Tell the Fed about unauthorized overdraft practices

via email from The Center for Responsible Lending

Today is the last day to send your

unauthorized overdraft story to the Fed.

Read today’s USA Today story on another unfair bank overdraft practice and tell your story to the Fed below:

The Fed knows something smells fishy with overdraft – but do they know just how bad it stinks?

In new proposed rules, the Federal Reserve Board has acknowledged that banks are using unfair overdraft practices. But their solution doesn’t go far enough.

Thousands of consumers have sent the Fed their stories during the official comment period for the proposed rules. Thank you if you were one of those consumers – it will really make a difference.

The comment period ends at 5 pm ET today, so you can still send a story now and encourage the Fed to stop unauthorized overdrafts.

The new rules would not keep banks from enrolling customers in their most expensive option for covering overdrafts without prior consent, but would only allow them to opt out of the program after the fact. Consumers should not have to “unsubscribe” from this costly system.

Under prevailing practices, banks can intentionally maximize the overdraft fees you pay by automatically approving debit card purchases that throw your account balance into the negative and by manipulating their debit-clearing systems. At the least, the Fed should make them get your approval before charging you these fees, which now average $34 per incident.

If you’ve been burned by unauthorized overdrafts, click here to tell the Fed. Thanks to the many who have already written.

The comments you submit will be part of the Federal public record made available to the public online and in paper form. Your name and address may be included as part of your comments.

For more information – Shredded Security

The devil and the Compact to Help Ohioans to Preserve Ownership

Bill Callahan’s well stated “Now the devil is… where the devil always is” observation on the Governor’s Compact to Help Ohioans to Preserve Ownership offers a key insight to the value of these non-binding measures. The compacts are non-binding, but as Callahan points out

the servicers are committing themselves to report progress to the Commerce Department and otherwise stay engaged with Strickland, Zurz and Dann. Presumably these officials will be checking in regularly with local governments and community agencies, and looking to broker (or jawbone) cooperation where it’s lacking. Will this work? It could. The Compacts establish an agreed-upon set of benchmarks — public expectations, in effect — for good servicer behavior. These benchmarks are definitely a big improvement over the industry’s standard practices to date. The reporting obligation, combined with a strong capacity for public monitoring and feedback (at least here in Cuyahoga County), should create some pressure on the servicers to honor their “nonbinding” commitments. If they don’t, a public record of their failure will be created — a record to support the need for binding action by the State.

I read the Citi compact and agree that the benchmarks are a big improvement over standard practices, but I wonder, given the problem of unemployment, whether early contact and free nonprofit counseling will make any difference at all. I echo Callahan’s observation that the public monitoring of these nonbinding compacts will build a record to support the need for binding action by the state.

Reviewing the compact with my jaded lawyer eyes I see this:

Citi’s specially trained servicing unit will work with borrowers to find solutions short of foreclosures and try to ensure that no borrower loses his or her home.

If a borrower has the desire, ability and intent to make their mortgage payments, Citi will work with them to keep them in their home.

To the extent permissible within existing fiduciary, contractual or other legal obligations and in accordance with prudent mortgage lending and servicing practices Citi will: waive fees and/or penalties; provide fixed rate loan modifications; modify loans based on the homeowners’s ability to repay; forgive some loan principle; or assist homeowners to remove negative information on their credit reports.

But read this:

Citi’s specially trained servicing unit hey we got a 100 million dollar subsidy to pay for counseling and all those out of work lawyers come CHEAP – talk as long as you want will call work with borrowers night and day, especially on holidays and call your neighbors to put notes in your door if you don’t’ answer the phone to find solutions such as charging you a one time fee you can’t afford and add another year or two on the mortgage short of foreclosures and try to ensure that no borrower loses his or her home.

If a borrower is not one of those lazy poor people has the desire, ability and intent to make their mortgage payments, Citi will work with them to keep them in their home.

To the extent that it doesn’t affect our CEO’s huge inflated salary or upset our stockholders permissible within existing fiduciary, contractual or other legal obligations we always have a GOOD reason for not helping you and in accordance with prudent mortgage lending and servicing practices but you know that is not going to happen because we have to take what we can get before your fold Citi will: waive fees and/or penalties; provide fixed rate loan modifications; modify loans based on the homeowners’s ability to repay; forgive some loan principle; or assist homeowners to remove negative information on their credit reports, ha ha just kidding we aren’t going to do this but it makes us look good to say we will try.

Why George, Why?

Another must read from Callahan’s Cleveland Diary – take a good hard look at how many foreclosures were filed within blocks of George Voinivich’s Cleveland home. They say a picture paints a thousand words – this one paints a million. Look at the picture and then call George and ask him why he voted no on the bankruptcy reform measure.

More Callahan – a review of what passed and what didn’t and who benefits and foreclosures by zip code.

My take on the stories behind the foreclosure crisis.

Advocacy Groups Urge Bankruptcy Relief for Homeowners

In response to bankruptcy reform measures permitting restructuring or deferment of home mortgages being dropped from the Senate’s foreclosure compromise bill 15 civil rights, consumer and housing groups – Center for Responsible Lending, Leadership Conference on Civil Rights, ACORN, American Federation of Labor and Congress of Industrial Organizations, Consumer Action, Consumer Federation of America, Consumers Union, Lawyers’ Committee for Civil Rights Under Law, NAACP Legal Defense & Educational Fund, Inc., National Association of Consumer Advocates (NACA), National Association of Consumer Bankruptcy Attorneys, National Association of Neighborhoods, National Community Reinvestment Coalition, National Council of La Raza, National Fair Housing Alliance – issued a joint statement condemning the eviscerated bill:

Sadly, as long as policymakers rely on inadequate voluntary measures, we will continue to see foreclosures tear down communities and wipe out the most important source of financial security that most Americans have. Twenty thousand homeowners with subprime loans are losing their homes every week. It is not too late to do the right thing. We urge both the Senate and the House to take fast action to lift the ban that now holds homeowners hostage to voluntary relief from their loan servicers and investors that may never come.”

Call your representatives. Take action at the Center for Responsible Lending.

The Lending Crisis

This election season the sheer amount of information available is overwhelming. After my morning news update I head over to Brewed Fresh Daily and Psychobilly Democrat to get a read and concise summary on the hot issues of the day. It should come as no surprise that predatory lending is often at the top of the list.

It is also not surprising that this issue is on Obama’s radar. Mark Alexander, Senior Adviser to Obama’s campaign, will attend will attend the City of Cleveland’s Fighting Foreclosure and Abandonment Forum the day after the debate. To bring home the importance of this issue Psychobilly Democrat points us to photographs of a devastated Slavic Village on erieblu’s blog.

The photos are grim to be sure, but what caught my eye was erieblu’s very poignant “TOTAL DISCLOSURE”

i myself have lost my house, although not in a cleveland urban area. IN 2002, i bought my dream home in Lakewood after saving for 10 yrs and steady work history for several years( not easy for an artist in cleveland) one yr after 911, six months after buying my home my spouse & i found ourselves laid off and scrambling for jobs with incomes we had worked so hard to achieve…after yrs of working EIGHT different jobs since then, we finally lost it to the sheriff exactly five years from the day we got the key..

you cannot work with the bank or a nice nonprofit to help save your home with payments you can’t make with no income….no job-again, today i am laid off, homeless with no prospect of a real job for a college educated white kid who busted her ass trying earn a slice of pie from this american dream flavored dessert.

i have two cokes left, a borrowed computer & a busted painful ankle……so,right now i feel for this neighborhood, these people who also left what they had because you got nothing

She tells the story that proves that this is not just a “lending crisis.” Subprime lending is not why erieblu no longer has her home. She no longer has her home because she and her husband no longer have jobs. And that is the problem.

When jobs move offshore everyone suffers. Years ago in a bar in Youngstown, Ohio a friend of mine predicted that NAFTA would be the downfall of the middle class. He was right. He reminded me of this last week as he a related an even more chilling tale. We had been talking about, what else, jobs. I am looking for one. I told him about an advertisement on Craigslist directed to lawyers, selling offshore legal work done by lawyers – in India. I told him I was stunned that what I studied, paid dearly for and was licensed to do by the State of Ohio, could be replaced by lawyers not licensed to practice law in the United States.

He told me he had an even better story. He had been to the Emergency Room late one evening. He needed an X-ray. When he was told that the radiologist left at 11 pm. He asked when the xrays would be read; the nurse casually replied, “oh, we transmit them to India electronically and they are read there.” I checked and it is true; hospitals have been doing this for years.

I was dumbstruck.

So what are we, the educated middle class, to do? We did all the right things, we studied hard, worked hard, paid our taxes only to find our daily work gone. The desperation in erieblu’s post is heart wrenching and she speaks for many of us.

Poverty is working it’s way up our society. The middle class, the innovators, the men and women whose work provided the daily beat of life to this country, is disappearing. What is left is a rarefied class system. If you get to the top you hold onto it at any price, and if you fall from grace for whatever reason, getting out is almost impossible.

I read once that it takes a first class intellect to bring change; you must believe both the absolute gravity and hopelessness of the situation at the same time you believe you can change it. I want to believe Obama possesses this quality of intellect.

So Obama, if you are listening trade, bankruptcy, credit reporting and banking reform must be accomplished in short order, all while convincing American business to bring the jobs home. We are dying here in the rust belt.

And to erieblu, I applaud your courage in putting it out there. Thank you.

This post is also available on mybarackobama.com.