In an ongoing effort to protect homeowners facing foreclosure, the Consumer Financial Protection Bureau has issued new rules for mortgage servicers. The rules, which won’t take effect until January 2014, include provisions requiring banks to consider and respond to loan modification applications submitted at least 37 days before a schedule foreclosure. Similarly, servicers must inform borrows of alternatives to foreclosure and will not be able to begin foreclosure proceedings while homeowners are seeking a loan modification. The rules also severely limit some of the lending practices (e.g. inflated up-front fees, interest-only payments, and high debt-to-income ratios) considered predatory by consumer groups. For more detail, see articles by WashPo and CNN.
Citigroup’s Q4 earnings report underperformed this morning – in large part due to its $1.29 billion in legal costs – and the company’s stock dropped 3.4% in early trading. While most banks are still purging their balance sheets, there is worry that we may not have seen the end of these mortgage-crisis-era liabilities. Citigroup’s CFO, John Gerspach, hinted on a Thursday conference call: “I think that the entire industry is still looking at some additional settlements that are still yet to appear.” For more, see NYTimes and Reuters. [Bank of America’s Q4 was hit by settlements as well: WSJ]