Economy Watch: The Fed’s Raskin Decries Mortgage Servicing Tactics
- Nov 15, 2010
November 15, 2010
By Dees Stribling, Contributing Editor
Sarah Bloom Raskin, the newest governor of the Federal Reserve (sworn in Oct. 4, 2010) used the occasion of her first speech as part of the Fed to take the mortgage servicing industry to task for certain recent and well-publicized problems. In fact, she actually used the term “robo-signers.”
Current attention is focused on so-called ‘robo-signers,’ ” Raskin told the National Consumer Law Center’s Consumer Rights Litigation Conference in Boston. “This development is troubling on its own, but it also shines a harsh spotlight on other longstanding procedural flaws in mortgage servicing. Many may view these procedural flaws as trivial, technical or inconsequential, but I consider them to be part of a deeper, systemic problem.”
During her time as Commissioner of Financial Regulation for the State of Maryland—that was her previous job—she said she had encountered a “Pandora’s Box of predatory tactics,” including “the padding of fees, such as late fees, broker-price opinions, inspection fees, attorney’s fees, and other fees; the strategic misapplication of payments so that the homeowner’s payments for principal and interest due on the loan were improperly applied to the servicer’s fees, sometimes improperly causing the loan to be considered to be in default; and the inappropriate assessment of insurance, with premiums of two to four times the cost of standard homeowners’ insurance.”
Starbucks Looks to Encourage Chinese Coffee Drinking
The world does not have enough Starbucks locations, even though the total is about 17,000 these days. At least, that’s the conclusion of Starbucks Corp., which said on Friday that it plans to open 500 stores worldwide in the next year—with 400 or so of those outside the United States, many in China, though no exact number was specified. Reportedly the coffee behemoth wants to more than double its presence in the People’s Republic, from 400 stores currently to more than 1,000.
The company also said that it’s going to start growing its own coffee in China, after inking a memorandum of understanding with the municipal government of Pu’er in Yunnan Province and the Yunnan Academy of Agricultural Science to develop a plantation. Arabica seeds will likely be planted as early as 1Q12 for a first harvest in 2014.
Starbucks is coming off a strong quarter, as it reported early in November. The company’s revenues climbed 17 percent compared with the same quarter last year, and same-store sales, an important metric in the retail business, were up a solid 8 percent. It anticipates opening a total of 223 new stores this year, but it has already closed 45.
IMF Help for Island Nations in the Atlantic, Present and Past
The International Monetary Fund has said that it’s ready to help Ireland by letting it draw on part of the multi-billion euro fund established by the EU and the IMF this spring, back when Greece was the problem economy de jour. The Irish government denies that there is any need for a bailout. The German government says there is. The Greek government is probably glad not to be the focus of attention this time around.
Remember Iceland? The poster child for imploding national economies back at the height of the Panic of 2008 struck a deal with the International Monetary Fund at the time to borrow $2.1 billion (small change compared with the bailout of, say, Fannie or Freddie). So far, the North Atlantic island nation has accessed about $1.37 billion of that total, and the IMF says things are looking up.
“Iceland’s post-crisis stabilization is continuing, supported by a steady implementation of program policies,” the IMF said in a statement on Sunday, following a review of the aid package, adding a forecast that sounds much like that of the rest of the world: “Growth is gradually recovering and is expected to gather steam in 2011, but the pick-up is likely to be slower than previously projected.”
Wall Street had a down day on Friday, with the Dow Jones Industrial Average ending off 90.52 points, or 0.8 percent. The S&P 500 was down 1.18 percent and the Nasdaq lost 1.46 percent.