Recent News
A Bloomberg investigation has uncovered a secret financing network which connects investors including Harvard University to payday lenders. At the center of the network is Vector Capital IV, a San Francisco private-equity fund run by Alex Slusky. Slusky's fund consisted of $1.2 billion in funds raised from investors including Harvard University, who were told the fund would buy and turn around struggling software companies. But Slusky struggled to find enough companies to buy. When Harvard, fed up with delays, tried to pull out, Slusky invested the funds in Cane Bay Partners, owners of a... Read more
The recent iCloud hack that led to the theft of celebrity photos from Apple's popular cloud storage service has fueled concerns about the safety of the data banks and their employees store in the cloud. Analysts warn that any service which backs up data to an external cloud server introduces a degree of security risk. Apple's iCloud was particularly vulnerable because some Apple service logins lacked brute force protection -- a measure which would have prevented hackers from entering thousands of randomly generated password guesses searching for a correct match. Security experts advise... Read more
Banks are making less of their money from customer-account fees than at any time in the past seven decades as strict government rules and changing consumer behavior squeeze a major source of revenue. After peaking in 2009, the annual account fees collected at U.S. banks have declined, even as the volume of bank deposits has swelled. The fees have dropped nearly 21% to $32.5 billion last year from $41.1 billion in 2009, reversing a trend of fee growth that had lasted since 1942. Fees have become less profitable since 2010, when the Federal Reserve put in place a new regulation requiring... Read more
ICBA is now accepting nominations for the 2014 ICBA Community Banker of the Year award. All community bankers are eligible, from C-suite to teller. Nominees should demonstrate outstanding leadership and results both in their community and within their bank. Self-nominations are permitted. ICBA will accept nominations until Sept. 30, 2014.
A HUD program to sell its most delinquent mortgages to private investors is producing modest returns when it comes to keeping those struggling borrowers in their homes. To date, 2,049 mortgages sold to investors under the program have been reworked to allow the delinquent borrowers to remain in their homes and start making payments again, although the overwhelming majority of the 73,000 sold troubled mortgages have been foreclosed on. Roughly half of the loans remain delinquent and have yet to be reworked, sold or foreclosed. HUD began selling the mortgages to private investors in an... Read more
The New York attorney general's office has filed a lawsuit against regional lender Evans Bank, accusing it of denying mortgages to African-Americans regardless of their credit. Prosecutors claim the bank created a map that defined a “trade area,” places in the Buffalo region where the bank would make mortgages and other loans. The map excluded much of Buffalo’s East Side, with its large minority population. From 2009 to 2012, Evans received 1,114 applications for residential mortgages, but only four came from African-American applicants. The charges come amid a spate of discriminatory... Read more
A federal bankruptcy judge has told OneUnited Bank that it must wait for $2.9 million raised in a real estate auction by its borrower, the Charles Street African Methodist Episcopal Church, until the two sides have resolved their remaining legal disputes. The legal fight has dragged on since the church filed for bankruptcy in March 2012. The Charles Street AME church owes nearly $5 million to OneUnited after falling behind on a $3.4 million construction loan in 2008 and 2009 while building a community center. It also owes $1.3 million on a loan secured by the church... Read more
An ambitious 25-year social mobility study illustrates the strong effect of children's socioeconomic background in their adult lives. Starting in 1982, researchers kept track of 790 Baltimore first graders from diverse social and economic backgrounds as they matured and entered adulthood. Less than half of the group graduated high school on time. At age 28, more than 10 percent of the black men in the study were incarcerated. A mere 4 percent of the first-graders classified as the “urban disadvantaged” had by the end of the study completed the college degree. Just 33 of 314 raised in the... Read more
The CFPB has announced that David Reiling, CEO of Minneapolis-based Sunrise Banks, and Monica Thomas, Executive Vice President of Illinois Service Federal Savings and Loan Association in Chicago, Ill. will join the CFPB’s new Community Bank Advisory Council. The Dodd-Frank Act charges the CFPB with establishing the Consumer Advisory Board to advise and consult with the Bureau’s Director on consumer protection, financial services, community development, fair lending and civil rights. “These new members of our... Read more
San Francisco-based Lending Club Corp. has filed for an initial public offering. The online peer-to-peer lender is yet to determine the number of shares and price range, but expects its initial fundraising target to be $500 million. It said it may use a portion of the IPO proceeds to repay a term loan it used to fund an acquisition earlier this year. Other web-based lenders are expected to follow in Lending Club's footsteps. OnDeck Capital Inc., an online lender to small business, is preparing to file for an IPO that could value the business at roughly $1.5 billion. Executives from Kabbage... Read more
A new study by the Russell Sage Foundation finds that household net worth declined steadily between 2007 and 2013. Households in the lowest income quartile were hardest hit, losing 60% of their wealth. The culprit, advocates say, has been slow mortgage lending to low income and minority borrowers. Twenty-five percent of Americans' wealth comes from the increased value of homes and nearly 50% for people of color. But since 2007, one-quarter of all Latino and African-American... Read more
Proposed requirements on private mortgage insurers under consideration by the Federal Housing Finance Agency would protect Fannie Mae and Freddie Mac from another financial crisis, but could end up raising mortgage costs for thousands of borrowers according to a new report from Moody's Analytics and the Urban Institute. The report authors say that the new rules would lead borrowers to pay an extra 0.15 percentage point in mortgage insurance premiums. Borrowers with low credit scores who make... Read more
The CDFI Fund awarded 185 organizations more than $195.4 million in the FY 2014 round of the CDFI and NACA Programs. The award announcement included more than $160.8 million in Financial Assistance and Technical Assistance awards to 152 organizations through the CDFI Program, and more than $12.2 million to 33 organizations through the NACA Program. Twelve awardees received $22.4 million in Healthy Food Financing Initiative awards. Eight CDBA members were among the awardees, including BankPlus ($1,750,000), Beneficial State Bank ($1,500,000), Carver... Read more
Bronx-based Spring Bank is launching “Borrow and Save,” a credit building product designed to help borrowers bridge income gaps without resorting to payday loans. "Borrow and Save" is a 6 to 12 month loan of up to $1,500 with no minimum credit score requirement. The loan is underwritten on the basis of an individual’s demonstrated ability to cover payments. One quarter of the loan is placed in a free savings account that is available when the loan is repaid. The goal is to help borrowers break the cycle of unsustainable borrowing, improve their credit scores and move... Read more
In a video interview with Forbes Magazine, Beneficial State Bank CEO Kat Taylor discussed the bank's new social impact metrics, its rebranding from OnePacific Coast Bank and the power of community development banking. "If you think about any of the practices in the world that we need to change, they're all enabled and amplified by finance," Taylor said. "Finance -- and the banking system in particular -- is what amplifies the whole money supply and facilitates commerce. It's what allows growth and when we get it right, it's very very good and when we get it wrong it's very... Read more
Consumers are banking less often on desktop computers as an increasing number of people turn to mobile phones, ATMs and even branches to handle their finances, a survey released by the American Bankers Association's finds. The Internet led the pack in the poll, with 31 percent of depositors saying that handling transactions on a laptop or personal computer is their most commonly used method. But that's down from 39 percent in 2013. Meanwhile, mobile banking, branches and ATMs all showed gains. Branches and... Read more
Alternative lenders that can turn around a deal within a couple of days or offer loans that last just a few months could disrupt lending – but critics warn their flexibility and speed come at a price. Annual percentage rates on the loans can soar above 100 percent, and there can be steep fees and penalties for things like prepayment. Some lenders have even been accused of hiding APRs from borrowers. "125 percent APR for a loan is just not OK in my book," says Mark Pinsky, president and chief executive of Opportunity Finance Network, a CDFI advocacy organization. But alternative lenders... Read more
Southern Bancorp Community Partners' new Community Champions program aims to provide up to $8,000 in home purchase or renovation assistance to teachers, nurses, police officers, firefighters and other local public servants. The program is one of four Southern Bancorp projects funded with a grant from the U.S. Department of Housing and Urban Development. “The Community Champions program rewards those who leverage their time and talents for the good of our community by helping them make Helena their long-term home," said Brooke Gerber, Community Champions coordinator and... Read more
Despite the outcry surrounding the new Qualified Mortgage rule instituted in January, mortgage data have shown little evidence of change to the Fannie Mae, Freddie Mac or Ginnie Mae markets and minimal impact on the loans banks hold in portfolio. Researchers believed they would find a reduction in the number of interest-only loans, fewer loans to borrowers with high debt-to-income ratios, less small loans and reduced adjustable rate mortgage share. Instead, researchers saw each of these indicators remain relatively stable. The authors theorize that the rule’s impact was muted because... Read more
The U.S. Treasury Department has guaranteed $325 million in new bonds to help support economic development opportunities in low-income and underserved communities through the CDFI Bond Guarantee Program. The program is designed to help CDFIs fill a financing gap in underserved areas by providing long-term, fixed rate capital. Four institutions received the bond guarantees in the inaugural round. Clearinghouse CDFI will receive $100 million on account of a bond issued by Opportunity Finance Network; Community Development Trust, LP will receive $125 million on account of a bond issued by the... Read more