- — Photo Courtesy of http://www.gcsagents.com —
The Consumer Financial Protection Bureau last week proposed rules to protect homeowners and to avoid problems suffered by many borrowers during the housing crisis.
“These rules are about putting the service back in mortgage servicing,” said CFPB Director Richard Cordray, on a conference call with reporters. “The bottom line is to treat consumers fairly by preventing surprises and run-arounds.” The rules provide basic protections, he added.
For instance requiring that the mortgage servicing company provide monthly statements which seems so simple but is not standard; breaking down all the numbers such as deposits, principals, interest rates, fees, due dates and warnings about new or increased fees including ARMs adjustable-rate mortgage reminders in advance.
“A lot of this stuff is common sense,” said Keith Gumbinger, vice president of HSH Associates, a publisher of consumer loan information, of the proposed rules. “You shouldn’t have to codify proper business practices. That’s not to say everyone is a bad actor. But the ones who did it wrong did it so badly, they forced the regulators’ hands on the rest of the industry.”
One of the major surprises occurs when the borrower no longer maintains property insurance and the mortgage servicer has the right to force a policy. The new law requires that forced policy process be transparent and borrower of policy payments to avoid borrower not being ready to pay the cost.
Policies and procedures will be required to be in place so borrowers are able to navigate and find assistance when they need including correcting payment issues and receiving timely payment receipt and corrected documents.
Systems will be required so that the homeowner borrower is able to easily obtain assistance and options to avoid foreclosure when they are in default. The new rules also requires review of file for loan modification and other payment plans application and response in a timely fashion restricting ability to proceed with foreclosure unless these options are applied for first.
“The inadequate performance of many mortgage servicers has helped widen the misery for many Americans,” said Richard Cordray, director of the consumer agency, in remarks to reporters announcing the proposed rules. The rules will take effect next year after a public comment period. “Right now, people have too little protection under federal law if their mortgage servicer surprises them with costly fees or gives them the runaround.”
- — Photo Courtesy https://exchanges.nyx.com —
The financial markets have changed and New York Stock exchange has lost volume over the years. Currently it trades only 22% of the equity market down from 80% in the late 1990. Their public competitors such as Direct Edge and BATS, launched in 2005 and 2006 have taken 17% of the volume.
Though some of the balance of equity has disappeared a large percentage have moved off the public exchanges to dark pools or dark liquidity. Darkpools are not available to the public and have little regulation. Technology has advanced to accommodate private trades and with dark pools these trades are often anonymous.
One form of dark pool is for the equity to be handled internally to the organization through a wholesale brokerage. Another form of darkpools are trades by financial institutions so that the trades can be anonymous and does not impact the market. There is no showing of hands that will trigger activity in the market which could potentially push pricing up or down.
THE NYSE plans to recover its lost volume using a hybrid “greypool” to gain benefits of the privacy of the darkpool and benefits of a highly regulated institution.
The Security and Exchange commission approved the NYSE’s pilot program called the Retail Liquidity Program slated for August 1st. The RLP’s intent is to bring business back to the NYSE.
RLP will be able to quote stock prices in fractions of a cent which is not permitted on public exchanges. The market makers using the RLP will not be required to make their prices public and they will be receiving orders directly from the individual investor with an E*Trade accounts instead of purchasing from a hedge fund that may have advantageous information or a volume situation.
NYSE officials say that while the RLP does borrow a few elements from dark pools, it brings them into a more regulated, transparent platform. “The important part around this program is that it replicates some of what happens in non-exchange markets and brings it into an exchange environment where it’s subject to the rules and oversight that exchanges are known for,” says Joe Mecane, the NYSE’s head of U.S. equities.