Fannie Mae and Freddie Mac are extending additional relief to homeowners affected by the catastrophic flooding caused by Hurricane Harvey, HousingWire.com reported yesterday. Last week, Fannie and Freddie announced a number of measures that mortgage servicers can take to aid borrowers whose homes were damaged by the storm, including mortgage forbearance and other options. Now, with officials declaring that Harvey dumped more water on Texas than any storm in history, Fannie and Freddie announced today that each of the government-sponsored enterprises is suspending foreclosures and evictions in affected areas. Specifically, each of the GSEs is implementing a 90-day foreclosure sale suspension and a 90-day eviction suspension on borrowers whose homes are located in eligible disaster areas. Freddie Mac also said that it will be working with servicers to ensure that no property inspection costs resulting directly from Hurricane Harvey will be passed on to the affected borrowers.
The White House is expected today to nominate Columbia University law professor Robert Jackson to a vacant slot on the Securities and Exchange Commission, the Wall Street Journal reported. If confirmed, Jackson would fill a Democratic opening at the top U.S. markets regulator. The Wall Street Journal reported in July that the White House was preparing to nominate Jackson. The law requires partisan balance on the five-member commission and the White House has already tapped Hester Peirce, a researcher at the conservative Mercatus Center, to fill a separate, Republican slot. Both nominees will likely advance through the Senate as a bipartisan pair, boosting the likelihood that they both win confirmation this fall. They would join an SEC down to just three members: Democrat Kara Stein, Republican Michael Piwowar, and Jay Clayton, the chairman, who is an independent.
The Trump administration is planning to raise premiums and place tighter loan limits on some borrowers in a mortgage program that helps seniors supplement their incomes, the Wall Street Journal reported today. The U.S. Department of Housing and Urban Development on Tuesday announced the changes in a letter to lenders to the reverse-mortgage program, which allows seniors to take out a loan against the value of their home. The Trump administration feels the changes are necessary to put the program, which is backstopped by taxpayers, on a sounder financial footing. “Given the losses we’re seeing in the [reverse mortgage] program, we have a responsibility to make changes that balance our mission with our responsibility to protect taxpayers,” HUD Secretary Ben Carson said through a spokesman. The modifications won’t apply to borrowers with existing mortgages, but will affect those who take out new loans. Some 650,000 borrowers have outstanding reverse loans insured by the Federal Housing Administration, which is part of HUD.
A federal district court in Atlanta has granted the defendants’ motions for Rule 37 sanctions against the CFPB for its conduct in connection with the defendants’ depositions of CFPB witnesses. To sanction the CFPB, the court struck four counts from the CFPB’s complaint, and with no claims remaining against them, the court dismissed the defendants who sought the sanctions from the case. The underlying case is a CFPB enforcement action filed in April 2015 targeting an alleged debt collection scam that named as defendants not only the debt collectors and their individual principals but various companies alleged to have been “service providers” to the collectors, including payment processors. The CFPB claimed that the payment processors were subject to its enforcement authority as both “covered persons” and “service providers” under the CFPA.
A top congressional critic of the Consumer Financial Protection Bureau said this week that any decision by Director Richard Cordray to run for governor of Ohio could further endanger the agency’s pending rule on limits for payday lenders if his political ambitions are influencing the rule-making process, MorningConsult.com reported yesterday. In a letter to Cordray on Monday, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) wrote that speeding up the finalization of the payday lending rule in coordination with Cordray’s possible entry into the Ohio governor’s race would open up the regulation to legal challenges. The proposed rule, which Hensarling opposes, would among other things require payday lenders to vet in advance if borrowers can pay back their loans.
Federal Reserve Chairwoman Janet L. Yellen offered a forceful defense of broad new banking regulations enacted after the 2008 financial crisis, saying that the rules safeguard the economy against another crisis and rejecting assertions from President Trump and top aides that they should be rolled back, the Washington Post reported today. Yellen’s speech comes as Trump considers whether to reappoint her to a four-year term as head of the U.S. central bank. Yellen made clear in her speech on Friday that she believes tighter regulations and standards have made the banking system safer and that while some improvements could be made, they should be modest, not structural. “The evidence shows that reforms since the crisis have made the financial system substantially safer,” Yellen said.
Federal Reserve Chair Janet Yellen had a clear message for the Trump administration Friday in what could be her final Jackson Hole speech: Undoing the hard work of overhauling the financial system after the financial crisis could have dangerous consequences. In her keynote address Friday at the high-profile Jackson Hole conference in the Grand Teton mountains of Wyoming, Yellen was not holding back — in a way suggesting she is not holding her breath for a reappointment from President Donald Trump. Yellen's term as Fed chair expires in February, and Trump is widely expected to nominate Gary Cohn, the former Goldman Sachs president who now leads Trump's National Economic Council, to replace her.
JPMorgan Chase Bank and Dallas debt collector Real Time Resolutions have agreed to pay $4.3 million to resolve a proposed class action by homeowners alleging that the firms tried to collect mortgage debt that was not legally enforceable. The settlement will reimburse thousands of California homeowners who received allegedly deceptive collection letters from Chase and Real Time Resolutions and hundreds who paid on debt that they allegedly had no legal obligation to pay.
Banks are scaling back on lending to Americans with the lowest credit scores, according to a study from TransUnion.
Lenders processed fewer new personal loans, auto loans, and credit cards for subprime borrowers year-on-year in Q2 for the first time since 2012. Lenders tightened their standards after the housing crisis a decade ago following several years of reckless lending to subprime borrowers. As the economy rebounded, they opened up access to the subprime part of the market. This new study shows that the trend is turning again. But now is not a comparable time period to the financial crisis, said Ezra Becker, the senior vice president of research and consulting at TransUnion. It would be alarming and a sign of another credit downturn if lenders pulled back on their underwriting and delinquencies still continued rising, Becker said. "Delinquency levels are still far below historical norms," he told Business Insider.
The U.S. Chamber of Commerce is asking the Securities and Exchange Commission to block a new rule that would require auditors to tell investors more about what they find when they audit a company’s books, the Wall Street Journal reported today. The business group urged the SEC to reject the central provisions of the new rule, which would require auditors to tell investors about “critical audit matters” — any especially challenging or complex areas of a company’s finances that force an auditor to make tough judgment calls. The Public Company Accounting Oversight Board (PCAOB), the government’s auditing regulator, approved the new rule in June. It is intended to give investors more information by expanding the auditor’s report, the letter included in every company’s annual report in which the auditor weighs in on the accuracy of the company’s financial statements. The auditor’s up-or-down ruling on the company’s numbers would be retained in the revamped report, but disclosures would be added on “critical audit matters” and on how long an auditor has worked for a company. The PCAOB’s rule is subject to ratification by the SEC, and the chamber’s Center for Capital Markets Competitiveness wants the SEC to decline to do so.