S&P Faces Squeeze After $1.3 Billion Countrywide Fine


Standard & Poor’s (MHFI)’ chances of settling the government’s lawsuit over mortgage-bond ratings for less than $1 billion may have slipped away after Bank of America Corp.’s Countrywide unit was socked with a $1.3 billion fine.

The Countrywide ruling was the first to lay out what penalties financial institutions could face under a 1989 bank-fraud law the Obama administration is using against alleged culprits of the subprime mortgage crisis. It has strengthened the government’s hand against McGraw Hill Financial Inc.’s S&P, said Peter Henning, a law professor at Wayne State University.

“If the starting negotiation point for the Justice Department to settle was $1 billion before, that number has just gone up,” Henning said in a phone interview.

The U.S. sued S&P and Countrywide under the Financial Institutions Reform, Recovery and Enforcement Act, or Firrea, a law […]

Banks Pressure Senate to Act on Reg Relief


Community bankers are launching a last-ditch effort to push the Senate this year to pass more than a dozen bipartisan regulatory relief bills that have already cleared the House with support from both parties.

Though the bills are considered relatively narrow, uncontroversial fixes, the Senate has not acted upon them, frustrating many in the industry. Some are hoping to use a Senate Banking Committee hearing on community bank issues scheduled for Sept. 16 to jumpstart the process.

“It’s disappointing to see the lack of attention being paid, by all accounts, to technical fixes and minor changes that can provide some relief to community banks,” said James Ballentine, executive vice president of congressional relations and political affairs at the American Bankers Association.

The legislation in question may be small in scope, but it would provide a significant benefit for community banks, supporters say.

For example, the House passed a […]

FHA Wants Fewer Defects, More Low-Credit-Score Loans


The Federal Housing Administration wants lenders to make fewer mistakes when writing mortgages for the government insurance program. The agency also wants to serve more borrowers with low credit scores. Getting both may be tricky.

FHA lenders already have felt the tension between these two demands. A hard line on defects means lenders are more likely to be on the hook for losses in the event of default, and lower credit scores make defaults more likely. Many FHA lenders such as JPMorgan Chase have been pulling back from the market for this reason.

The FHA expects 75% of the loans it insures from now on will be made to borrowers with FICO scores of 680 or below, an FHA official told a group of risk managers Monday. The housing downturn took many of these borrowers out of the home buying market and the FHA is looking for ways to bring […]

Sales of New Homes Unexpectedly Fall to Four-Month Low


New-home sales fell unexpectedly in July for the second month as the housing recovery makes only fitful progress.

Sales declined 2.4% to a 412,000 annualized pace, the fewest since March and weaker than the lowest estimate of economists surveyed by Bloomberg, after a 422,000 rate in June, the Commerce Department reported today in Washington.

Housing has advanced in fits and starts this year, buffeted by tight credit and slow wage growth. A shortage of skilled labor and supply-chain bottlenecks also have hindered construction even as population growth boosts demand for shelter. Bigger gains in employment and wages would stoke a more-rapid recovery.

“It’s a little bit disappointing,” said Thomas Simons, an economist at Jefferies LLC in New York and the top forecaster of new-home purchases over the past two years, according to data compiled by Bloomberg. “The new-home sales data have […]

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