Friday’s Government Reports Roundup
- ADP released their National Employment Report. In their report, they assert over 150,000 jobs will become available in the month of June. Furthermore, they standby their assertion even after their May employment prediction missed the mark by 100,000 potential jobs. Despite criticism, ADP representatives believe the labor market is and will remain strong.
- The National Low Income Housing Coalition (NLIHC) released a report entitled, Out of Reach: The High Cost of Housing. The report alleges there is no municipality in America where one can afford a modest two-bedroom if he or she is a minimum-wage worker. For instance, a Minnesota resident spends over half of her monthly income on her family’s housing needs. Moreover, the report continues by analyzing Trump’s budget proposal and its affect on more than a quarter of a million families.
- Democrats are pleading with, HUD Secretary, Ben Carson, to restore housing rules and funding for the LGBTQ community. Over 30 Democrats signed a letter urging Carson to restore resources protecting members of the LGBTQ community.
July 7, 2017 | Permalink | No Comments
July 6, 2017
The CFPB Makes Its Case
CFPB Director Cordray
The Consumer Financial Protection Bureau released its Semi-Annual Report. Given that the Bureau is under attack by Republicans in Congress and in the Trump Administration, one can read this as a defense (a strong defense, I might editorialize) for the work that the Bureau has done on behalf of consumers. The core of the Bureau’s argument is that it levels the playing field for consumers when they deal with financial services companies:
The Bureau has continued to expand its efforts to serve and protect consumers in the financial marketplace. The Bureau seeks to serve as a resource on the macro level, by writing clear rules of the road and enforcing consumer financial protection laws in ways that improve the consumer financial marketplace, and on the micro level, by helping individual consumers get responses to their complaints about issues with financial products and services. While the various divisions of the Bureau play different roles in carrying out the Bureau’s mission, they all work together to protect and educate consumers, help level the playing field for participants, and fulfill the Bureau’s statutory obligations and mission under the Dodd-Frank Act. In all of its work, the Bureau strives to act in ways that are fair, reasonable, and transparent.
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When Federal consumer financial protection law is violated, the Bureau’s Supervision, Enforcement, and Fair Lending Division are committed to holding the responsible parties accountable. In the six months covered by this report, our supervisory actions resulted in financial institutions providing approximately $6.2 million in redress to over 16,549 consumers. During that timeframe, we also have announced enforcement actions that resulted in orders for approximately $200 million in total relief for consumers who fell victim to various violations of consumer financial protection laws, along with over $43 million in civil money penalties. We brought numerous enforcement actions for various violations of the Dodd-Frank Act and other laws, including actions against Mastercard and UniRush for breakdowns that left tens of thousands of economically vulnerable RushCard users unable to access their own money to pay for basic necessities; two separate actions against CitiFinancial and CitiMortgage for keeping consumers in the dark about options to avoid foreclosure; and against three reverse mortgage companies for deceptive advertisements, including claiming that consumers who obtained reverse mortgages could not lose their homes. We also brought two separate actions against credit reporting agencies Equifax and TransUnion for deceiving consumers about the usefulness and actual cost of credit scores they sold to consumers, and for luring consumers into costly recurring payments for credit products; and an action against creditor reporting agency Experian for deceiving consumers about the usefulness of credit scores it sold to consumers. The Bureau also continued to develop and refine its nationwide supervisory program for depository and nondepository financial institutions, through which those institutions are examined for compliance with Federal consumer financial protection law. (10-11, footnotes omitted)
Anyone who was around during the late 1990s and early 2000s would know that consumers are much better off with the Bureau than without it. This report provides some of the reasons why that is the case.
July 6, 2017 | Permalink | No Comments
Thursday’s Advocacy & Think Tank Roundup
- The Department of Justice allegedly began settlement talks with HSBC Holdings Plc (HSBC). These settlement talks stem from HSBC’s supposed sale of toxic mortgage bonds. HSBC’s actions took place during the financial crisis of the early 2000’s.
- Democrats refuse to let Trump take funding away from the less fortunate citizens of the U.S. On July 5, 2017, Democrat House representatives reintroduced a bill attempting to fully fund public housing. California’s Representative, Maxine Waters, led the charge of this bill. Members of the Committee on Financial Services believe the bill could transform many of America’s lowest income earning neighborhoods.
- Harvard’s Joint Center for Housing Studies released their reports regarding Chicago’s CDFI Collaborative work to develop some of their lowest earning neighborhoods such as Englewood and West Woodlawn. Moreover, the study provides advice to other communities seeking to transform low-income neighborhoods. The study names one should try a new approach, use various methods to attack the problem, speak with the individuals involved in the restoration in-person and continually, and adapt to any changes easily.
July 6, 2017 | Permalink | No Comments
July 5, 2017
First-Time Homebuyer Tips
The Lenders Network quoted me in First-Time Home Buyer Tips and Advice from Top Mortgage & Real Estate Experts. It reads, in part,
If you’re in the market to purchase your first home, then you know there’s much for you to learn. First-time homebuyers often make many mistakes they wish they didn’t. You’re making the biggest financial decision in your life, you want to make sure you don’t make any mistakes. So we asked mortgage and real estate experts what advice they would give first-time homebuyers.
* * *
8. Look into a HomeReady HomePath Loan
“Many first-time home buyers look to Federal Housing Administration –insured mortgages which have low down payment requirements.
Fannie Mae and Freddie Mac both offer loan programs to lenders who lend to first –time homebuyers of one-unit residences.
These programs have down payment requirements that are as low as 3 percent. Fannie’s program is called HomeReady.
It defines a first-time homebuyer as “An individual is to be considered a first-time home buyer who
1. Is purchasing the security property;
2. Will reside in the security property as a principal residence; and
3. Had no ownership interest (sole or joint) in a residential property during the three-year period preceding the date of the purchase of the security property.
In addition, an individual who is a displaced homemaker or single parent also will be considered a first-time home buyer if he or she had no ownership interest in a principal residence (other than a joint ownership interest with a spouse) during the preceding three-year time period.”
July 5, 2017 | Permalink | No Comments
Wednesday’s Academic Roundup
- The Credit Card Act and Consumer Finance Company Lending, Elliehausen and Hannon
- Residential House Prices, Commercial Real Estate and Bank Failures, Fissel, Hanweck, and Sanders
- Comment Regarding Increasing Price Competition for Title Insurers, Reiss
- Distorted Advice in Financial Markets: Evidence from the Mortgage Market, Gambacorta, Guiso, Mistrulli, Pozzi, and Tsoy
- What Caused the Tsuanami of Recession to Financial Markets During the Period 2007-2008?, Siskos
July 5, 2017 | Permalink | No Comments
July 4, 2017
Jefferson on Governing
President Jefferson on Mount Rushmore
In commemoration of Independence Day, I quote from Thomas Jefferson’s First Inaugural Address as President of the United States in 1801:
About to enter, fellow-citizens, on the exercise of duties which comprehend everything dear and valuable to you, it is proper you should understand what I deem the essential principles of our Government, and consequently those which ought to shape its Administration. I will compress them within the narrowest compass they will bear, stating the general principle, but not all its limitations. Equal and exact justice to all men, of whatever state or persuasion, religious or political; peace, commerce, and honest friendship with all nations, entangling alliances with none; the support of the State governments in all their rights, as the most competent administrations for our domestic concerns and the surest bulwarks against anti-republican tendencies; the preservation of the General Government in its whole constitutional vigor, as the sheet anchor of our peace at home and safety abroad; a jealous care of the right of election by the people — a mild and safe corrective of abuses which are lopped by the sword of revolution where peaceable remedies are unprovided; absolute acquiescence in the decisions of the majority, the vital principle of republics, from which is no appeal but to force, the vital principle and immediate parent of despotism; a well-disciplined militia, our best reliance in peace and for the first moments of war till regulars may relieve them; the supremacy of the civil over the military authority; economy in the public expense, that labor may be lightly burthened; the honest payment of our debts and sacred preservation of the public faith; encouragement of agriculture, and of commerce as its handmaid; the diffusion of information and arraignment of all abuses at the bar of the public reason; freedom of religion; freedom of the press, and freedom of person under the protection of the habeas corpus, and trial by juries impartially selected. These principles form the bright constellation which has gone before us and guided our steps through an age of revolution and reformation. The wisdom of our sages and blood of our heroes have been devoted to their attainment. They should be the creed of our political faith, the text of civic instruction, the touchstone by which to try the services of those we trust; and should we wander from them in moments of error or of alarm, let us hasten to retrace our steps and to regain the road which alone leads to peace, liberty, and safety.
Let us hope that our current leaders, and we the people, rededicate ourselves to the 21st century version of these principles on this our Independence Day.
July 4, 2017 | Permalink | No Comments
July 7, 2017
Holding Servicers Accountable
By David Reiss
I submitted my comment to the Consumer Financial Protection Bureau regarding the 2013 RESPA Servicing Rule Assessment. It reads, substantively, as follows:
The Consumer Financial Protection Bureau issued a Request for Information Regarding 2013 Real Estate Settlement Procedures Act Servicing Rule Assessment. The Bureau
is conducting an assessment of the Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act (Regulation X), as amended prior to January 10, 2014, in accordance with section 1022(d) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Bureau is requesting public comment on its plans for assessing this rule as well as certain recommendations and information that may be useful in conducting the planned assessment. (82 F.R. 21952)
Before the RESPA Servicing Rule was adopted in 2013, homeowners had had to deal with unresponsive servicers who acted in ways that can only be described as arbitrary and capricious or worse. Numerous judges have used terms such as “Kafka-esque” to describe homeowner’s dealings with servicers. See, e.g., Sundquist v. Bank of Am., N.A., 566 B.R. 563 (Bankr. E.D. Cal. Mar. 23, 2017). Others have found that servicers failed to act in “good faith,” even when courts were closely monitoring their actions. See, e,g., United States Bank v. Sawyer, 95 A.3d 608 (Me. 2014). And yet others have found that servicers made multiple misrepresentations to homeowners. See, e.g., Federal Natl. Mtge. Assn. v. Singer, 48 Misc. 3d 1211(A), 20 N.Y.S.3d 291 (N.Y. Sup. Ct. July 15, 2015). The good news is that in those three cases, judges punished the servicers and lenders for their patterns of abuse of the homeowners. Indeed, the Sundquist judge fined Bank of America a whopping $45 million to send it a message about its horrible treatment of borrowers.
But a fairy tale ending for a handful of borrowers who are lucky enough to have a good lawyer with the resources to fully litigate one of these crazy cases is not a solution for the thousands upon thousands of borrowers who had to give up because they did not have the resources, patience, or mental fortitude to take on big lenders and servicers who were happy to drag these matters on for years and years through court proceeding after court proceeding.
The RESPA Servicing Rule goes a long way to help all of those other homeowners who find themselves caught up in trials imposed by their servicers that it would take a Franz Kafka to adequately describe. The Rule has addressed intentional and unintentional abuses in the use of force-placed insurance and other servicer actions.
The RESPA Servicing Rule Assessment should evaluate whether the Rule is sufficiently evaluating servicers’ compliance with the Rule and implementing remediation plans for those which fail to comply with the vast majority of loans in their portfolios. Servicers should not be evaluated just on substantive outcomes but also on their processes. Are avoidable foreclosures avoided? Are homeowners treated with basic good faith when it comes to interactions with servicers relating to defaults, loss mitigation and transfers of servicing rights? The Assessment should evaluate whether the Rule adequately measures such things. One measure the Bureau could look at would be court cases involving servicers and homeowners. While perhaps difficult to do, the Bureau should attempt to measure the Rule’s impact on court filings alleging servicer abuses.
The occasional win in court won’t save the vast majority of homeowners from abusive lending practices. The RESPA Servicing Rule, properly applied and evaluated, could.
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July 7, 2017 | Permalink | No Comments