Recent News
Thousands of Americans who lost their homes in the housing bust now face more unpleasant fallout as debt collectors chase them down for the money they still owe. By now, banks have usually sold the houses. But the proceeds of those sales were often not enough to cover the amount of the loan, plus penalties, legal bills and fees. Now, Fannie Mae and Freddie Mac, as well as other mortgage players, are increasingly pressing borrowers to pay. Before the housing bubble, banks often refrained from seeking deficiency judgments, which were seen as costly and bad publicity. But the housing crisis... Read more
OFN will be hosting more than 1,200 CDFI practitioners, funders, investors and policy makers at the 2014 OFN Conference in Denver, Colorado October 14-17. The theme of this year’s OFN Conference is how CDFIs can work together in the future, informed by their experiences of the past 30 years. The event will feature a practitioner-driven curriculum with a focus on strategic dialogue, all directed toward aligning capital with social, economic and political justice. Registration for the conference is still open... Read more
Southern Bancorp has distributed hundreds of thousands of dollars in downtown renewal grants, startup funding and low-interest loans this year in Helena-West Helena, Ark. Matt Inman, a 27-year-old native of the town, lives in a downtown apartment above a 1,900-square-foot retail space that he renovated last year and hopes to market as a coffee shop or restaurant location. Since finishing that building, Southern has provided Inman financing to purchase two additional downtown properties which he plans to turn into retail and residential space. Brooke Gerber, project... Read more
Lending startups such as ZestFinance and LendUp are putting a high-tech spin on credit scoring. ZestFinance collects as many as 10,000 pieces of data about the poor and unbanked, then lends them money at rates as high as 390 percent. In comparison, FICO scores use just a few dozen pieces of data. ZestFinance’s machines organize facts about a loan applicant into “metavariables.” Some metavariables can be expressed only as mathematical equations. Others rank applicants in categories. An applicant whose stated income exceeds that of peers flunks the veracity test. A person who moves... Read more
The U.S. Department of the Treasury has invited public comment on proposed changes to the CDFI Certification Application. The CDFI Fund seeks comment on a number of topics, including the utility of the requested information, the expected burden of collecting the information, ways to improve the quality of information being collected, estimates of cost, and how use technology to simplify data collection. The deadline for comments is December 8th, 2014.
Thirty-five low income homeowners will get critical home repairs thanks to a $253,750 Affordable Housing Program grant from BankPlus and the Federal Home Loan Bank of Dallas. The grant will help fund Habitat for Humanity Mississippi Capital Area's Neighborhood Revitalization Initiative. This is the third grant the organization has received from FHLB Dallas and BankPlus. The organization received a $400,000 grant in 2011 and a $493,000 grant in 2012, funding a total of 65 new homes and 33 home repairs. “There is a great need in this community for projects such as this, and... Read more
Sunrise Banks' recent growth has created some major changes on the bank's strategic planning and interactions with regulators, CEO David Reiling says. As a smaller institution, the bank's talk with regulators was about how the numbers had changed since the last exam. But as the bank passed the $250 million threshold, “you were not just talking about the past, but forecasting the future,” Reiling says. The management group meets each week for 90 minutes, but instead of addressing details and specifics, the group concentrates on strategic matters, preparing for the next... Read more
The FDIC and CFPB have launched a Spanish-language version of their financial literacy training, Money Smart for Older Adults. The free tool is designed to help seniors and their caregivers identify, respond to and prevent financial exploitation, which affects millions of senior citizens each year. The instructor-led module is designed to be delivered by representatives of financial institutions, adult protective service agencies, senior advocacy organizations and law enforcement. "We know that senior citizens... Read more
Dominik Mjartan, the new CEO of Southern Bancorp Community Partners and executive vice president of Southern Bancorp, knows what it is like to crave a better life. He came to the U.S. from the former Czechoslovakia at the age of 16 with hopes of attaining the American Dream, a goal he now strives to make achievable for underbanked consumers. Mjartan emphasizes that the goals of serving the underbanked and running a profitable business are compatible. "Increasingly, the American Dream is out of reach for hardworking people," Mjartan said. CDFIs like his "are uniquely... Read more
A study by the Pew Charitable Trusts reveals that online payday lenders are often more predatory than their storefront counterparts. The report, which surveyed over 700 borrowers, found average online interest rates of 650 percent, compared to 391 percent for storefronts. Forty-six percent of online borrowers report that lenders made withdrawals that overdrew their checking accounts, twice the rate of storefront borrowers. Thirty... Read more
Urban Partnership Bank CEO Bill Farrow says his bank has revived Shorebank's mission of creating financial opportunity in Chicago and Detroit while turning around some of the troubled assets of the closed bank. For instance, Farrow estimates that Urban Partnership has saved 70 percent of the 300 failed church loans inherited from ShoreBank. Urban Partnership's lending has created or retained approximately 2,500 jobs over the past four years. It is also experimenting with new ways of reaching customers, including opening a branch in a Walmart store. The Walmart branch was a... Read more
Six years after the housing crisis, investors are snapping up a new crop of subprime bonds backed by auto loans. Ratings companies are awarding the bonds top grades and buyers have almost no way to determine the accuracy of the information those ratings use as criteria. Auto lenders also collect less information on borrowers than in mortgage lending because dealers want buyers to be able to drive off the lot that day. Subprime auto payments more than 60 days late climbed to 3.6 percent of the debt outstanding in July, from 3 percent the year before. But none of that has curbed demand for... Read more
In a new interview, Microsoft cofounder Bill Gates described how he hopes mobile payments can serve the unbanked, particularly in the developing world. Gates hopes his initiative will reduce overhead costs for small transactions between users, bringing down the barriers for secure transactions. Gates praised Apple Pay and said he hoped Microsoft would soon introduce a mobile payment solution of its own. Gates foresees mobile payments eliminating many bank transaction... Read more
Britain's new financial regulator, the Financial Conduct Authority (FCA), has taken action against online payday lender Wonga. Wonga positioned itself as a tech startup with ‘affordability algorithms’ that allowed it to make lending decisions in minutes. In fact, that speed relied on lax underwriting standards and insufficient credit checks which allowed borrowers to take out plainly unaffordable loans. The company has now agreed to entirely write off the debts of 330,000 customers, a total... Read more
Dominik Mjartan has been named CEO of Southern Bancorp Community Partners and Executive Vice President of Southern Bancorp, Inc. Mjartan previously served as Senior Vice President, charged with managing corporate strategy and other corporate functions. He will retain these responsibilities as Executive Vice President of Southern’s holding company. “Dominik’s financial acumen, strategic thinking and commitment to our... Read more
The U.S. Treasury marked the 20th anniversary of the CDFI Fund with speeches from Treasury Secretary Jacob Lew and former Treasury Secretary Robert Rubin. The event also included a panel featuring Brian Argrett, President & CEO of City First Bank of D.C. Secretary Lew’s comments focused on the Obama Administration’s commitment to expanding the community development goals of the CDFI fund. “By working together—government, private sector, nonprofits, faith institutions and community leaders—we can change the odds, we can overcome dim expectations and we can make America... Read more
In a surprise announcement, e-commerce giant eBay said it would spin off digital payment service PayPal. The move, an apparent reaction to Apple’s entry into mobile payments, is meant to make PayPal more nimble. PayPal has more than 150 million regular users and generated $6.6 billion in revenue last year. A number of large retailers as well as payment startups Square and Stripe have already agreed to accept Apple Pay, which is expected to be available within a month. Apple says its service, which will allow iPhone users to pay with their phones and authenticate purchases with via... Read more
The CFPB has asserted its authority over “captive” finance companies that belong to the auto companies. Until now, finance companies that aren’t primarily banks, like Ford Motor Credit Co., were regulated by the states. First on the CFPB's agenda is reforming "dealer markups" on auto loans. The markups compensate dealerships for helping generate loans for the finance companies by tacking on a small amount of interest, which becomes part of the customer’s total interest rate. Most lenders impose caps of 2 or 3 percentage points on dealer markup, but dealerships have the discretion to charge... Read more
The CFPB has set a number of precedents with an enforcement action against Flagstar Bank. The action not only marks the first time the CFPB has enforced its new mortgage servicing rules, but also the first time it has banned a servicer from servicing new loans. The CFPB cited Flagstar for taking too long to process applications for foreclosure relief and permanent loan modifications—up to nine months per application. Flagstar also failed to inform... Read more
Secret recordings made by New York Fed examiner Carmen Segarra offer an intimate study of the New York Fed's culture as it attempted to become a more forceful financial supervisor. The recordings, Segarra says, reveal the Fed had become too risk-averse and deferential to the banks it supervised. The recordings back up the image of Fed culture detailed in a 2009 Fed report which describes extensive regulatory capture, documenting lengthy meetings and discussions of systemic risk that rarely resulted in supervisory action. Segarra was fired form the New York Fed in 2012 after, she claims,... Read more