Banks

An investigation by the nonprofit journalism operation, ProPublica, raises intriguing questions about reasons desperate homeowners are being turned away for the very government program aimed at helping them.

Some of the problems ProPublica uncovered echo complaints WalletPop heard when we wrote about troubles with the federal Home Affordable Modification Program last year: trial modifications being extended just as they are completed, and loans being denied because an income decline is considered temporary.

That temporary hardship, the focus of ProPublica's latest story, was not intended to be legitimate grounds for denial, as was clearly explained by the Treasury Department in a December memo. Now, JPMorgan Chase -- which was involved in all of the cases the investigation uncovered -- has acknowledged its error and encouraged anyone denied for that reason to reapply. A spokeswoman told ProPublica that the company "adapts as quickly as possible" to the Treasury guideline missives.

As of the end of 2009, the government reported, more than 900,000 trial modifications had been started, but only 66,465 had transitioned into permanent breaks for the borrowers. The report also showed JP Morgan Chase was second only to Bank of America as a participant in the federal HAMP program.

Consumers overwhelmingly want limits and additional disclosures on bank overdraft fees, according to a survey released by the Consumer Federal of America (CFA). Yet Congress has done nothing to fix the problem since it held hearings late last year and banks continue to make billions on overdraft fees. The Center for Responsible Lending (CRL) estimates that consumers paid $23.7 billion for overdraft fees in 2008, which is an increase of 35% over just two years.

CRL reported that 50 million Americans overdrew their checking accounts at least once over a 12-month period with 27 million account holders paying five or more overdraft or insufficient funds fees per year.

The Federal Reserve is implementing new rules requiring banks to get customers' consent on overdrafts when they get a debit card, but the new rules do nothing to rein in the high fees or provide real-time disclosures. The rule does mandate an opt in at the time one opens an account, but does not require banks to discuss the opt out provision after a customer experiences an overdraft.

If you're fed up with overdraft fees, you're not alone. During a telephone press conference held earlier this afternoon, which I sat in on, Consumer Federation of America released the results of a national poll today showing that (surprise) just about everyone wants limits and additional disclosures on bank overdraft fees.

I'll get to that in a moment, but there was really a second message that the CFA and the Center for Responsible Lending, which had a representative at this conference, wants to get out: If you're truly fed up, call your Congressman or woman and ask them to get behind two bills circulating in Congress that intend to put much more severe restrictions on overdraft fees.

It's no big secret that a lot of Americans are having trouble making their credit card payments these days. High interest rates and punitive penalty fees just heap it on, and make getting out from under those bills a daunting task.

This article from MSN Money, though, explores a possible solution many people aren't even aware of: Asking their issuer to cut them some slack.

The technical industry term for this is "forbearance." It's not loan forgiveness; you still have to pay. But, according to the article, an issuer can do anything from postpone payments to lowering minimum payments to reducing your interest rate or the amount you pay in fees.

Although the President claimed in his State of the Union address that the worst of the economic storm has passed us by, he apparently didn't consult with bankers who answered the January survey of senior loan officers conducted by the Federal Reserve.

Had Mr. Obama done so, he'd have found out that, in fact, when it comes to mortgage loans, bankers are not exactly upbeat about the near term future.

In fact, according to the survey, credit standards are still being tightened as bankers expect delinquencies to continue to rise.

For prime real estate loans, 17 % of banks say they tightened their standards, while 30% of banks answered the same way about non-traditional loans.

At first, the story sounds funny. Looking at it a little more closely, however, it's really not.

Francis Coleman, a 40-year-old, unemployed machinist, has made headlines because he told a news station he was going to rob a Bank of America the next morning and that they should be there to tape the whole thing. Well, the news station called the police, and the police went to Coleman's house and arrested him.

But this really isn't the case of the dumb criminal; it's really the story of a man at the end of his rope, a man who made a bad decision that's now going to cost him, which makes this story even sadder.

New York Attorney General Andrew M. Cuomo today announced a nationwide agreement regarding banking fees. He held a telephone press conference, which I listened in on, and if you're a Citibank customer, this news may affect you.

Starting today, Citibank was basically going to kill its free checking program. But after the New York Attorney General's office stepped in, Cuomo was able to announce today that -- for many customers -- the free checking program has been extended until at least the end of the year.


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If you are fence sitting about whether to buy that house, you may not want to wait too much longer: If government officials can be believed, the more than year-long federal support of mortgages, which brought rates to post World War II lows, is slated to end within the next couple of months.

Should this happen, mortgage rates are expected to climb. By how much, no one seems certain. Though fears are already being expressed by some, that any hefty increase in the 30-year fixed rate mortgage could cut any developing real estate market recovery off at the knees.

But forget the macro implications and let's keep to the micro ones: that would be you.

If you've been trying to log onto Bank of America's web site today, with no luck, it's not your imagination or your computer's fault -- B of A's Web site is down. Or at least it was at the time of this writing -- and had been throughout much of Friday morning and the early afternoon.

If you try to log onto its site, you'll get a "problem loading page" notice (if you're using Firefox).

It was speculated on BusinessInsider.com that it might be a cyber attack, although the writer there admitted that plenty of web sites malfunction, and this may just be one of those times.

Times Asia is reporting it as the server simply crashing.

I contacted Bank of America, and spokesperson Anne Pace told me that "Bank of America's Online Banking service is, indeed, available. However, some customers are having intermittent issues accessing the site."

If we learn more, we'll let you know. In the meantime, if you're one of those "some customers" trying to do some online banking, you might want to resort to the old-fashioned way and head to a brick and mortar branch, or call its customer service line if you have half an hour to spare. If you were planning on paying bills online, pull out your checkbook and find a stamp. Or try another computer, and maybe you'll have better luck.

P.S. I'm told by Ms. Pace that as of 8 p.m., Friday, January 29th, the issues have been resolved, and that the web site is up and running.

Wells Fargo recently surveyed 1,000 online banking customers and discovered that it's the 30-somethings who are more likely to use an online bank Web site, mobile banking and other Internet-related tools to manage their finances.

The 30-something folks are also using social networking, advanced photo and film technologies, and career networking sites more often than other respondents.

With more and more "distressed" (foreclosed) homes up for sale, a bank-owned home may be the way to go if you are considering buying a house.

But experts say buying from a bank is very different than buying a home from an individual. With that in mind, here are some expert tips on how to buy a bank-owned home.

Despite the use of anti-virus programs, the safety of banking and shopping online continues to be threatened by hackers and malicious software creators who take advantage of the fact that most of us use the same computer to bank online as we do to play on Facebook or let our kids, and their friends, surf the Internet. Mixing business and pleasure is a cause for concern because criminals will often use your visit to an innocuous page to infect your computer, allowing them to gain access to your banking and other private information.

"These individuals are no longer pranksters," Ray Dickenson, CTO of Authentium, told WalletPop in a phone interview referring to malware and virus creators, "they are highly motivated criminals." Because of their determination and the high potential for reward, virus writers repeatedly prove to be a step ahead of the anti-virus products that safeguard your entire operating system. Authentium, which also makes an anti-virus product, created Safe Central to address these issues. Instead of keeping a large operating system clean, Safe Central focuses on the security of the web. By doing so it is able to lock down a smaller set of files and provide safe web sessions.

Ugh. Did we just manage to get one annoying, expensive bank fee out of our hair only to turn around and find another one staring us in the face? Yes, we did, according to MSNBC's Red Tape Chronicles.

Here's the short version. The Federal Reserve is cracking down on banks that are slapping their customers with overdraft charges of up to $35 if they overdraw their account by even a few dollars. Beginning this summer (July for new account holders, a month later for existing customers), Americans will have to choose to be part of this racket. (Think about it; If you spend $10 you don't happen to have on lunch with friends and get charged $35, the bank is essentially loaning you that $10 at a 350% interest rate.)

Let's get the obvious out of the way first: We don't want you to overdraw your checking account. Spending more money than you actually have is not ideal, to say the least, and always winds up costing you more -- sometimes much more -- in the long run.

But banks made more than $38 billion in overdraft fees alone in 2009, so it's apparent that a lot of Americans are spending more money than they have in their checking accounts.

New rules about overdraft fees kick in this coming July. As we've pointed out in other posts, though, this doesn't mean you're off the hook if you try to buy something when you account balance is at zero. Rather, you'll just get slapped with an "insufficient funds" fee, which can cost as much as that overdraft "protection" fee you thought you were avoiding.

There's a lot of good stuff going on as far as the government cracking down on the way banks and credit-card companies have been treating their customers lately. The CARD Act kicks into gear next month, and Federal Reserve rules that come into play this summer will stop the frustrating practice of being automatically enrolled in overdraft "protection" programs that zing you for $35 if you go into the red. But there's a drawback to these reforms: Banks are still going to be looking for ways to make money.

Banks were expected to make $38.5 billion from overdraft charges alone in 2009, so they're going to want to make up that shortfall -- along with the money their credit-card units earn that will be curbed thanks to the CARD Act -- somehow. One way they'll probably do it is by reducing or eliminating free checking.

This Bankrate.com article points out that offers of free checking have been dwindling, and many "free" checking programs now come with conditions or catches, such as minimum balance requirements or direct deposit. The article also suggests that customers who want to keep free checking might be limited to online- and ATM-based transactions only. Translation: If you want to speak to a real human being, you'll have to pony up.