Mortgage - Home Loan, Commercial Loan

Home Federal Savings and Loan, one of Shreveport’s oldest financial institutions (in operation since 1924), and First Louisiana Bank, one of Shreveport’s newest, have agreed to combine.

According to a news release from Ron Boudreaux, of First Louisiana Bank, the resulting bank, retaining the name First Louisiana Bank, will have combined assets of more than $250 million and six offices in Caddo and Bossier parishes.

Both banks will operate independently until the close of this transaction, which is expected to occur late in the second quarter of 2008.

Daniel R. Herndon will serve as chairman of the board of the newly created holding company and the bank and chief executive officer of the holding company.

Boudreaux will become president and chief operating officer of the holding company and president and chief executive officer of the bank. He will also serve as a director of both the holding company and the bank.

In addition, David L. Winkler will serve as vice chairman of both the holding company and the bank.

Together, the banks employ 62 people, and Herndon said the expansion opportunities will likely increase the number of employees.

This transaction is subject to certain conditions, including regulatory approval as well as the approval of the respective shareholders.

All of the directors have agreed to the merger.

WASHINGTON (CBS) ― The Federal Reserve endorsed new rules Tuesday that would give people taking out home mortgages new protections against shady lending practices.

The proposed rules, approved in a 5-0 vote by the board, are geared to providing safeguards to the riskiest “subprime” borrowers, already painfully stung by the housing and credit debacles. The proposal is expected to apply to new loans made by all types of lenders, including banks and brokers. The plan could be finalized next year.

The Fed, which has regulatory powers over the nation’s banking system, is proposing:

* restricting lenders from penalizing certain subprime borrowers - those with tarnished credit or low incomes - who pay off their loans early. The restriction would apply to loans that meet certain conditions, including that the penalty expire at least 60 days before any possible payment increase.

* forcing lenders to make sure that subprime borrowers set aside money to pay for taxes and insurance.

* barring lenders from making loans when they don’t have proof of a borrower’s income.

* prohibiting lenders from engaging in a pattern or practice of lending without considering a borrower’s ability to repay a home loan from sources other than the home’s value.

“Unfair and deceptive acts and practices hurt not just borrowers and their families, but entire communities, and indeed, the economy as a whole,” said Fed Chairman Ben Bernanke in prepared remarks. “They have no place in our mortgage system,” he added.

Fed policymakers also are considering requiring financial disclosures to borrowers early enough to use while shopping for a mortgage. Lenders could not charge fees - except for a fee to obtain a credit report - until after the consumer receives the disclosures. The Fed also will consider prohibiting certain types of misleading or deceptive advertising for certain loans. It also would require that all applicable rates or payments be disclosed in ads with equal prominence as advertised introductory “teaser” rates.

In addition, the Fed is expected to propose barring lenders from paying mortgage brokers a fee that exceeds the amount the would-be borrower had agreed to in advance that the broker would receive.

And, the Fed would ban certain practices, such as failing to credit a mortgage payment to a borrower’s account when the company servicing the mortgage receives it. The Fed also would prohibit a broker or other company from coercing or encouraging an appraiser to misrepresent the value of a home.

Before taking effect, the rules must be voted on again following a period of public comment and possible revisions.

The Fed’s response has taken on heightened importance given the meltdown in the housing and credit markets that has led to record numbers of home foreclosures. The crisis has raised the odds that the economy might fall into a recession, roiled Wall Street and given Democrats and Republicans much fodder to blame each other.

The plan, if ultimately adopted, offers Bernanke, who took over the helm in February 2006, an important opportunity to put his imprint on the Fed’s regulatory powers. Some critics have complained that Bernanke’s predecessor - Alan Greenspan, who ran the Fed for 181/2 years - failed to act as a forceful regulator especially during the 2001-2005 housing boom, when easy credit spurred lots of subprime home loans and many exotic types of mortgages.

When the housing market went bust, subprime loans were most heavily affected.

On Sunday, Greenspan called for the government to infuse cash into the economy to help homeowners, though he stopped short of calling for a tax break.

Of the nearly 3 million subprime adjustable-rate loans surveyed by the Mortgage Bankers Association from July through September, a record 4.72 percent entered the foreclosure process during those months. At the same time, a record 18.81 percent of the subprime adjustable-rate loans were past due.

When home values weakened, borrowers were left with loan balances that eclipsed the value of their homes. They also were clobbered when their loans reset with much higher interest rates.

(© 2007 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

For adoptive parents, bringing a new baby into the home can be very costly. One national bank has begun helping such families more easily afford the financial burdens of adoption by tapping into their home equity.

Chase, a division of JPMorgan Chase & Co., introduced New Additions last month, a program that offers adoptive parents a discounted home-equity loan. Adoption advocates say it is the first service of its kind and will give the 125,000 families who adopt children each year in the United States more financial flexibility.

“For families who are spending $20,000 or $30,000 to adopt internationally, it can really help,” said Rita Soronen, executive director of the Dave Thomas Foundation for Adoption in Dublin, Ohio.

The Chase program works like other home-equity loans, in that borrowers take out a line of credit against the equity in their homes, borrowing money and paying it back.

As they have with everything else in the mortgage market in recent months, banks are making home-equity loans much more cautiously.

Chase’s New Additions product is no exception.

Only those with more than 10 percent equity in their homes can qualify, and applicants must also have credit scores above the subprime level, which is typically in the low-to-mid-600 range. The maximum amount of the credit line varies with applicants’ credit histories and the amount of equity they have in their homes.

The initial interest rate varies according to a number of factors, including the applicant’s credit history. Once the loan is made, the interest rate fluctuates according to the prime interest rate.

Whatever interest rate an applicant qualifies for, Chase discounts that rate by a full percentage point for New Additions customers for the first six months.

Earlier this month, for instance, a borrower in Rye, N.Y., with excellent credit and 50 percent equity in a $400,000 home could qualify for a line of credit of up to $160,000 at an interest rate of 7.25 percent. The New Additions discounted introductory rate would be 6.25 percent

There is no limit to the amount of money the Federal Home Loan Bank system can lend to support the mortgage finance industry as long as investors are willing to keep on buying its debt at moderate prices, said the system’s regulator.

“I do not think there is anything that sets a maximum amount of potential advances,” Ronald Rosenfeld, chairman of the Housing Finance Board, said in an interview with the FT.

“If the market were to perceive some excess and therefore began to resist buying our securities, that would obviously impose a limitation,” said Mr Rosenfeld. “I simply could not begin to quantify that nor do I see it coming in the near future.”

Since the onset of the credit crisis, the FHLB - a government-sponsored network of 12 co-operative banks - has emerged as a vital source of finance for mortgage lenders. In the third quarter its lending grew at an annualised rate of roughly three-quarters of a trillion dollars a year. To fund this massive expansion the FHLB issued $210bn debt in November alone.

Mr Rosenfeld said the FHLB would not lend without limit to individual financial institutions in need of cash. “At this time prudence would suggest that an individual bank does not go beyond a certain point with any particular member. I am sure that will continue to be a topic of discussion.”

At the end of September, the three biggest borrowers were Citigroup (NYSE:C), Countrywide (NYSE:CFC) and Washington Mutual (NYSE:WM).

Mr Rosenfeld said the FHLB was doing what it was created to do in 1932: providing a backstop source of liquidity for mortgages when the normal private sources of finance dried up. “The role has not changed. The numbers have changed.”

He said the FHLB provided an essential “safety buffer” for private markets. “If the members of the system could obtain funds elsewhere at better prices or on better terms they would do.”

He added: “I think that matters of market liquidity such as we are talking about require an entity that has a greater purpose in life than just pure profit.

Some top former economic officials worry about the massive expansion of debt that is seen as carrying a government guarantee. But he said: “I do not look at this in context personally of risk to the American taxpayer . . . more in the context of benefit to Americans.

“There is always a risk,” he admitted. “But the reward in my opinion is enormously more significant than the risk.” The FHLB was protected against credit risk on its lending by tough collateral rules and a requirement to post de facto margin. The regulator was on “high alert”. But there was no prohibition on posting complex or illiquid securities as collateral for loans.

“Once we start saying we will not take something that is hard to value, it exacerbates liquidity problems in our system.”

The 12 FHLBs have investment portfolios with $130bn (EU90.4bn, £64.4bn) in mortgage-backed securities. This includes some subprime loans. Finance Board staff estimate that the dollar-weighted exposure to securities backed by subprime loans is less than 10 per cent of the private label MBS holdings.

“We believe after very extensive analysis that there is very minimal credit risk in the MBS held by the banks,” Mr Rosenfeld said.

“If house prices were to depreciate 20 to 30 per cent you would simply have enormous problems in this country.” One of the ways to try to ensure that did not happen was to “ensure we continue to provide liquidity”.

LOS ANGELES - U.S. homeowners increasingly failed to keep up with their home loan payments in November, as the number of foreclosure filings surged 68 percent nationwide compared with the same month a year ago, according to a mortgage research company.

In all, 201,950 foreclosure filings were reported last month, compared with 120,334 in November 2006, Irvine-based RealtyTrac Inc. said Wednesday.

Last month’s filings fell 10 percent from October’s 224,451.

The last time there was a sequential drop in foreclosure filings was between August and September, when they fell 8 percent.

“It’s a little bit of good news in the otherwise murky real estate market right now,” said Rick Sharga, RealtyTrac’s vice president of marketing. “The fact that we’re seeing a 10 percent decrease is significant. It’s a good thing.”

The U.S. had one foreclosure filing for every 617 households in November, RealtyTrac said.

The filings include default notices, auction sale notices and bank repossessions. Some properties might have received more than one notice if the owners have multiple mortgages.

Forty-three states saw an increase in foreclosure filings over last year.

The decline in filings from October to November likely corresponds with a lull in adjustable-rate mortgage resets, Sharga said.

Such loans typically have a low introductory interest rate, then reset sharply higher after a set period. The number of borrowers who took on adjustable-rate mortgages offering a teaser rate for just two or three years rose sharply in the last couple of years of the housing boom, particularly in high-priced states such as California.

But many borrowers have been unable to afford the increased payments that come with the resets, and falling housing prices have made it harder to refinance or sell.

A flood of rate resets for such loans has helped drive up the number of home loan defaults in the last few months.

“We’ll see another fairly big spike in (foreclosure) filings in early ‘08,” Sharga said. “Then there’s another group of loans that’s due to reset in May and June, so we’ll see another wave of defaults probably in the fall.”

Experts estimate some 2 million adjustable-rate mortgages are due to reset at higher rates in the next seven months.

Nevada, Florida and Ohio had the highest foreclosure filing rates in the country last month, RealtyTrac said.

Nevada reported one foreclosure filing for every 152 households, earning the state the highest rate in the nation for the 11th month in a row. The state had 6,694 filings in November, up 1 percent from October and up 167 percent from November 2006.

Florida had one foreclosure filing for every 282 households. The state reported 29,238 filings last month, down more 3 percent from October, but up 212 percent from November last year.

Ohio reported one foreclosure filing for every 307 households. The state had 16,308 filings last month, down nearly 6 percent from October and nearly double the number from November 2006.

California had 39,992 foreclosure filings last month, up 108 percent from a year earlier and the most in the nation. Its foreclosure rate was one filing for every 325 households.

The state’s filings fell 21 percent from October’s total.

Rounding out the states with the top 10 foreclosure filing rates in November were Colorado, Michigan, Georgia, Arizona, Indiana and Illinois.

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On the Net:

RealtyTrac Inc.: http://www.realtytrac.com

PHILADELPHIA (AP) — Former American Home Mortgage Investment Corp. loan officers want a bankruptcy judge to let them alert thousands of other ex-employees that they may be entitled to collect from the failed company for allegedly overworking and underpaying them.

Court papers filed late Friday ask the U.S. Bankruptcy Court in Wilmington, Del., to lift the shield that protects companies in Chapter 11 from lawsuits so American Home workers can be informed of their right to participate in a potential class-action lawsuit.

Those who left their jobs before American Home went under in August “may remain unaware that their employer engaged in illegal pay practices,” say lawyers who filed the class action in California before American Home sought Chapter 11 protection.

Due to the bankruptcy filing, lawyers for American Home’s suing loan officers need court approval to send out notices about the lawsuit, which was filed with the U.S. District Court for the Northern District of California. They also need bankruptcy court approval to seek certification of class-action status for the case.

Officials of the liquidating Melville, N.Y.-based company weren’t available to comment Monday.

Time could be running out for those entitled to join in the lawsuit, as a Jan. 11, 2008, claims-filing deadline looms in American Home’s Chapter 11 case, according to the employee lawyers.

Plans are to file a proof of claim in the bankruptcy case on behalf of employees involved in the class action, which began in June. But if employees don’t know about the class action and don’t sign up, they won’t be included in the bankruptcy claim.

The California class action alleges violations of federal labor law and state wage and hour laws for California, New York, Illinois, Wisconsin, Colorado, New Jersey and Washington.

Long hours without overtime were an occupational hazard for loan officers in the heyday of home lending, if the lawsuits filed against mortgage companies are any indication.

New Century Financial Corp. of Irvine, Calif., and Atlanta’s HomeBanc Mortgage Co., both of which filed bankruptcy this year, also have been accused in court of violating overtime pay laws.

“What they do is hire a bunch of people and tell them you must work 60, 70, 80 hours a week and they think because these people are paid on commission basis that they are exempt from the Fair Labor Standards Act,” said Marshall A. Adams, whose Ft. Lauderdale, Fla.-based firm Adams, Cassidy and Piccolo is handling the HomeBanc litigation.

Adams said most mortgage brokers were office-bound employees who mostly worked the phones. So in spite of their commission pay structure — which meant six-figure incomes for some — lawyers say the brokers were entitled to overtime pay and other protections.

The industry is strained, experts say, by rising defaults and a new law that reduces federal subsides to lenders.

WASHINGTON — Credit-market tremors — like the ones linked to the housing crisis — are beginning to show up in the $85 billion student-loan market.

So far, there is no apparent shortage of loans available to college-bound Americans. But analysts say rising defaults, coupled with a new law that cuts federal subsidies to student lenders, are beginning to strain the industry.

The rising defaults have surfaced amid falling home prices and rising foreclosures, trends that last summer touched off a crisis in global credit markets as investors faced the prospect of not being repaid on mortgage- backed securities.

In some cases, families whose home loans are resetting at sharply higher rates may be having a harder time keeping up to date on auto- or student-loan payments. A general tightening of credit is also probably making it more difficult to borrow from other sources to meet these payments, analysts said, and soaring commodity prices are eating into budgets.

Student lenders are under increasing pressure too. Following a crackdown by New York Attorney General Andrew Cuomo, they have been forced to alter the way they do business. For example, they no longer are allowed to offer gifts to or share revenue with college financial-aid officers.

It is against this backdrop that, on Friday, First Marblehead’s chief executive cited “challenging times” as the company slashed its quarterly dividend to 12 cents a share from 27.5 cents and said it would not bundle any more student loans for investors during the fourth quarter. As this activity shrinks, less money will be pumped into the private student-loan market, which makes up 20 percent of the overall student-loan market.

Meanwhile, reduced federal subsidies and anticipated lower profits have led a number of banks and other student lenders to scale back discounts to borrowers, such as reduced interest rates for having payments automatically debited from bank accounts.

Sallie Mae, the nation’s biggest student lender, formally called SLM Corp., saw its $25 billion acquisition by a private-equity firm and two banks — Bank of America and JPMorgan Chase — scuttled and thrown into court. The investors argued the change would cut deeply into profits.

Sallie Mae reported that it wrote off $142.6 million for borrowers missing payments on student loans in the July-September quarter, more than doubling the $67.2 million writedown of a year earlier.

The Federal Reserve moved Tuesday to protect home buyers from dubious lending practices, its most sweeping response to a mortgage meltdown that has forced record numbers of people from their homes.

The Fed has been under attack for not doing more to stem the crisis as hundreds of thousands of people lost the roof over their head. The situation raised the odds the country will fall into recession, unhinged Wall Street, racked up multibillion losses for financial companies and resulted in political finger-pointing over who was to blame.

The proposed rules, endorsed by the Federal Reserve Board in a 5-0 vote, would crack down on a range of shady lending practices that has burned many of the nation’s riskiest “subprime” borrowers — those with spotty credit or low incomes — who have been hardest hit by the housing and credit debacles. The rules also would curtail misleading ads for many types of mortgages and bolster financial disclosures to borrowers.

“Unfair and deceptive acts and practices hurt not just borrowers and their families, but entire communities, and indeed, the economy as a whole. They have no place in our mortgage system,” Fed Chairman Ben Bernanke said. “We want consumers to make decisions about home mortgage options confidently, with assurance that unscrupulous home mortgage practices will not be tolerated,” he said.

If ultimately adopted, the plan would apply to new loans made by thousands of lenders of all types, including banks and brokers. It would not cover loans already made.

The proposal would restrict lenders from penalizing risky borrowers who pay loans off early, require lenders to make sure these borrowers set aside money to pay for taxes and insurance and bar lenders from making loans without proof of a borrower’s income. It also would prohibit lenders from engaging in a pattern or practice of lending without considering a borrower’s ability to repay a home loan from sources other than the home’s value.

The plan disappointed both supporters and opponents of tougher home-lending regulations.

Mortgage lenders worried that the Fed plan was too tough and could crimp customers’ choices. “We worry that some of the product restrictions could make it harder for bankers to tailor products for their customers and communities and result in some creditworthy customers not being able to obtain a loan,” said Edward Yingling, president of the American Bankers Association.

Consumer groups and Democrats in Congress complained that the proposal doesn’t provide sufficiently strong safeguards for borrowers.

“The Fed has done too little, too late,” said Kathleen Day, spokeswoman for the Center for Responsible Lending, a group that promotes homeownership and works to curb predatory lending. “We don’t think it is strong enough to protect people in the future and does nothing to help people left holding the bag now,” she said.

Consumer advocates wanted an outright ban on prepayment penalties. These penalties, they say, deter homeowners from refinancing on more favorable terms. The penalties can be hard on borrowers who want to get out of adjustable-rate mortgages that reset from a low introductory rate to a much higher one they have trouble paying off. However, mortgage industry representatives argued that prepayment penalties ensure that lenders receive a minimum return if loans are paid off early, and can provide borrowers with a benefit of lower upfront costs or lower interest rates.

Another disappointment to consumer groups: to make a case for a possible violation, the lender has to have engaged in a pattern of making loans without considering the borrowers’ ability to repay. An individual incident would not be sufficient by itself.

“We are pleased the Fed recognized the critical issues that have caused the foreclosure crisis. Unfortunately, the proposal fell short of the mark,” said Allen Fishbein, the Consumer Federation of America’s point person on housing and credit policies.

Before taking effect, the public, industry and others can weigh in. The Fed will then vote again, and the rules could be revised.

The proposal offers Bernanke, who took over the helm in February 2006, an important opportunity to put his imprint on the Fed’s regulatory powers. Some critics have complained that Bernanke’s predecessor — Alan Greenspan, who ran the Fed for 18 1/2 years — failed to act as a forceful regulator especially during the 2001-2005 housing boom, when easy credit spurred lots of subprime home loans and many exotic types of mortgages.

When the housing market went bust, subprime loans were most heavily affected.

Of the nearly 3 million subprime adjustable-rate loans surveyed by the Mortgage Bankers Association from July through September, a record 4.72 percent entered the foreclosure process during those months. At the same time, a record 18.81 percent of the subprime adjustable-rate loans were past due.

When home values weakened, borrowers were left with loan balances that eclipsed the value of their homes. They also were clobbered when their loans reset with much higher interest rates.

The House has passed legislation that would put into law some tougher provisions than contemplated by the Fed. A similar bill is pending in the Senate.

Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee and contender for his party’s presidential nomination, called the Fed proposal a “significant step backwards.” Rep. Barney Frank, D-Mass., said it shows that the Fed is “not a strong advocate for consumers, and two, there is no Santa Claus. People who are surprised by the one are presumably surprised by the other.”

For both risky and not-so-risky borrowers, the Fed also proposed:

• Prohibiting certain types of misleading or deceptive advertising for home mortgages. For instance, it would bar using the term “fixed” to describe a rate that is not truly fixed over the life of the entire loan. It also would require that all applicable rates or payments be disclosed in ads with equal prominence as advertised introductory “teaser” rates.

• Require lenders to provide financial disclosures to borrowers early enough for them to use while shopping for a mortgage. Lenders could not charge fees — except for a fee to obtain a credit report — until after the consumer receives the disclosures.

In addition, the Fed proposed barring lenders from paying mortgage brokers a fee that exceeds the amount the would-be borrower had agreed to in advance that the broker would receive.

The Fed also proposed banning certain practices, such as failing to credit a mortgage payment to a borrower’s account when the company servicing the mortgage receives it. And it would prohibit a broker or other company from coercing or encouraging an appraiser to misrepresent the value of a home.

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On the Net:

Federal Reserve: http://www.federalreserve.gov/

The European Commission has unveiled plans to integrate EU mortgage markets, saying it could eventually lead to lower prices for borrowers.

The Commission expects most consumers to continue to borrow locally.

But it believes that the proposed measures will help improve competition among lenders and potentially drive down the cost of loans.

It wants to making it easier for firms to enter each other’s markets but stopped short of proposing a new law.

Instead, the more integrated market would be likely to be run on a voluntary basis in the 27-nation bloc.

The proposals, set out in a white paper, said the value to the EU economy of such increased integration over the next 10 years was about at 94.6bn euros ($136.4bn; £67.6bn)

This meant consumers could save as much as 470 euros per year in interest on a 100,000 euro mortgage loan by 2015.

Non-binding approach

“The Commission has not yet decided whether legislation is the most appropriate way forward to achieve the potential benefits from integration of mortgage markets,” it said in a statement.

Prospects of a binding approach through EU legislation have been strongly opposed by such markets as Germany and Britain.

Among the most important issues highlighted by the Commission are differences in national rules on early repayment of mortgages, different financial traditions and differing consumer behaviour, as well as language issues.

The Commission also said it had drawn “on the initial lessons that can already be learnt from the recent turbulence in financial markets”, sparked by problems in the US sub-prime market.

But it said that the proposals were not a reaction to the sub-prime crisis in the US, as its research dated back several years.

Mercantile Commercial Capital LLC has increased its loan volume by 22 percent compared to the same period in 2006.

The Maitland-based firm reports that through Nov. 30, it has provided 47 U.S. Small Business Administration 504 loans totaling $101 million

Christopher G. Hurn, Mercantile president and chief executive officer, says the 47 loans helped create 761 new jobs.

The U.S. Small Business Administration 504 loans help small business owners who want to develop or acquire their own facilities.

Hurn also reports that Mercantile has added 14 correspondent offices, including Seattle, San Antonio, Wichita, Phoenix, Sacramento, Dallas, St. Louis and Cape Cod. The firm now boasts 32 correspondent offices throughout the country.