyers would curtail defaults but concludes that doing so would constitute "a big mistake for business and consumers." CRL figures that raising the threshold for down payments to 20 percent would disqualify 60 percent of the buyer pool in general and as many as 75 percent of African-American and Latino borrowers. Lowering the bar down to a minimum of 10 percent down, the report finds, still would hamstring a good number of buyers. Moreover, it adds, many of the borrowers weeded out through higher down payment requirements would be homeowners very unlikely to default on their loans. "We find that imposing 80 percent loan-to-value (LTV) ratio requirements on qualified mortgages (QM) would exclude 10 otherwise creditworthy borrowers to prevent one foreclosure," the study's authors write. - Editorial: Making Banks Dot the "i" in Every Foreclosure
Denver Post 01 Feb 2012
Homeowners who are foreclosed on are entitled to know that those seizing the property have the legal wherewithal to do so, declares a Denver Post editorial, in backing new legislation introduced in the Colorado General Assembly. State Rep. Beth McCann (D-Denver) is sponsoring House Bill 1156, which would require county judges who are reviewing foreclosure documents to first establish that the bank trying to seize the title of the property has the right to do so. Only then can the property be forcibly put up for sale at public auction. "These are appropriate safeguards that should not be overly burdensome to lenders," according to the editorial. The bill corrects a situation in which attorneys could provide a lone signature to verify the lender's authority to foreclose on a home and did not have to produce the actual mortgage papers prior to foreclosing. - Hurting Poor Borrowers
New York Times 01 Feb 2012
A bill pending in the New York State Legislature would allow check-cashing firms to impose higher interest rates and to enter the lending industry, a move that could hurt low-income consumers. The proposal would exempt check-cashing stores from a 1976 law that makes it felonious for lenders to charge greater than 25 percent interest. While it would require state banking officials to take lenders' profitability and business costs into consideration when determining a rate, it does not establish a new interest ceiling. State lawmakers argue that some of their constituents lack access to banking and credit and that their financial problems will only be exacerbated by making them vulnerable to another form of financial abuse. A New York Times editorial worries that if lawmakers give check cashers a pass, they likely eventually will do the same for other financial institutions -- including banks that already practice payday-like lending in other states. Moreover, the newspaper points out, other states that have amended their statutes to sanction steeper interest rates for short-term, small-dollar loans have seen those moves backfire. New York's legislators, the Times concludes, "should instead be finding ways to bring legitimate financial services to communities that desperately need them." - Debt-Buying Agency Settles FTC Deception Charges
Washington Post 31 Jan 2012
Asset Acceptance -- one of the country's largest debt collection companies -- has agreed to pay $2.5 million as part of a proposed settlement with the Federal Trade Commission, which accused it of using deceptive methods to collect old debts. According to the FTC, the Michigan-based company misled consumers about whether it could sue them for failing to pay old debts even though laws in most states ban debt collectors from taking legal action after a certain number of years have gone by. Additionally, Asset Acceptance allegedly trained employees to encourage consumers to make partial payments, in an attempt to revive the old debt and reset the clock on the firm's ability to sue. The settlement requires that it inform consumers that it cannot sue them for "stale" debt. Additionally, the firm agreed to notify customers in writing when it provides negative information to credit reporting agencies. - Foreclosure Claims Dominate CFPB Mortgage Complaints
Housing Wire 31 Jan 2012
According to the Consumer Financial Protection Bureau, more than 38 percent of the 2,300 mortgage complaints submitted to the agency in December were based on loan modification and foreclosure problems. Since its startup in July 2011, the agency has fielded nearly 10,000 grievances across its scope of monitored financial products, including payday loans, credit cards, and student loans. The CFPB reported that companies in question responded to 88 percent of the complaints, providing relief in more than half of the cases; almost 19 percent of the relief went to mortgage-related complainants. Out of the mortgage complaints, 889 were related to problems with loan workouts or foreclosures. Additionally, 501 complaints were tied to payments, escrow accounts, and loan servicing. - Working Poor: Almost Half of U.S. Households Live One Crisis From the Bread Line
Huffington Post 31 Jan 2012
While an estimated 15 percent of Americans live at or below the poverty line, a significantly larger number -- nearly 50 percent of the population -- have a decent income but hardly any savings, meaning they are one adverse event away from major financial hardship. The advocacy group Corporation for Enterprise Development released a report on Jan. 31 analyzing this demographic, known as "liquid asset poverty households." Because many people who are liquid-asset poor earn a steady income, they may not understand how precarious their situation is. "They don't necessarily realize how close people can be to one interruption to income or one interruption to health benefits," notes David Rothstein, project director for asset building at the nonprofit Policy Matters Ohio. "They're one paycheck away from being in debt." Rothstein, also a member of a Corporation for Enterprise Development steering committee, adds that payday lenders are "a huge problem" in Ohio, as in most other states. Such lenders market themselves as a resource for people with one-time, unexpected expenses, but they can end up ensnaring individuals in a long-term lending relationship. "People say things like, it's just one mechanical problem with their car," he says; but what frequently happens is that "every other week, they're back at the payday lending shop." Corporation for Enterprise Development President Andrea Levere believes that more financial education could have helped the current situation from occurring. The report asserts there are numerous measures that could reduce liquid-asset poverty, from bolstering consumer protections against payday lenders to offering more assistance to first-time home buyers. - New Bill to Protect VA Homeowners From 'Fraudulent' Foreclosures
Public News Service 31 Jan 2012
Across Virginia, financially distressed homeowners who get behind on their mortgage payments are encountering a similar scenario: the borrower tries to work with the lender to modify the loan terms and pays a fee to obtain the modification, only to have the bank foreclose anyway. State Delegate Bob Marshall (R-Manassas) describes it as a "bait and switch" maneuver, and he has proposed new legislation to protect homeowners. "My bill says before you foreclose, you must offer a loan modification package. If you accept it -- this is up to the bank -- then you can't drop them, as long as they are substantially complying with the terms of the agreement," Marshall explains. The lawmaker says his concern is that banks have not been held accountable for their actions, even when they have erroneously foreclosed on homes. Regina Chaney -- whose group, Housing Opportunities Made Equal of Virginia, advises struggling homeowners -- says the issue of individuals being foreclosed on even as they are working out an alternative with a bank is not uncommon. She believes the Marshall legislation would give people other options, such as a short sale, and also would spur banks to expedite their paperwork. The bill would require a mortgage lender or servicer to inform the borrower in writing if it turns down an application for modification, listing the reasons for the rejection, within 30 days of receiving the application. The bill, House Bill 822, is currently in the House Courts of Justice, and Marshall believes it will receive a hearing shortly. - California Senate Approves Stricter Rules on Debt Collection
Los Angeles Times 31 Jan 2012
California senators on Jan. 31 approved regulations reining in the debt collection industry even further, in a move applauded by consumer watchdogs as a bold step toward protecting state residents from predatory lenders. Under the bill, companies that purchase consumer debt and then move to collect late payments would be required to provide additional paperwork to prove they are trying to collect the proper amount from the right borrower. "It's really gotten out of control, and a lot of innocent people have been caught up," said Sen. Mark Leno (D-San Francisco), a vocal advocate of the bill. One of those individuals is Leno's colleague, Sen. Lou Correa (D-Anaheim), who was erroneously targeted by a debt collection firm that was seeking $4,000 from someone with a similar name. The misinformation resulted in a court order to garnish the legislator's paychecks. Critics say the regulations would put an unfair onus on debt buyers, requiring excessive paperwork and making it difficult to collect from legitimately delinquent borrowers. State Attorney General Kamala Harris offered a different view. "Too often, a consumer can get ensnarled in a long and costly battle to prove they are not the ones responsible for debt," she stated. "The Fair Debt Buyers Practices Act will put reasonable requirements on debt buyers and ensure consumers are not forced to pay the debts of others." - What Will It Take to Save the Unbanked?
Forbes 30 Jan 2012
Among the one in four U.S. households that are unbanked, many remain disconnected from traditional financial institutions because they cannot access them; but even more make a conscious decision to be unbanked. Among those consumers, 37 percent say they do not have enough money to need an account; 18 percent say they did not write enough checks to justify an account; roughly 13 percent say the minimum balance is too steep; and an additional 13 percent see no need to have an account. There are repercussions to choosing this financial lifestyle, however. According to one estimate, a household with net income of $20,000 may spend as much as $1,200 annually on alternative financial service provider fees such as for money orders for expenses and to cash payroll checks. Unbanked households have fewer savings and more retirement risk as well as restricted access to credit-building products such as credit cards and loans. Moreover, without a bank account, families cannot build and safeguard their wealth in an FDIC-insured place. Low-income unbanked populations with no place to save tend to live paycheck-to-paycheck in what becomes a vicious and routine cycle. The best alternatives for these consumers are a no-fee checking account -- typically found at credit unions, community banks, and online banks -- and a secured card. Individuals should look for accounts with no monthly maintenance fee, no debit card fees, and no minimum balance. - CFPB Hears From Students About New Financial Aid Disclosure
American Banker 30 Jan 2012
According to the Consumer Financial Protection Bureau, students would find it useful to know exactly how much debt they will have when they graduate from college and how much they will owe in monthly loan payments. The agency asked students, parents, and educators to comment on its proposal for a new, streamlined financial aid disclosure. The CFPB released a prototype in October for the financial aid shopping sheet that colleges would provide to prospective students. Besides post-graduation payment expectations, the document would explain loan payments, identify other financial aid sources, and compare costs between private and public colleges. More than 22,000 individuals weighed in on the matter, with the majority saying the sheet would be helpful. Additionally, students said it would helpful to know a school's performance in terms of financial aid recipients being able to repay the debt. - CFPB Outlines Regulatory Plans in First Semiannual Report to Congress
American Banker 30 Jan 2012
The Consumer Financial Protection Bureau released its first semi-annual report to Congress on Jan. 30, listing the steps it has taken to make the watchdog operational in its first six months. Those steps have included opening offices that focus on special issues such as fair lending, students, enlisted populations, and minorities; processing consumer grievances on credit cards and home loans; and recruiting more than 750 employees. In the next six months, the CFPB intends to release final rules requiring lenders to verify each borrower's ability to repay a mortgage; propose a rule combining disclosures required under the Truth In Lending Act and Real Estate Settlement Procedures Act; introduce a bevy of proposed new rules regarding the mortgage market, including new servicing guidelines, loan originator compensation rules, and limits on high-cost loans; and propose initial rules defining the range of its non-bank program. - Foreclosure Prevention Program Expanded
Orlando Business Journal 30 Jan 2012
Homeowners carrying higher debt loads now will be eligible for the Home Affordable Modification Program (HAMP), which is being extended through December of next year. The Obama administration is expanding the initiative in hopes of reaching more distressed borrowers. Introduced in February 2009, HAMP aspired to provide relief for as many as 4 million Americans but has only helped fewer than 1 million to date. The administration also announced that it was tripling incentives for banks that lower loan principals. Moreover, Fannie Mae and Freddie Mac, too, will receive incentives for reducing principal balances. - DeLauro Proposes Bill to Protect Homeowners, Reform Foreclosure Process
New Haven Register 30 Jan 2012
A bill sponsored by Rep. Rosa DeLauro (D-Conn.) aims to create standards for the mortgage industry in order to safeguard homeowners and improve the foreclosure process. DeLauro said she introduced the Mortgage Servicing Act, which has companion legislation in the Senate, "to improve interactions" between borrowers and servicers. It would "mandate a single point of contact" for lenders; outlaw dual tracking of foreclosures, so that a lender could not pursue a foreclosure while also working on a possible mortgage modification; and require independent review of foreclosure alternatives and loan workouts prior to the start of the foreclosure process. DeLauro's measure is similar in some ways to a proposed settlement between state attorneys general and the country's top five lenders -- Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, and Ally Financial. However, while that deal would cover only those firms and the 40 states involved in talks, DeLauro proposal would establish standards that apply to all states and lenders. "This bill requires servicers to do these things that would seem like common sense," according to Jeff Gentes, an attorney with the Connecticut Fair Housing Center. "The administration, when it came in, in 2009, tried a lot of carrots. Now it's stick time." - Consumer Bureau Taking a Closer Look at Appraisal Fees
San Diego Union Tribune 29 Jan 2012
The Consumer Financial Protection Bureau has until July to issue a revised HUD-1 settlement form to enhance disclosures about closing fees on home sales. With regard to appraisal fees, the agency could require two different disclosures -- one stating how much the appraiser is paid and another indicating how much of the fee is pocketed by the appraisal management company, which often is wholly owned by or affiliated with the lender. The National Association of Realtors has expressed concern about rising appraisal charges, with 70 percent of members reporting that consumers were hit with higher appraisal fees at the settlement table. Meanwhile, appraisers have seen compensation fall by upwards of 50 percent; and NAR is concerned that more appraisers are unfamiliar with the geographic area where they are performing valuations. - Tribe-Owned Lending Companies Collect Thousands of Complaints
NewsOK 29 Jan 2012
The Oklahoma attorney general's office is monitoring the state's Miami and Modoc tribes for their participation in costly Web-based lending. While state law caps the amount of payday loans at $500, dictates the length of the loans, and gives borrowers the right to request a payment plan if they cannot repay the debt in full when it comes due, some say the Miami and Modoc tribes use their sovereign-nation status to help affiliated companies circumvent consumer protections. State Sen. Rick Brinkley has called the companies' business practices "unethical." He notes that most grievances against them involve fees in the range of 1,000 percent or higher. "Nearly 30 percent of the complaints filed by U.S. consumers against payday lenders are filed against seven payday lenders in Miami, Oklahoma, which has a population of about 12,000," Brinkley notes in a statement on the Senate's Web site. Payday lending is popular in the rest of the state, too, with nearly 1 million loans issued there in 2010, according to an annual report on the Oklahoma Department of Consumer Credit's Web site.
