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Analysis: Call It a Comeback for Risky Home Buyers

 
 

June 25, 2015

 
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  NEWS AND ANALYSIS

ANALYSIS: CALL IT A COMEBACK FOR RISKY HOME BUYERS

More Americans who recently went through foreclosure or bankruptcy are getting home loans, the Wall Street Journal reported today. A new wave of nonbank lenders is bringing these risky buyers back into the housing market some seven years after the mortgage meltdown. The lenders are targeting borrowers who have recently gone through a foreclosure, short sale or bankruptcy -- but who they say are safer than their credit profiles suggest. They are sometimes approving borrowers in as little as a few months or even weeks after a foreclosure. "Lenders are trying to carve out niches that play upon the fact that underwriting remains, by historic standards, very tight," said Guy Cecala, publisher of Inside Mortgage Finance, a trade publication. Several lenders have entered this market since the housing crisis, and their numbers, while still small, have picked up over the past year. Cecala estimates that mortgage originations for borrowers who have recently been through a major financial setback and are back on their feet will total at least $5 billion this year. That's up from around $2 billion to $3 billion last year and expected to be the highest since the housing boom, he said. That compares to a total of $1.3 trillion of mortgage originations that are expected for 2015, according to the Mortgage Bankers Association. Read more. (Subscription required.)

MORE AMERICANS ARE RENTING, AND PAYING MORE, AS HOMEOWNERSHIP FALLS

Even as the housing market continues to improve -- sales of existing homes in May increased to their highest pace in six years, the National Association of Realtors reported on Monday, and first-timers make up 32 percent of the buyers -- it is leaving millions of Americans unwillingly stuck in rental housing, the New York Times reported yesterday. The nation's homeownership rate has been falling for eight years, down to 63.7 percent in the first quarter of this year from a peak of over 69 percent in 2004, according to a new report released yesterday by Harvard University's Joint Center for Housing Studies. The flip side of the decline in homeownership is a boom in rentals and a significant rise in the cost of renting. On average, the number of new rental households has increased by 770,000 annually since 2004, the center's report said, making 2004-14 the strongest 10-year stretch of rental growth since the late 1980s. Read more.

WHISTLEBLOWERS TESTIFY AT HOUSE HEARING ON ALLEGED DISCRIMINATION AT CFPB

The House Financial Services Committee has investigated serious allegations of discrimination and retaliation against employees at the Consumer Financial Protection Bureau, and today it held a hearing to examine those allegations, HousingWire.com reported. "The level of unprofessional treatment and dysfunction that I have observed and endured has not only hurt me, but has hurt countless CFPB employees who would naturally look to an Office of Civil Rights for protection against discrimination," according to the prepared testimony of Florine Williams, a career professional with over 20 years of Equal Employment Opportunity experience who currently serves as a senior equal employment specialist in the Office of Civil Rights at the CFPB. Another witness, Robert Cauldwell, a CFPB examiner who currently serves as president of the National Treasury Employees Union Chapter 335 (which represents CFPB employees), said he has observed widespread problems at the CFPB. "When employees file complaints, the CFPB reaches into their past to dig up irrelevant information and use it against them," Cauldwell testified. Read more.

Click here to read the prepared hearing testimony.

JPMORGAN, SEC IN SETTLEMENT TALKS OVER PRODUCT STEERING

JPMorgan Chase & Co. is in talks with the Securities and Exchange Commission to settle a probe into whether the bank inappropriately steered private-banking clients to its own investment products, the Wall Street Journal reported today. The regulator has been examining whether JPMorgan guided clients to its own so-called proprietary products and away from those offered by other firms. A settlement, including a fine, could happen as early as this summer, though the size hasn't be determined. The practice, while not banned, is closely watched by regulators. The civil inquiry by the SEC's enforcement division has moved alongside queries launched more than a year ago by the Office of the Comptroller of the Currency. JPMorgan disclosed in a May filing that the SEC and other regulators are looking into its sale and use of proprietary products, such as JPMorgan mutual funds, in its wealth-management division. Regulators including the SEC have long monitored whether brokers sell their clients the right product for them, or push the ones that make their firm the most money. Read more. (Subscription required.)

 

 

MISS ABI’S TELECONFERENCES EXAMINING SUPREME COURT RULINGS IN BANKRUPTCY CASES? ARCHIVE REPLAYS AVAILABLE IN THE NEWSROOM!

ABI media teleconferences featuring experts discussing the Supreme Court's recent decisions in the six bankruptcy cases before the Court for consideration during the 2014 term. Teleconferences were held on the following cases:

- Baker Botts, LLP v. ASARCO, LLC on June 18. Click here to listen.

- Consumer Case Round-Up on June 3 (Bullard v. Hyde Park Savings Bank, Harris v. Viegelahn and Bank of America v. Caulkett and Bank of America v. Toledo-Cardona). Click here to listen.

- Wellness International Network, Limited v. Sharif on May 26. Click here to listen.

NEW FRAUD AND FORENSICS BOOK AVAILABLE FOR PRE-ORDER IN ABI'S BOOKSTORE!

Now available for pre-order in the ABI Bookstore is Fraud and Forensics: Piercing Through the Deception in a Commercial Fraud Case. Cases such Madoff and Enron have hinged on the ability of talented investigators to uncover the truth amidst layers of fraud, and this book highlights the areas of specialty, challenge and reward for forensic accountants and the professionals who work with them in commercial fraud cases. Written by members of ABI's Commercial Fraud Committee among other noted professionals, Fraud and Forensics provides a broad and deep look at the challenges faced in the course of a commercial fraud matter, as well as the tools available to help identify, unwind and prove fraudulent transactions. This book will also assist both forensic accountants and the professionals who work with them to sift through the fine details while creatively considering all of the possibilities to fit together the pieces of a fraud puzzle. Click here to pre-order. (Book to be shipped in mid- to late July; make sure to log in to obtain the ABI member price).

ABI LIVE WEBINAR ON JULY 8 TO EXAMINE CHAPTER 11 REFORM COMMISSION'S RECOMMENDATIONS ON PROFESSIONAL FEES AND EXPENSES

Don't miss the abiLIVE webinar on July 8 examining the Chapter 11 Reform Commission's recommendations on professional fees and expenses. The panel will discuss the recommended reforms that provide for more effective oversight, as well as alternative fee structures consistent with professionals’ ethical obligations under the Code of Professional Responsibility. Click here to register.

ABI WORKSHOP TO FEATURE BANKRUPTCY JUDGES EXAMINING COMMISSION RECOMMENDATIONS ON RESOLVING COURT SPLITS

The 2015 Bankruptcy Judges Roundtable, an ABI Workshop, will take place at ABI headquarters on Aug. 4 to examine the Chapter 11 Reform Commission's recommendations on resolving court splits. The Commission identified more than 30 splits in case law on important bankruptcy issues. Attend the program from 3:00-4:30 p.m. ET in person or via live webstream to hear five bankruptcy judges discuss the recommendations and issues surrounding the court splits. Speakers on the program are Bankruptcy Judges Dennis R. Dow (D. Mo.), Bruce A. Harwood (D. N.H.), Barbara J. Houser (N.D. Texas), C. Ray Mullins (N.D. Ga.) and Eugene R. Wedoff (N.D. Ill.). ABI will seek 1.5 hours of general CLE credit in 60-minute-hour states and 1.5 hours of credit in 50-minute-hour states for the program. A networking reception will follow from 5-7 p.m. ET for in-person attendees, and registration for just the reception is also available. Click here to register.

NEW CASE SUMMARY ON VOLO: SHOWALTER V. HOPPER (IN RE SHOWALTER; 9TH CIR.)

Summarized by Lovee Sarenas, U.S. Bankruptcy Court, Central District of California

The Ninth Circuit affirmed the BAP's ruling that the debtor's exemption claim under California's homestead exemption laws does not apply to the debtor when (1) the debtor did not reside in the property for purposes of a homestead exemption, and (2) the California exemption law asserted only applies to voluntary sales and not forced sales such as the filing of the bankruptcy petition. Alternatively, the Ninth Circuit upheld the BAP's ruling that Florida exemption laws do not apply notwithstanding that the subject property is located in Florida because the debtor was a resident of California for purposes of Sect. 522.

There are more than 1,700 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI's Volo website.

NEW ON ABI'S BANKRUPTCY BLOG EXCHANGE: CHAPTER 11 REFORM COMMISSION’S PROPOSALS FOR PLAN SETTLEMENTS AND COMPROMISES

A recent blog post analyzes the recommendations of ABI’s Commission to Study the Reform Commission for plan settlements and compromises.

For more on the Final Report of the Chapter 11 Reform Commission, please click here.

To read more on this blog and all others on the ABI Blog Exchange, please click here.

INSOL INTERNATIONAL

INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 23 member associations worldwide with more than 9,800 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

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NEXT EVENT:

abiLIVE Webinar:
"Ethics - Chapter 11 Commission Recommendations on Professional Fees and Expenses"

July 8, 2015
Register Today!

UPCOMING EVENTS:

22nd Annual Northeast Bankruptcy Conference
July 9-12, 2015
Register Today!

10th Annual Northeast Consumer Forum
July 9-11, 2015
Register Today!

20th Annual Southeast Bankruptcy Workshop
July 23-26, 2015
Register Today!

ABI Workshop: 2015 Bankruptcy Judges Roundtable
Aug. 4, 2015
Register Today!

11th Annual Mid-Atlantic Bankruptcy Workshop
Aug. 6-8, 2015
Register Today!

23rd Annual Southwest Bankruptcy Conference
Sept. 10-12, 2015
Register Today!

41st Lawrence P. King & Charles Seligson Workshop on Bankruptcy and Business Reorganization
Sept. 16-17, 2015
Register Today!

20th Annual Views from the Bench Conference
Oct. 9, 2015
Register Today!

7th Circuit Consumer Bankruptcy Conference
Oct. 12, 2015
Register Today!

35th Annual Midwestern Bankruptcy Institute
Oct. 15-16, 2015
Register Today!

 
   
  CALENDAR OF EVENTS
 

2015

July
- abiLIVE Webinar: "Ethics - Chapter 11 Commission Recommendations on Professional Fees and Expenses"
July 8, 2015
- Northeast Bankruptcy Conference
July 9-12, 2015 | North Falmouth, Mass.
- Northeast Consumer Bankruptcy Forum
July 9-11, 2015 | North Falmouth, Mass.
- Southeast Bankruptcy Workshop
July 23-26, 2015 | Amelia Island, Fla.

August
- Mid-Atlantic Bankruptcy Workshop
Aug. 6-8, 2015 | Hershey, Pa.
- ABI Workshop: Bankruptcy Judges Roundtable
Aug. 4, 2015 | Alexandria, Va.

 

 

September
- Southwest Bankruptcy Conference
Sept. 10-12, 2015 | Las Vegas, Nev.
- Lawrence P. King & Charles Seligson Workshop on Bankruptcy and Business Reorganization
Sept. 16-17, 2015 | New York, N.Y.

October
- Views from the Bench Conference
Oct. 9, 2015 | Washington, D.C.
- 7th Circuit Consumer Bankruptcy Conference
Oct. 12, 2015 | Chicago, Ill.
- Midwestern Bankruptcy Institute
Oct. 15-16, 2015 | Kansas City, Mo.

 

 
 
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