• The Motley Food rated H&R Block as the “Worst Stock in the S & P 500,” mainly on the news that they will offer free federal e-file returns. “How desperate has H&R Block become, if it needs to resort to coaxing taxpayers into its stores with free federal filing?” they ask. A contrary viewpoint would say that the market is already discounting their business. Block’s fundamentals reflect a very low valuation. It is also worth mentioning that Jackson Hewitt is offering free preparation for basic federal returns (online).
• The Colorado Attorney General’s Office announced a settlement with Payday Everyday of Colorado. The Texas company operates the Payday Everyday of Colorado and FastBucks stores. The company deserves (more…)

This video does a good job of making the mortgage crisis relatively easy to understand.

It skips a few important players in the process – notably the GSEs – but it has a nice pace. I’m glad that it included some reference to the role that the ratings agencies played in the debacle.

When is it appropriate for a government agency to spell out the type of products that appear in the marketplace? The upcoming rulemakings on the CFPB seem destined to pit consumer advocates against banks, and the preference among lawmakers for either “suitability” or “choice” will probably provoke much of the contention.

Although the Dodd-Frank bill established the CFPB, much remains to be done to determine what it will mean. From its initial conceptualization, the CFPB has promised to revitalize the power of consumer disclosures.  Elizabeth Warren spoke at the Consumer Federation of America’s annual conference in Washington, DC this morning and she reiterated her faith in the power of disclosure to protect the public. At once excited but simultaneously weary, she made an effort to emphasize that she believes that most Americans will appreciate the results of the new bureau once they can see its benefits.

“Do you hear people saying that the Consumer Product Safety Commission should do less to protect the safety of infants in their (more…)

The Dodd-Frank bill requires lenders to retain a five percent risk-retention in loans sold to the secondary market.  It is an idea driven by the lessons that we learned from the financial crisis. Give banks a moral hazard by making them hold some skin in the game. It is hoped that they would then respond by not making unsustainable loans.

The bill gives regulators some time to decide how to implement that requirement. The Dodd-Frank bill does offer some guidance. The Merkley Amendment sets an expectation that lenders will hold a five percent stake in any ”qualified residential mortgage.”   A “QRM,” as it known, needs risk retention.  An exempted loan does not.

First Thoughts

This is a classic example of a rule that could have unexpected consequences. At first glance, it seems like common (more…)

Now we have news that the nation’s largest mortgage originator, Countrywide, systematically skipped over the basic framework of how property is legally identified and represented in their transactions.

This administrative lapse could cost Bank of America billions of dollars, according to Daily Finance.

A team leader from B of A’s Mortgage Litigation department testified at a New Jersey hearing that it was “customary for Countrywide to maintain possession of the original note and related documents.” That is a surprise, (more…)