1) Wells Fargo to pay $175M (unfortunately just 4% of their quarterly
profit) settlement on discrimination against blacks and Latinos for
mortgage terms:
http://www.washingtonpost.com/business/economy/wells-fargo-justice-department-settle-discrimination-case-for-175-million/2012/07/12/gJQAX66ZgW_story.html
"...Even when black and Hispanic customers got prime loans, they paid higher
fees than white borrowers, Justice alleged. The average African
American taking out a $300,000 prime loan was charged $2,064 more in
broker fees than a similarly qualified white customer. Latino borrowers
paid an average of $1,251 more."
This wasn't an isolated
incident, it occurred in at least 36 states affecting 34,000 borrowers
over 5 years. It was obviously policy, set forth by higher rungs of
leadership. I supposed there is more "risk" associated with borrowers
living in certain neighborhoods and holding certain jobs, but borrowers
had the exact same credit scores as whites but got worse terms. Prime
borrowers of black and Latino heritage were 3-4X more likely to receive
subprime terms than whites. Similar settlements were hashed out with
SunTrust and CountryWide/BofA, so it wasn't just WF. And to be fair to
WF, the implicated brokers were independent affiliates, and now WF no
longer works with independents.
2) San Bernardino County (part of Southern CA where HALF of
mortgages are underwater) considering a plan to use eminent domain to
expedite voluntary refinancing:
http://www.npr.org/2012/07/13/156683302/county-considers-eminent-domain-as-foreclosure-fix
An interesting concept. Fed and local gov'ts have tried almost
everything to get banks to stop dragging their feet on re-fis, and it
hasn't really worked. One person interviewed for the story had a good
point: when your mortgage is underwater, you feel poorer and therefor
spend less, which further depresses the economy. So re-fis are a "public
good" (and therefore arguably covered under eminent domain), especially
when borrowing rates are at record lows but too few people can take
advantage of it. Of course the realtors and mortgage brokers are against
this, and they have a point - unfortunately at present the County plans
to work with a single lending agency to issue new mortgages. That
smacks of corruption. Maybe if they opened it up to a few or all lenders
to bid for the mortgages, it might make lending rates more competitive
and the process more transparent? This process will be probably tied
down with red tape for years, but maybe the threat will pressure the
banks to streamline re-fis a bit more?
