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| Friday, November 20, 2009 |
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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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January 12, 2009 12:01 AM ET
The federal government is ill-equipped to stop the migration of predatory subprime lenders to the rapidly growing sector of U.S.-backed home loans, raising the specter of another cycle of lending abuses. The Federal Housing Authority lacks sufficient staff, adequate technology and legal authority to screen questionable lenders who seek to participate in the issuance of federally backed loans, Department of Housing and Urban Development officials told lawmakers late Friday. One FHA lender in New York who was debarred for five years resumed operations using the same fraudulent practices, HUD assistant inspector general James Heist told the House Financial Services Committee. An Arizona lending company that filed for bankruptcy after its license was suspended by the state was reconstituted by one of the principal owners under a different name in the same location, Mr. Heist said. HUD approved the new entity to process federal loans last year, he said. “I see bad actors moving over to FHA because money has dried up,” said Rep. Maxine Waters (D-Ca.), a subcommittee chairwoman. The FHA is part of HUD. The FHA’s oversight shortcomings aren’t limited to lenders. Its reviews of appraisers are “not adequate to reliably and consistently identify and remedy deficiencies,” Mr. Heist said. An audit found that the government’s roster of appraisers included 3,480 with expired licenses and 199 that had been disciplined by the state, he said. Subprime lenders who made deceptive or predatory loans to borrowers who lacked adequate income or credit histories have been pegged by many economists as being at the root of the financial crisis. The ensuing foreclosures contributed to the collapse of the home-loan market and Wall Street’s mortgage-backed securities business. With the credit crunch and the demise of subprime loans, lender applications to participate in the FHA program for low- and middle-income homebuyers have soared. The FHA had over 3,300 approved lenders at the end of fiscal 2008, more than a four-and-a-half-fold increase from two years before, Mr. Heist said. Open applications for fiscal 2009 thus far total 1,007, of which 827 have already been approved. “The integrity and reliability of this crop of program loan originators, in our view, is unproven and, in light of the aggressive recent history of this industry, may pose a risk to the program,” he said. FHA’s lender approval process “is largely manual,” Mr. Heist said. Dozens of systems that store federal housing data “have been obsolete for nearly two decades,” said HUD deputy assistant secretary Phillip Murray. Mr. Murray said that in the case of the sanctioned Arizona company whose principal started a new firm, the FHA lacked the authority to hold him responsible for disciplinary actions against the earlier firm. HUD is now preparing a rule to address this legal gap, a process that could take a year-and-a-half, he said. [To see the written testimony of HUD assistant inspector general James Heist, CLICK HERE]
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