by Ryan Smith | 28 Aug 2013
A former Missouri bank chairman is facing up to a year in federal prison after he admitted to using federal bailout funds to buy a vacation home.
Darryl Layne Woods, 48, pleaded guilty Monday to misleading federal investigators about his use of funds from the Troubled Asset Relief Program to buy a luxury condo in Fort Myers, Fla.
Woods is the former chairman and CFO of Mainstreet Bank in Ashland, Mo., as well as chairman, president, and majority shareholder of Calvert Financial Corporation, the bank holding company for Mainstreet. In November of 2008, Calvert applied for TARP funds and in January 2009 was awarded $1,037,000 through the TARP Capital Purchase Program, according to the Special Inspector General for TARP Christy Romero.
Woods admitted Monday in federal court that within days of receiving the cash, he used $381,000 of the TARP funds to purchase the Fort Myers condo for his own use and the use of other bank executives. When investigators quizzed Calvert on how the money was being spent, Woods failed to disclose the purchase.
“The purpose of TARP is to promote financial stability and lending in a time of national economic crisis, not to bankroll the purchase of luxury vacation properties for bank executives,” Romero said Tuesday.
“At a time when many other Americans were losing their homes, he was siphoning off public funds to buy a luxury vacation condo in Florida,” U.S. Attorney Tammy Dickinson said. “These federal funds were intended to help stabilize the economy during a fiscal crisis. Instead, this disgraced business leader took advantage of the situation to benefit himself and other bank executives, then lied to federal investigators in an attempt to hide his scheme.”
As part of his plea agreement, Woods must sever his professional ties to the banking industry, and can no longer serve as an officer or employee of any financial institution. He could also face up to a year in federal prison, and be ordered to pay restitution and a fine of up to $100,000.
My 2 cent Commentary: Now if some Joe Nobody went into the Mainstreet Bank in Ashland, Mo and robbed them of $381,000 and was later apprehended, do you think that, if found guilty, would get UP TO a year in federal prison? No way! That poor Joe Nobody would be looking at 7 to 10 years and not in some country club prison. This seems to be another example of corporate greed in the bank system. Although not entirely getting away with it, the punishment does not seem to be a adequate.
by Ryan Smith | 23 Aug 2013
A major bank and an Ohio mortgage broker are being charged with discriminating against a couple with disabilities, according to the Department of Housing and Urban Development.
HUD announced Thursday that it was charging Fifth Third Bank and the Clinton Township, Ohio-based Cranbrook Mortgage Corporation with discrimination against a couple who were trying to refinance their home. HUD alleges that the bank and the mortgage firm required unnecessary medical documentation when the couple applied for a Federal Housing Administration loan.
According to a Thursday news release, a couple who received Social Security disability benefits filed a claim that their loan application had been wrongly denied. HUD alleges that both Fifth Third and Cranbrook required the couple to provide physician’s statements as proof of their Social Security income. According to HUD, at the time the couple applied for the loan, “Fifth Third’s underwriting policy explicitly specified a physician’s statement as appropriate evidence for establishing continuance of disability income.” The couple refused to provide the statements and was denied the loan.
According to the Fair Housing Act, lenders may verify the amount and source of an applicant’s income, but can’t place higher standards of proof or qualification on those who receive disability benefits.
“Persons with disabilities should not have to meet higher mortgage qualification standards because they rely on disability insurance payments as a source of income,” said Bryan Greene, HUD’s Acting Assistant Secretary for Fair Housing and Equal Opportunity. “Banks and mortgage companies may verify income and have eligibility standards, but they may not single out homebuyers with disabilities or deny financing when they are otherwise qualified.”
The charge will be heard by a U.S. administrative law judge, provided no party in the case requests a hearing in federal district court, according to HUD. If an administrative law judge finds that discrimination has occurred, he or she may award damages and order other relief, including injunctive relief and payment of attorneys’ fees. If the case goes before a federal court, punitive damages may also be awarded.
The FHA has made it drastically easier for once-struggling homeowners to qualify for an FHA loan.
The Federal Housing Administration has announced in a letter to mortgagees that it will reduce the time homebuyers must wait after a bankruptcy, foreclosure or short sale before qualifying for an FHA-backed mortgage. The period had previously been two years following a bankruptcy, and three years following a foreclosure or short sale. The agency has now reduced the waiting period to one year.
"FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage," FHA Commissioner Carol Galante said in the letter.
But fulfilling the new, more lenient waiting period won't automatically qualify borrowers for an FHA-backed loan. Borrowers will have to show that they experienced an "economic event" whereby their household income fell by 20% or more for a period of at least six months. They must also demonstrate that they have fully recovered from the event, and agree to complete housing counseling prior to closing.
by Adam Smith | 19 Aug 2013
There’s nearly $1.2 trillion in outstanding student loan debt, and more than $1 trillion of it is from federal student loans, the federal government says. Those federal student loans come with more repayment options than private ones, but most students aren’t taking advantage of them. Why not? They may not know how, Bloomberg Businessweek suggests.
Two-thirds of Federal Direct Loan Program borrowers are on a normal, 10-year repayment plan. The rest are on different kinds of plans, with about two-thirds of this group using options that make loans cheaper in the short term but more expensive in the long term, Businessweek says. That’s either through increasing the term of the loan or by using a gradually increasing payment schedule.
That leaves just three out of 10 who are using an income-based repayment plan, which not only ties payment amounts to monthly income but also forgives the balance remaining after 10, 20 or 25 years, depending on the program. They are:
Public Service Loan Forgiveness. Full-time employees in some public service jobs, such as teachers, can have their remaining debt forgiven after 10 years of on-time, income-based payments.
Pay As You Earn. This income-based repayment plan debuted in December 2012 and is available only for those who received a loan disbursement more recently than September 2011. Eligible balances are forgiven after 20 years.
Standard income-based repayment allows forgiveness after 25 years.
There are advantages and disadvantages to each option, but you have to know about them to even consider switching to income-based repayment. The problem is, “publicizing the programs is largely up to the loan servicers that collect monthly payments and are supposed to work with borrowers in trouble,” Businessweek says. They don’t always do a good job of it.
The application process was streamlined this summer, the White House says, and the U.S. Department of Education is pushing borrowers to educate students about their repayment options before they leave school.
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