CRA-NC is organizing a tour to the nation’s capital.  We’re bringing housing counselors from all over the state.  The counselors are angry.  They are tired of getting the run-around from servicers.  They see the press about HAMP’s 500,000 loan modifications.  They aren’t seeing that on the ground.  Maybe that is because they are trying to get real modifications – not ones that merely extend the life of a loan, or reach a modification agreement that actually results in a higher monthly payment.

We’re going to bus people from Durham, Rocky Mount, Winston-Salem, and Rich Square.  The Durham bus holds 55, and the other buses are taking about 15 people.

The Modify This Tour takes place October 29th.

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The plain vanilla mortgage, once a stunning bit of common sense that has emerged in a sea of financial obfuscation, is now a policy proposal of the past.

Barney Frank dropped the Obama Administration’s plain vanilla language in the Consumer Financial Protection Act Tuesday.

Many writers, approaching this issue from a behavioral economics perspective, saw a lot of merit to this idea.  Richard Thaler, who studies how people make financial decisions, called it “mortgages made easy.”The logic of his viewpoints are neatly expressed in this (more…)

Tomorrow is the North Carolina literary festival.  In the spirit of that festival, or perhaps because the weekend is approaching, or perhaps because someone needs to say it…I propose a literary reference to our current regulatory regime in the financial markets.

As you may or may not know, many feel that our financial regulatory system was asleep at the wheel during the last decade.  Subprime mortgage lending grew rampantly, and even though there was plenty of data to demonstrate that it would lead to problems, very (more…)

There’s a new boss in town, and it is not the same as the old boss.

Community groups met with Wells Fargo’s senior management from the Carolinas yesterday.  A lot of the people came from what they refer to as “legacy Wachovia.” There were people from Home Mortgage, from REO disposition, from servicing, from deposit services, from diversity programs, and from small business lending.  We were flanked by leaders from some of North Carolina’s leading community development financial institutions.

It was odd, but what emerged was a sense that the leaders of legacy Wachovia had little or no sense of Wells’ track (more…)

Yesterday, President Obama signed the Helping Families Save Their Homes Act into law.  What a relief!

There are two main features to this law:

First, it protects renters.  Renters have been one of the groups getting the collateral damage from the foreclosure crisis.  When an investor owner can’t pay his mortgage, he has to turn the home over.  In most cases, that means that the renters need to move on, as well.

Second, it includes a disclosure rule that requires companies buying mortgages on the secondary market to inform borrowers about who now owns their mortgage.

I have talked with so many people who are not sure who owns their mortgage.  I would say that this is a hard thing to understand.  I have tried to explain it numerous reporters.  Many are confused by the idea of a service and an investor on top of an original lender, possibly working with a wholesaler through a mortgage broker.

Definitely my broadcast news reporters couldn’t grasp it.

There are some other good features, too: a two percent cap on origination fees, and a “net tangible benefit” to borrowers during a refinancing.

The ABA and their bankers are a hard group to bargain with.  They have a lot of friends, particularly on the Financial Services Committee.  So, in a way, getting any kind of new law is great.  That said, this law is sort of misleading, because it does not come with the appropriate penalties for financial institutions who break its terms.

That’s because “curing” the problem does not require a systemic fix, but only a solution for the particular borrower.