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As part of a program designed by Philadelphia Mayor Michael Nutter, courts will launch a pilot program requiring mediation between homeowners and lenders before foreclosure can occur. This is one part of a plan Nutter's plan to address a nationwide mortgage crisis affecting many Philadelphia homeowners. "It will give people an opportunity to be heard," County Judge Annette M. Rizzo said of the program. "And, give them the opportunity to stay in their homes or gracefully exit.
According to the mayor, approximately 8,500 foreclosure filings are expected in Philadelphia this year. "The city has already taken steps to address the problem, including delaying the sheriff's sales for April and May to give the pilot program time to potentially keep people in their homes.
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While consumer credit rose at a 4.2 percent annual rate in April, it's down from a 6.2 percent increase in March. However, demand in April for auto loans and other types of nonrevolving credit rose at a 6.5 percent annual rate, up from a 5.5 percent increase in March.
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The Federal Reserve approves of Bank of America's $4 billion purchase of Countrywide Financial Corp. As a result, Bank of America will not only be the the largest U.S. bank, but it will also become the nation's largest mortgage servicer and have $1.9 trillion in total assets. For more information click here.
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The U.S. Department of the Treasury’s Financial Management Service (FMS) has announced that a prepaid debit card for Social Security payments and other federal benefits is now available. The Direct Express Debit MasterCard card, issued by Dallas-based Comerica Bank, is designed for unbanked people receiving federal benefits who are looking for alternatives to using check-cashing facilities or carrying large amounts of cash. This program is being introduced in 10 state; it is expected to reach the rest of the country this summer
Click here for more information.
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The Labor Department reported that consumer prices rose by 0.6 percent last month. Apparently, the increase was driven by gasoline costs, which climbed 5.7 percent.
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To help stabilize declining home values, the Federal Housing Administration on Friday announced it will temporarily extend government-backed mortgage insurance to borrowers who wish to purchase vacant foreclosed properties. Normally, the FHA does not insure properties that have been owned by the seller for less than 90 days. That policy, designed to discourage flipping, will be suspended for one year in an effort to spur quick sales of foreclosed properties that are marketed and sold by property disposition firms on behalf of lenders.
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US Department of Housing and Urban Development
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Seventy-five years ago, President Franklin Delano Roosevelt signed legislation creating the Federal Deposit Insurance Corporation (FDIC). Today the FDIC continues to protect American consumers' money deposited in FDIC-insured accounts.
Chairman Sheila C. Bair said, "The FDIC has a proud and storied tradition. We've protected the savings of consumers, we've kept the banking system stable and secure, and we've built confidence and stability into the U.S. economy."
Chairman Bair plans to tour four cities where FDIC regional office are located, in July and September. She will engage guests in discussions about deposit insurance, what it means to be an FDIC-insured institution, the costs and benefits of banking services, and the consumer protections resulting from federal regulation of the banking industry.
Blair observed, "Deposit insurance has given consumers peace of mind that their insured money is safe. We at the FDIC are very proud to say that no depositor has ever lost a penny of insured funds at an FDIC-insured institution. As bank customers age and accumulate wealth in savings and retirement accounts, now more than ever, it's important for people to know their deposit insurance limits."
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JPMorgan Chase is changing its brand; starting first with phasing out the Bear Stearns name, and then changing the familiar eight-sided JPMorgan Chase logo to simply “JP Morgan.” The purpose of JPMorgan’s branding strategy is to separate identities to the consumer and institutional businesses.
JPMorgan new logo will not feature the octagon for its institutional business. Instead, it will exhibit a new font that is a thinner—which will essentially be an updated version of the old JPMorgan logo. Launch of the new logo is set for around Aug. 25, just in time for the United States Open tennis tournament, which it sponsors.
JPMorgan spokeswoman Kristin Lemkau said, “We’re investing in the JPMorgan brand across our business. As part of that investment, we’re moving to a logo that more closely resembles the heritage JPMorgan logo.”
On the retail side of its business, JPMorgan will continue to use the Chase brand with its familiar octagon logo (this includes 3,152 branches in 17 states). However, the institutional side, which encompasses the investment bank, treasury and security services and asset management, will assume the JPMorgan name and new logo.
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U.S. Department of the Treasury's Community Development Financial Institutions (CDFI) Fund announced that it is awarding $8,224,587 to 29 organizations serving Native American or Alaskan Native communities in 15 states.
"The 29 Native organizations we recognize today are strong institutions that bring leadership and stability to their communities by providing financial education, building assets, and expanding financial opportunity," said CDFI Fund Director Donna Gambrell.
Since 2002, the CDFI Fund has made 177 awards totaling $31.3 million through its various funding programs aimed at benefiting Native communities. In addition, the CDFI Fund has awarded over $7.5 million to organizations to provide capacity-building and financial services training programs that are focused on Native Communities.
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According to Roger Randolph, a gas station manager in St. Albans, W.V., he hung a sign on his pumps that reads, "No more credit cards." He apparently created the sign because he realized it was costing him money each time someone filled up with $4-a-gallon gas.
Unfortunately, he isn’t the only one, gas station operators nationwide are reporting similar woes as higher prices translate into higher credit card fees the managers must pay, squeezing profits at the pump. The complaints target the interchange fee—a percentage of the sale price paid to credit card companies on every transaction. The percentage is fixed—usually at just under 2 percent—but the dollar amount of the fee rises with the price of the goods or services. "The more they buy, the more we lose," said Randolph. "Gas prices go up, and our profits go down."
As gas tops $4 a gallon, that pushes fees toward 10 cents a gallon. Now stations, which typically mark up gasoline by 11 to 12 cents a gallon, are seeing profits shrink or even reverse. "At these prices, people aren't making any money," said Jeff Lenard, spokesman for the Alexandria, Va.-based National Association of Convenience Stores. "It's brutal." Lenard's group reports convenience stores paid roughly $7.6 billion in credit card fees last year, while making $3.4 billion in profits.
The way interchange fees are structured has long annoyed retailers, prompting calls for relief.
Legislation pending in the U.S. House and Senate would allow merchants to bargain collectively with major credit and debit card companies.
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Shares of Fifth Third Bancorp fell 13 cents to $9.13 June 19, 2008. The Cincinnati-based bank announced it was raising $1 billion through the offering of convertible preferred stock, selling noncore assets to raise an additional $1 billion or more and slashing its dividend in an effort to shore up its capital base.
Fifth Third said it expects charge-offs, and loans written off as not being repaid, to continue to rise into 2009. In a regulatory filing Wednesday, Fifth Third said it expects second-quarter earnings of a penny to 5 cents a share. Analysts polled by Thomson Financial, on average, predicted income of 40 cents per share.
Banks across the country have been forced to raise new capital, slash dividends and sell portions of their operations as they look for ways to build up capital bases severely eroded by losses tied to rising defaults among mortgages.
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The Independent Community Bankers of America, a trade group representing nearly 5,000 smaller banks, spent $820,000 lobbying in the first quarter on numerous small business and tax issues.
The trade group lobbied on issues including mortgage regulations, credit unions, student loans, credit card fees, money laundering, flood insurance, identity theft and credit card regulations, according to an April 21 filing with the House clerk's office.
The group spent more than $3.4 million lobbying the federal government last year.
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The trade group for mortgage insurers spent over $1.2 million lobbying in the first quarter on issues dealing with the housing market slump, according to a recent disclosure form.
The Mortgage Insurance Companies of America lobbied on housing bills, the economic stimulus package signed by President Bush in February, and a bill to mandate tougher oversight of government-sponsored mortgage finance companies Fannie Mae and Freddie Mac.
The Washington-based trade group spent $4.6 million lobbying last year.
Members of the Mortgage Insurance Companies of America include: AIG United Guaranty, part of American International Group Inc., Triad Guaranty Inc., PMI Group Inc., MGIC Investment Corp., Genworth Financial Inc. and Old Republic International Corp.
Besides lawmakers, the trade group lobbied the Department of Housing and Urban Development, according to an April 18 filing with the House clerk's office.
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Commercial banks (and some Wall Street companies) borrowed slightly more from the Federal Reserve's emergency lending program.
A Fed report said banks averaged $13.4 billion in daily borrowing for the week. That compared with $13.1 billion in the previous week.
The identities of commercial banks and investment houses are not released. However, the program will continue for at least six months. Commercial banks and investment companies now pay 2.25 percent in interest for the loans.
As part of efforts to relieve credit strains, the Fed auctioned $36.8 billion in Treasury securities to investment companies. The auction drew bids for less than the $75 billion the Fed was making available, which was viewed as possible sign of some improvements in credit conditions.
Meanwhile, the investment firms averaged $8.6 billion in daily borrowing for the week ending June 18. That compared with $8.4 billion the previous week.
The investment houses were given similar loan privileges as commercial banks in March after a run on Bear Stearns pushed the nation's fifth-largest investment bank to the brink of bankruptcy and raised fears that other Wall Street firms might be in jeopardy.
In exchange for the 28-day loans of Treasury securities, bidding companies can put up as collateral more risky investments. These include certain mortgage-backed securities and bonds secured by federally guaranteed student loans. The auction program, which began March 27, is intended to make investment companies more inclined to lend to each other. A second goal is providing relief to the distressed market for mortgage-linked securities and for student loans.
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More than 400 real estate industry players have been indicted since March, including dozens over the last two days—in a Justice Department crackdown on incidents of mortgage fraud nationwide that have contributed to the country's housing crisis.
The FBI put the losses to homeowners and other borrowers who were victims in the schemes at over $1 billion. "Mortgage fraud and related securities fraud pose a significant threat to our economy, to the stability of our nation's housing market and to the peace of mind to millions of Americans," Deputy Attorney General Mark Filip said.
Since March 1, 406 people have been arrested in the sting dubbed "Operation Malicious Mortgage" that saw 144 cases across the country.
The most recent sweep involved two former Bear Stearns managers in New York were indicted—-becoming the first executives to face criminal charges related to the collapse of the sub-prime mortgage market.
Across the country, reports of mortgage fraud have soared over the past year as the sub-prime mortgage market collapsed and defaults and foreclosures soared. Banks reported nearly 53,000 cases of suspected mortgage fraud last year, up from more than 37,000 a year earlier and about 10 times the level of reports in 2001 and 2002, according to the Treasury Department's Financial Crimes Enforcement Network.
The Justice Department also is expected to ask Congress for more money to help combat mortgage fraud as part of a larger funding request to curb white collar crime and violent crime.
Lara Jakes, Associated Press Writer
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The Senate confirmed Michael Fryzel, a former director of the Illinois Department of Financial Institutions, to a seat on the National Credit Union Administration (NCUA) Board.
The Senate also filled three Securities and Exchange Commission seats by confirming Troy Paredes, Luis Aguilar and Elisse Walter as commissioners. Donald Marron was approved as a member of the White House's Council of Economic Advisers.
Get more information click here.
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The percentage of delinquencies for home equity lines of credit rose 14 basis points to 1.10 percent during the first quarter of 2008, according to the ABA Consumer Credit Delinquency Bulletin. The bulletin showed that bank card delinquencies also increased, jumping 13 basis points to 4.51 percent, slightly above the five-year average of 4.40 percent. "It was a tough quarter for some people," ABA Chief Economist Jim Chessen said.
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Strategies for promoting responsible and sustainable mortgage lending to low- and moderate-income (LMI) families will be the focus of the FDIC-sponsored Forum on Mortgage Lending for LMI Households on July 8th in Arlington, VA.
The forum, featuring leading experts in banking, investment, government, academia and the nonprofit community, will explore a framework for LMI mortgage lending in the future, including identifying market and regulatory incentives for encouraging responsible mortgage lending to LMI borrowers.
Forum participants will include the Honorable Henry M. Paulson, Jr., Secretary of the Treasury; the Honorable Ben S. Bernanke, Chairman, Federal Reserve Board of Governors; and James Dimon, Chairman of the Board and Chief Executive Officer of JPMorgan Chase & Co.
Building upon the discussions from the LMI forum, the FDIC's Advisory Committee on Economic Inclusion (ComE-IN) will convene on July 9th in Washington, D.C., to examine ways to encourage mortgage credit availability to lower-income households.
The availability of credit to mortgage borrowers has sharply contracted, with total originations in the first quarter of 2008 down almost 30 percent from the first quarter a year ago. Origination volumes have fallen even more dramatically in the subprime segment and in the non-conforming so-called "Alt-A" segment - nearly 90 percent and 80 percent, respectively. Moreover, total mortgage originations are forecast to continue to decline by 18 percent in 2008 and by another 11 percent in 2009, according to the Mortgage Bankers Association.
"I remain concerned that reductions in mortgage credit availability will disproportionately affect lower-income households, who already lag the general population in homeownership rates," said FDIC Chairman Sheila C. Bair. "I look forward to hearing the issues and challenges raised at the FDIC's LMI mortgage forum and our Advisory Committee's views regarding how the FDIC can encourage mortgage credit availability strategies that will benefit consumers, lenders and investors, as well as the economy."
Click here to view both events via WebCast.
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