Millennials Prefer the Dentist to the Bank

A three-year study of 10,000 millennials by Viacom indicates that the banking industry is at a higher risk of disruption by millennials than any other industry. The study indicates that 71 percent of respondents would rather go to the dentist than listen to what banks are saying, 53 percent believe their bank's offerings are the same as other banks' offerings, and 33 percent would consider switching banks in the next 90 days. Seventy percent think the way people pay for things will completely change in five years, and 33 percent think they will no longer need a bank at all. Another 73 percent are more excited about financial services offerings from Google, Apple, Amazon, or Square than offerings from their own nationwide bank.

From "Millennials Prefer the Dentist to the Bank"
St. Louis Business Journal (09/28/15) Edwards, Greg

HOUSING FINANCE

Delinquent GSE Mortgages Decline As Economy Improves

The number of home loans backed by Fannie Mae and Freddie Mac that are 60 days or more past due or are in the foreclosure process fell 6 percent in the second quarter of 2015, following a 9 percent drop in the first quarter, according to the Federal Housing Finance Agency’s foreclosure prevention report released yesterday.

Seriously delinquent loans -- those that are 90 days or more past due -- dropped to 1.6 percent of Fannie and Freddie’s mortgage portfolio after the second quarter. By comparison, 5.5 percent of Federal Housing Administration loans were seriously delinquent, and 4 percent of all loans were.

The report also documented the GSEs’ efforts to prevent foreclosures, with 63,593 modifications or other actions in the second quarter and more than 3.54 million since the GSEs have been under U.S. conservatorship.

--ABA Daily Newsbytes

Bad Loans Remain Well Above Precrisis Levels

Seven years after the onset of the financial crisis, the banking industry is still sitting on a significant amount of bad loans. FDIC data indicates that nonperforming assets totaled $162 billion as of June 30, which is down 63 percent from mid-2010 but nearly triple the $56 billion reported in mid-2006. This can be attributed to banks' reluctance to offload a number of credits in bulk sales, loss-share agreements forcing banks to keep bad loans on their books, low interest rates, and a lack of better reinvestment options. Observers say this could pose problems if the industry faces another economic downturn. Clark Street Capital CEO Jon Winick says, "The banking system and the economy would have recovered faster if there had been more emphasis on disposing bad assets rather than managing them. It has distracted a lot of organizations." However, Rusty Cloutier, president and CEO of the $1.9 billion-asset MidSouth Bancorp in Lafayette, La., says, "Being more of a community bank, we try to work with customers in good times and in bad times. It is a good tool to have in your arsenal." But Winick notes that banks continue to incur costs associated with carrying bad assets, and reducing them could help banks get out from under regulatory orders.

From "Bad Loans Remain Well Above Precrisis Levels"
American Banker (09/24/15) Stewart, Jackie

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Number of New Mortgages in 2014 Plunges 31 Percent From Year Before

A report released Sept. 22 by the Federal Financial Institutions Examination Council shows that nondepository independent mortgage companies accounted for 47 percent of purchase loans for owner-occupants and 42 percent of refinancing loans in 2014, up from 43 percent and 31 percent, respectively, in 2013. The report shows that the total number of mortgages made last year dropped 31 percent from 2013 to 6 million, with refinances down 55 percent and purchase loans up just 4 percent. Nonbank lenders saw their share of the mortgage market rise as large banks like Wells Fargo, JPMorgan Chase, and Bank of America pulled back on lending to all but the most creditworthy borrowers, especially given the large penalties they incurred for mistakes made during the last housing boom. According to the FFIEC, large banks accounted for 32 percent of purchase loans and 38 percent of refinancing loans last year, down from 34 percent and 49 percent, respectively, in 2013. The report also shows that black borrowers accounted for 5.2 percent of purchase loans in 2014, up from 4.8 percent in 2013, while Hispanic-white borrowers accounted for 7.9 percent last year, up from 7.3 percent.

From "Number of New Mortgages in 2014 Plunges 31 Percent From Year Before"
Wall Street Journal (09/22/15) Light, Joe

CFPB Creates Online Tool to Help Homebuyers With Mortgages

The Consumer Financial Protection Bureau has created a virtual tool to help homebuyers navigate the mortgage process. The agency has created an "Owning a Home" page on its website that features an interactive step-by-step overview of the loan process, a monthly mortgage repayment worksheet to help homebuyers figure out how much they will owe, and sample forms for loan estimates and closing disclosures. In January, CFPB finalized changes to its "Know Before You Owe" mortgage rules. Starting Oct. 3, creditors will have three days to give a consumer a revised loan estimate once a consumer locks in a floating interest rate. Previously, the loan estimates were due on the day the rate was locked in. CFPB said the rule change gives creditors more leeway in revising estimates and consumers a chance to shop between loans. The Closing Disclosure, which details the final transaction, must be provided to consumers at least three business days before a closing to give consumers time to confirm whether they are getting what they expected, ask questions and negotiate any changes.

From "CFPB Creates Online Tool to Help Homebuyers With Mortgages"
The Hill (09/18/15) Wheeler, Lydia

Freddie Mac Makes It Easier to Get a Mortgage Modification

Freddie Mac is making several revisions to its guidelines for standard and streamlined mortgage modifications. The changes will "substantially increase" the number of borrowers who qualify for mortgage modifications, according to Freddie Mac. Moreover, the updated standards will make post-modification mortgage payments more affordable for borrowers. Freddie Mac also announced changes to its eligibility rules for its streamlined and MyCity modification programs. The new rules will maximize loan modification options for severely delinquent borrowers and further streamline the review of a borrower for the streamlined modification and the MyCity modification programs. The changes take effect on March 1, 2016.

From "Freddie Mac Makes It Easier to Get a Mortgage Modification"
Housing Wire (09/09/15) Lane, Ben

ABA Foundation Announces ‘Safe Banking for Seniors’ Initiative 

The ABA Foundation today announced a new campaign -- Safe Banking for Seniors -- to help bankers educate seniors and their caregivers on the risks of financial fraud.

As with other ABA Foundation financial literacy programs, the foundation will provide bankers with event materials, lesson plans, media outreach tools and best practices. Bankers will be encouraged to use the resources at outreach events throughout the year, and to team up with other organizations and agencies in their communities.

“Bankers are often the first line of defense against elder financial fraud from educating and advising customers to spotting the signs of abuse,” said ABA President and CEO Frank Keating. “We take our role seriously, and the more we can work together as citizens, bankers, and government officials, we can protect our seniors from fraud.”

FDIC Examines Changes in Reverse-Mortgage Regulations

Updated rules for reverse mortgages give priority to borrowers' well-being and address unanticipated issues, the FDIC reported in its Summer 2015 newsletter. The agency noted that many senior homeowners seeking a reverse mortgage are unaware of potential problems with this type of loan, especially if they can no longer afford taxes or property insurance. However, recent U.S. Department of Housing and Urban Development regulations protect surviving spouses after the death of a reverse mortgage borrower. Non-borrowing, surviving spouses can remain in the home pending certain conditions. Earlier this year, the Consumer Financial Protection Bureau issued a warning to consumers about the misleading effects of reverse mortgage advertisements. The marketing for this type of loan often leaves consumers confused. Many had the false impression that reverse mortgages are not a loan but a government-issued program that helps consumers stay in their home for the rest of their lives.

From "FDIC Examines Changes in Reverse-Mortgage Regulations"
The M Report (08/27/15) West, Xhevrije