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Alan White
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ProPublica’s new web site “Trump Town” tracks political appointees across federal agencies. In light of the president’s promises to “drain the swamp”, it is interesting to peruse some of the Treasury Department appointees responsible for bank regulation. I previously wrote... Continue reading
Posted Apr 13, 2018 at Credit Slips
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The Eviction Lab, a project led by sociologist Matthew Desmond (author of Evicted), have performed the invaluable and impressive task of gathering landlord-tenant eviction records from every county in the nation for the past 16 years. The sobering results, released... Continue reading
Posted Apr 7, 2018 at Credit Slips
A common misconception is that student loans are never dischargeable in bankruptcy. There is a bankruptcy discharge exception for some qualified student loans and educational benefit repayment obligations. The discharge exception does not, however, apply to all loans made to... Continue reading
Posted Mar 28, 2018 at Credit Slips
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Coverage of Federal Reserve Chairman Jerome Powell's Congressional testimony highlighted his optimism about economic growth and its implications for future interest rate hikes. Less widely covered were his brief remarks on the student loan debt crisis. Citing the macroeconomic drag... Continue reading
Posted Mar 10, 2018 at Credit Slips
As if the power to garnish wages without going to court, seize federal income tax refunds and charge 25% collection fees weren't enough, debt collectors have now persuaded the Education Department to free them from state consumer protection laws when... Continue reading
Posted Feb 28, 2018 at Credit Slips
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Student loan debt is growing more rapidly than borrower income. The similarity to the trend in home loan debt leading to the subprime mortgage bubble has been widely noted. Student loan debt in 1990 represented about 30% of a college... Continue reading
Posted Feb 26, 2018 at Credit Slips
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Golden Valley Lending, Inc. is a payday lender that charges 900% interest on consumer loans sold over the internet. Golden Valley relies on the dubious legal dodge of setting up shop on an Indian reservation and electing tribal law in... Continue reading
Posted Feb 12, 2018 at Credit Slips
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Twelve senators have just written to Education Secretary Betsy DeVos questioning why the Education Department continues to award lucrative contracts to debt collection firms, and criticizing the seriously misaligned incentives embedded in those contracts. While most federal student loan borrowers... Continue reading
Posted Feb 9, 2018 at Credit Slips
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Brookings Institute 2018 In a low unemployment economy, an entire generation is struggling, and millions are failing, to repay student loan debt. As many as 40% of ALL borrowers recently graduating are likely to default over the life of their... Continue reading
Posted Jan 26, 2018 at Credit Slips
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Following his appointment of Steven Mnuchin as Treasury Secretary, the President has nominated Joseph Otting, former CEO of OneWest Bank, to be the chief federal bank regulator as head of the Office of the Comptroller of the Currency. The OCC... Continue reading
Posted Aug 2, 2017 at Credit Slips
As the subprime foreclosure crisis grinds down slowly (there are still roughly 3 million pre-crisis subprime mortgages outstanding, many of them delinquent), and the HAMP program sunsets, the time has come to appraise the total damage done. In the ten... Continue reading
Posted Apr 5, 2017 at Credit Slips
How much in punitive damages is enough to punish unlawful conduct and deter its repetition? $45 million was one bankruptcy court's opinion, in the case of a wrongful home foreclosure and eviction in knowing violation of the automatic stay. The... Continue reading
Posted Mar 28, 2017 at Credit Slips
Banking is not an industry; banking is not the real economy. The big banks especially are economic and political behemoths that remain unpopular and poorly understood in the popular imagination. Opinion polls show voters favor breaking them up, and some... Continue reading
Posted Nov 12, 2016 at Credit Slips
Having done the legal coding in a number of coauthored empirical studies of various laws, and collaborated with statisticians, I heartily endorse Adam's point. Here is another example of a seriously flawed study based on misunderstanding the legal environment variables: http://www.creditslips.org/creditslips/2015/04/fast-foreclosures-slow-foreclosures.html.
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On Election Day, the Supreme Court will hear argument in the cases of Wells Fargo v. City of Miami and Bank of America v. City of Miami. At issue is the standing of cities to sue banks for mortgage redlining... Continue reading
Posted Oct 20, 2016 at Credit Slips
The Federal Housing Finance Agency has finally announced a program to reduce principal balances of distressed home mortgages held by Fannie Mae and Freddie Mac, eight years into the foreclosure crisis. Too little, too late would be an understatement to... Continue reading
Posted Apr 15, 2016 at Credit Slips
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Yesterday Senator Warren rightly excoriated former Fed consumer regulator, now industry lawyer Leonard Chanin after he claimed that, prior to the 2008 crisis, the Federal Reserv e Board had only anecdotal evidence that subprime mortgages were a problem. Mr. Chanin... Continue reading
Posted Apr 6, 2016 at Credit Slips
Forgiving student loan debt for low-income Americans could reduce the racial wealth gap among those households by as much as 50%, according to a new report from Demos and the Institute on Assets and Social Policy. Abbye Jo Atkinson has... Continue reading
Posted Nov 26, 2015 at Credit Slips
The Supreme Court made a noteworthy contribution to the crescendo in our national conversation about race in its recent Texas v. ICP Fair Housing Act decision. The Court affirmed that the Fair Housing Act prohibits not only explicit racial discrimination,... Continue reading
Posted Jul 9, 2015 at Credit Slips
At the onset of the current foreclosure crisis, banks bemoaned their inability to get homeowners in default to respond to their generous offers of loan modifications and other foreclosure alternatives. Homeowners, it seemed, were like ostriches with their heads in... Continue reading
Posted Apr 7, 2015 at Credit Slips
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Is the foreclosure crisis over? Yes and no. Since 2007, about six million homes have been sold at foreclosure sales (Foreclosures Public Data Summary Jan 2015). Today, about one million homes are still somewhere in the foreclosure process. Homeowners behind... Continue reading
Posted Mar 28, 2015 at Credit Slips
Interesting comments. Adam's argument does require looking to function rather than form. It is certainly true that the payday loan contract is not literally an assignment of wages in the hands of the employer, and the check or AH authorization is an order to pay, not an assignment of the bank's obligation to the borrower. Also, even if the contract engages the borrower not to stop payment on a check or prevent the electronic debit, the borrower could "revoke" the functional wage assignment by stopping the direct deposit of wages from the employer to the bank without violating the loan contract. Nevertheless, from the least sophisticated consumer standpoint, the borrower could easily have the impression that her directly deposited wages are automatically used to pay the loan if she does not pay the loan in cash. That is exactly the in terrorem effect of wage assignments that the FTC rule was enacted to prevent.
Adam, I think you're right. The postdated check or ACH authorization serves the same function as the classic wage assignment prohibited by the FTC rule, i.e. to insure payment from the borrower's wages in the event of default. I've also wondered about the prohibition on mandatory electronic transfers in Sec. 913 of the EFTA, with regard to ACH-based payday loans. As far as revocability, the typical payday loan contract provides that stopping payment on a check is a breach or a default. http://www.aocg.com/resources/NM1-CASH%20ADVANCE%20CONTRACT.pdf . I imagine loans secured by EFT payment have similar provisions.
Jason, the Irish central bank has set targets for all banks to achieve sustainable solutions for all mortgages in arrears, as part of a program called the Mortgage Arrears Reduction Strategy. http://www.centralbank.ie/press-area/press-releases/documents/approach%20to%20mortage%20arrears%20resolution%20-.pdf. The "split mortgage" is one of many strategies recommended in the 2011 Keane report http://www.finance.gov.ie/sites/default/files/mortgagearr2.pdf. My understanding is that these are portfolio loans, i.e. not securitized. US banks are actually writing down a fair amount of principal on portfolio mortgages in default. The obstacle to broader writedowns and other creative solutions remains the policy of Fannie, Freddie and FHFA.
We still have a ways to go, five years after the Global Financial Crisis. Total mortgage debt has eased down from 10.5 trillion dollars to 9.3 trillion, but that 10% drop aligns poorly with the 25% drop in home values,... Continue reading
Posted Nov 26, 2013 at Credit Slips