Thursday, September 17, 2009

FTC Considering Ban on Upfront Loan Mod Fees

by Calculated Risk on 9/17/2009 07:41:00 PM

About time ... (and a BFF preview below)

From Jillayne Schlicke at RainCityGuide: FTC Considers Total Ban on Upfront Loan Modification Fees. FTC Chairman Jon Leibowitz made the suggestion today. Jillayne adds:

Third party loan mod salesmen should only be allowed to collect a fee once the loan modification is not only performed but also after the homeowner has made a specific number of on time payments. This will rid the system of the Devil’s Rejects subprime LOs who act like they just walked off the set of a Rob Zombie movie and can only smell money.
Exactly! Jillayne has been arguing for this ban for some time.

And to get ready for Bank Failure Friday (BFF), from an SEC 8-K filing today: (ht Michael)
On September 15, 2009, Irwin Financial Corporation (the “Corporation”) and its principal depository institution subsidiary, Irwin Union Bank and Trust Company (“IUBT”), entered into a Cease and Desist Order (the “Order”) with the Board of Governors of the Federal Reserve System (the “Federal Reserve”) and the Indiana Department of Financial Institutions (the “DFI”). The Order includes requirements that the Corporation and IUBT achieve certain designated capital levels and reduce reliance on certain types of deposits by September 30, 2009. The Corporation and IUBT believe that there is no realistic prospect of achieving the required capital levels by the date required in the Order and, in the absence of certain loan sales, which the Corporation and IUBT believe would not be approved by appropriate regulatory bodies, they cannot achieve the requisite reduction in reliance on the designated deposits by the required date.
emphasis added
"No realistic prospect" is pretty clear.