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Alan White
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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
Banks and insurance companies are apparently gnashing their teeth at the news that the Mt. Holly case pending before the Supreme Court has been settled. The case itself does not involve financial services; it arose from a Fair Housing Act... Continue reading
Posted Nov 14, 2013 at Credit Slips
Federal bankruptcy law defers to the states on a critical issue: what is the basic minimum income and property that debtors need not surrender to creditors. Four states protect 100% of workers' wages, while 21 states allow creditors to garnish... Continue reading
Posted Oct 15, 2013 at Credit Slips
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Year Six of the great foreclosure crisis came to a close on June 30 with no real end in sight. Five million homes have been foreclosed and another million or more were surrendered by distressed home owners in short sales... Continue reading
Posted Oct 1, 2013 at Credit Slips
I recently stumbled on this excellent compendium of more than 300 books on the financial crisis. It also includes a list of 25 or so books that predicted the crisis, as well as a useful link to an annotated list... Continue reading
Posted Sep 10, 2013 at Credit Slips
Congress and the President are making huge decisions about the future of our biggest consumer credit markets – mortgages for homebuyers and college loans for students. Unfortunately critical policy choices are being avoided, ignored, or obfuscated. I’ll comment on student... Continue reading
Posted Aug 1, 2013 at Credit Slips
The Supreme Court granted certiorari today in MOUNT HOLLY, NJ, ET AL. V. MT. HOLLY GARDENS CITIZENS, on the question whether Fair Housing Act claims of race discrimination in the sale, rental or financing of housing can be proven based... Continue reading
Posted Jun 17, 2013 at Credit Slips
with Mel Watt, according to an AP story today. Congressman Watt of North Carolina was a moving force behind Miller-Watt-Frank, the mortgage reform legislation that eventually found its way into Dodd-Frank financial reform. Given that our all-but-nationalized housing finance system... Continue reading
Posted May 1, 2013 at Credit Slips
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A remarkable tabulation of the more than 3 million homeowners found to have been victims of mortgage servicing errors or fraud was released last week by the Fed and other bank regulators. About 25,000 foreclosures were started while homeowners were... Continue reading
Posted Apr 14, 2013 at Credit Slips
Today the Supreme Court ruled in Comcast Corp. v. Behrens that an antitrust class action was improperly certified because Justice Scalia and four other Justices found the plaintiffs' damage theory inadequately supported by expert testimony. Others will no doubt have... Continue reading
Posted Mar 27, 2013 at CL&P Blog
That is the finding of a report released yesterday by the Inspector General of FHFA, the agency that oversees our nationalized mortgage funders Fannie Mae and Freddie Mac. Mortgage servicers are paid incentives by Freddie for quick foreclosures, but not... Continue reading
Posted Mar 22, 2013 at Credit Slips
The New York Fed has posted a new analysis of student loan debt. Depending on how you read the data, student loan borrowers are either in serious trouble, or are no worse off than consumers with credit card debt or... Continue reading
Posted Mar 1, 2013 at Credit Slips
There are some assumptions underlying the proposed interpretation of data here. If 10% of loans result in a repo, it does not follow that 90% of borrowers don't lose their car, if borrowers have multiple loans. As for the alternative transport to work issue, getting a ride with friends and buying a new car may be ambiguous responses, especially allowing for the optimism bias. Those categories may represent borrowers with at least some difficulties posed by losing their car. In other words, one could say 66% of borrowers report not working or having reliable alternative transportation. Finally I would want to inquire a bit about the Oregon and Virginia data to see if some legal environment or reporting issue skews them from the other states.