OCC: More Outstanding Banks!
The Office of the Comptroller of the Currency has just released its latest CRA exam results. The news is hardly surprising – everyone passed!
In fact, of the 35 banks evaluated, 4 were given an “outstanding” and 31 were recognized as satisfactory. There were no “needs to improve” or “substantial noncompliance” ratings.
Grade inflation has run amok at the OCC for some time.
The OCC gave an outstanding rating to First National Bank of Audrain, located in Mexico, Missouri. This is in spite of the fact that FNB Audrain made no loans (zero) to low-income borrowers. There were plenty of low-income people in Mexico, Missouri. The OCC reports that it can characterize 16 percent of families in the area as low-income. FNB of Audrain made no loans in low or moderate income census tracts, either.
The CRA is supposed to make sure that banks meet the credit needs across all strata of a community.
First Merit Bank was given an outstanding. Here are some comments made by the OCC examiner about First Merit’s home mortgage lending in low and moderate income areas in one of its assessment areas (Canton, Ohio):
The distribution of home refinance loans is poor. The percentages of loans in low- and moderate-income areas are well below the percentages of owner-occupied housing units located in those neighborhoods.
The distribution of home purchase loans is poor. The percentage of loans in moderate-income neighborhoods is well below the percentage of owner-occupied housing units located in
moderate-income areas.
And here is what the examiner had to say about First Merit’s lending in Cleveland:
The distribution of home purchase loans within the Cleveland AA is adequate. The percentage of loans in low-income neighborhoods is significantly below the percentage of owner-occupied housing units located in the AA’s low-income areas, and FirstMerit’s 2007 low-income market share was well below its overall home purchase market share in the AA. In moderate-income areas, the percentage of loans is below the percentage of owner-occupied housing units located in those neighborhoods.
Now, consider the result. First Merit got an Outstanding. That is “OUTSTANDING!!!” Imagine a big rubber stamp, positioned at the end of a printing press. “Outstanding!”
Filed under: Community Reinvestment Act | Tags: CRA, First Merit, grade inflation
Scott Rickard
April 29, 2010
Please publish an article about the following current US single-family loan foreclosure situation.
In 2008, US financial institutions and Wall Street committed one of the greatest frauds ever perpetrated against the American people.
The government allocated $900 billion for special loans and rescues related to the US "housing bubble".
Several financial institutions used this money to buy single-family home loans from failed banks for only one penny on the dollar.
Case in point, JPMorgan Chase bought Washington Mutual for only for $1.9 billion. Washington Mutual held as assets of $118.9 billion in single-family loans, of which $52.9 billion were "option adjustable rate mortgages" (Option ARMs), with $16 billion in subprime mortgage loans, and $53.4 billion of Home Equity lines of Credit (HELOCs) and credit cards receivables of $10.6 billion.
That is why JPMorgan Chase is so incredibly profitable now.
Only 25% of Washington Mutual's single-family loans have actually foreclosed.
So the remaining 75% of Washington Mutual's single-family loans have not foreclosed, and JP Morgan Chase is making money hand over fist on the single-family loans they bought for only 1%.
Not to mention that the US is facing well over $300 billion dollars in single-family home loan foreclosures nationwide.
Right now the US is on pace to see over 1 million bank repossessions this year alone.
In all, more than 900,000 households, or one in every 138 homes, have received a foreclosure-related notice this year.
The $75 billion foreclosure prevention program has only helped a very small fraction of troubled homeowners.
So far, the Treasury has set aside $39.9 billion of the $75 billion foreclosure prevention program.
However, only $90 million of the $39.9 billion set aside for loan modifications has been spent on permanent loan modifications.
You can see a breakdown of the all the loan modifications for each financial institution here.
http://bailout.propublica.org/loan_mods/list
In essence, about 231,000 homeowners have completed the loan modification process as part of the foreclosure prevention program through March.
That's about 21 percent of the 1.2 million borrowers who began the program over the past year.
Total Number of Eligible Loans: 3,398,612
More than 1.3 million homeowners have received offers for trial modifications, and nearly 1.1 million trial modifications have begun under the program.
Only 170,000 homeowners now have permanent modifications, about double the number from December. An additional 91,000 borrowers have received final approval for a permanent modification.
While the government gave nearly $900 billion to Wall Street and financial institutions,very few single-family loans nationwide are receiving loan modifications and are only saving a median of 36 percent of their before-modification payment, which is a median of roughly $500 per month on mortgage payments.
However, homeowners have spent $2.7 billion in aggregate through trial and permanent modification loan payments. Please note that this is not loan principal savings, it is only trial and permanent modification loan payments.
This is ultimately another great deal for the banks, and a total rip off for the American people.
So for the few single-family loans that were modified at a median of $150,000, the amount of principle reduction was roughly 33% reducing the median loan principle by $50,000 to around $100,000. Nothing near the 99% off that financial institutions received when they bought assets from failed financial institutions using US government (Chinese actually) loans.
The worst part is that the US tax payer has already received a huge bill for the Troubled Assets Relief Program (TARP) which allowed the banks to experience record profits in under a year and a half. And now the $75 billion loan modification program, that barely helps a small fraction of affected single-family homeowners, is allowing the banks to cash in on the profits a second time through the term of the modified loans.
For more information on The State of the Government's Loan Modification Program see:
http://bailout.propublica.org/programs/6-making-h…
For more information on the Troubled Assets Relief Program (TARP) see:
http://www.financialstability.gov/docs/105Congres…
Read more at the Washington Examiner:
http://www.washingtonexaminer.com/economy/9090560…