Jim Campen

Reverse Mortgages Threaten Seniors’ Wealth

A new report from the National Consumer Law Center explains in detail how “[a]buses and abusers from the subprime mortgage industry have begun showing up in the reverse mortgage market, putting at risk the equity and savings of millions of seniors.”

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Money, Credit, and the Law – Know Your Rights

That’s the title of a valuable new video narrated by Professor Richard Alderman, director of the Center for Consumer Law at the University of Houston Law Center.

The video, consisting of easily digestible short chapters, provides help managing personal finances, dealing with credit problems and debt collectors, responding when sued by a creditor, seeking credit counseling, or exploring the option of bankruptcy.  The video can be viewed online or a DVD can be requested directly from Professor Alderman, also known as “The People’s Lawyer,” by writing to alderman@uh.edu.  If you visit the website, you’ll also find a range of helpful resources and links on consumer law, debt collection, and related topics.

http://www.peopleslawyer.net/

Private Student Loans: A Last Resort That’s Too Often Used First

Private student loans are more expensive, riskier, and come with fewer borrower protections than federal student loans.  Nevertheless, almost two-thirds of the undergraduates who took out private student loans during the 2007-2008 school year did so without first obtaining the maximum federal loans for which they were qualified.  In fact, over a quarter of students who took out private student loans took out no federal loans at all.  This is the most dramatic single finding highlighted in “Private Loans: Facts and Trends,” a report released last week by the Project on Student Debt

And we’re not talking about just a few students here.  The U.S. Department of Education survey on which the report is based is done every four years.  Between the 2003-04 survey and that for 2007-08, the share of all undergraduates who had private loans rose from 5% to 14%, while the actual number of private loan borrowers more than tripled, from less than one million to nearly three million (2,946,000) students.

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Foreclosure Scams: A Growth Industry

The unresponsiveness of mortgage servicers to the millions of homeowners facing foreclosure is a national scandal. One consequence of this hasn’t received as much attention as it deserves. As growing numbers of desperate homeowners are unable to get the help they need from their loan servicers, more and more are succumbing to the aggressive sales pitches of for-profit loan modification scammers that promise expert help in exchange for hefty upfront fees.

Almost always, these companies fail to deliver any assistance, and the homeowners end up even closer to losing their homes.

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Reverse mortgages: trouble brewing

In recent years, the Office of the Comptroller of the Currency (OCC)– the main federal regulator of the nation’s biggest banks – has seemed concerned with consumer protection only when it was acting aggressively to protect “its” banks from the prospect of being sued by state attorneys general for their predatory practices.  The OCC pursued this anti-consumer agenda so aggressively that even conservative Justice Antonin Scalia, in a blistering Supreme Court opinion issued earlier this week, felt compelled to denounce their over-reaching.

In a little-noticed speech (pdf) on July 8, however, Comptroller John Dugan – perhaps trying to repair his agency’s tattered reputation – came across as a born-again consumer protector. 

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Credit CARD Act goes far beyond the Fed’s credit card regs

According to an editorial in last Friday’s Washington Post,  the credit card bill that the President signed into law that afternoon “isn’t really needed” because it is “awfully similar” to the regulations on credit cards that were issued by the Federal Reserve last December.

Wrong!

In fact, the new law is remarkably broader and stronger than the regulations adopted by the Fed.  The changes happened in three stages. First, the House Financial Services Committee approved a bill stronger than those regulations; second, the full House, responding to a high-profile intervention by the President, approved a bill stronger that the one that emerged from its committee; and third, the Senate approved a bill that was stronger still. Keep Reading »

Subprime lending dropped in ‘07, but people of color still bear the brunt of it (AFFIL Week)

Today marks the release of Changing Patterns XV, the fifteenth annual report on mortgage lending in Massachusetts that I’ve prepared for the Massachusetts Community and Banking Council.

Lots of high-cost subprime lenders bit the dust in 2007, so subprime lending fell dramatically that year.  In Massachusetts, there were 5,085 subprime home-purchase loans made, down from 14,639 in 2006.  As a percentage of all home-purchase loans, subprime loans fell from 19% to 8%.

What didn’t change was the intense targeting of these loans to black and Latino borrowers and neighborhoods.  Among homebuyers in Greater Boston, 22% of all loans to blacks and 20% of all loans to Latinos were subprime, compared to just 5% of all loans to whites.  If you look only at high-income homebuyers, the disparities are even greater: 32% of loans to high-income blacks and 24% of high-income Latinos were subprime, compared to just 4% of loans to high-income whites.  Keep Reading »

Thank goodness this COP is on the beat (AFFIL Week)

On January 29, the Congressional Oversight Panel (COP) released its Special Report on Regulatory Reform (PDF link). The COP, established by Congress to oversee the Treasury’s bailout plan, is chaired by Harvard law professor and consumer advocate Elizabeth Warren. The report argues that the roots of the current crisis lie in twenty-five years of financial deregulation, and its recommendations embody many of the principles AFFIL posted yesterday.

The report identifies eight central problems, and offers smart recommendations to deal with each—including “Create a New System for Federal and State Regulation of Mortgages and other Consumer Credit Products.” We should have expected no less from a panel chaired by Professor Warren. Her video (above) introducing and summarizing the report is the best brief explanation of how we got into the current mess, and how we can prevent another financial crisis, that I’m aware of.

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Different crowd, same message

I recently had the privilege of attending a small conference at UMass/Amherst in honor of progressive financial guru Jane D’Arista. Details about the conference (The Political Economy of Monetary Policy and Financial Regulation) and about its sponsor, the Political Economy Research Institute (PERI), are available here.

Jane worked for a dozen years as a key staffer on the House Banking Committee under Texas populist Wright Pattman in the 1960s and 1970s – only to be summarily fired (after Pattman left the chairmanship of the committee) on the basis that she wasn’t actually a credentialed economist! Most recently she has been director of programs for the Financial Markets Center.

I first met Jane when we were both part a group convened by the Economic Policy Institute to produce a 1993 book, Transforming the U.S. Financial System: Equity and Efficiency for the 21st Century. My chapter focused on community reinvestment and fair lending. The chapter on the “parallel banking system” that Jane authored with Tom Schlesinger was a remarkably prescient look at how the ongoing dismantling of the financial regulatory system would lead to the sort of financial meltdown that we’re now experiencing. (The book is now out of print, but a version of Jane and Tom’s chapter is available here as an EPI briefing paper.)

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