Flotter

Nimbler.

Also, more agile, speedy, swift, brisk, deft, lissome, slippy, nippy and “fly.”

Non-bank-owned “mortgage servicing” companies have been buying up mortgage servicing rights from large banks in the U.S.A., controlling 3% of the mortgage servicing market in 2010 and 17% in 2014 said NYTimes.com. Homeowners in trouble seeking help with their mortgage found themselves being asked to supply the same documentation over and over as their mortgage servicing was sold on from group to group.

Initially, some U.S. regulators thought that moving banks’ mortgage management responsibilities from mortgage servicers the banks owned to private companies the banks didn’t own would benefit consumers because the private companies would be “nimbler.”

One of the largest of these companies, Ocwen, has now been found to have been cutting numerous corners. It was also affiliated with companies that profit from foreclosures. The chair of Ocwen was chair of a company that bought foreclosed properties and turned them into rentals, but Ocwen told regulators that it maintained an “arms-length relationship” from his foreclosure company.

Though it’s been said the private mortgage servicers are unregulated in the U.S., there may instead be a bit of a patchwork of too-light regulation because in December 2013 the U.S.’s Consumer Financial Protection Bureau and 49 state attorneys general negotiated a $2.1 billion settlement with Ocwen for “mortgage servicing violations.” The C.F.P.B. commented that Ocwen “took advantage of borrowers at every stage of the process.”

Cut corners attributed to the private mortgage servicers have included:

  • Robosigning fake paperwork
  • Other missing paperwork that wasn’t counterfeited
  • Demanding wrongful fees
  • Wrongful evictions
  • Not updating technology and procedures and not hiring sufficient employees to handle the huge influx of mortgages despite assurances to the contrary and despite the overloaded software’s apparently accidental triggering of wrongful foreclosures
  • Profit-motivated rushing of processing
  • Possible hosing of the housing-derivatives investors who bought mortgage-based financial securities

The head of the state of New York’s Department of Financial Services, Benjamin Lawsky, installed an independent monitor at Ocwen who reported on the inadequate bookkeeping, as a result of which Mr. Lawsky stopped Wells Fargo’s sale or transfer of mortgage servicing rights for 184,000 mortgages, worth $39 billion, to Ocwen in February 2014.

Ocwen was headquartered in Atlanta, with staffing centers in India and Uruguay, an affiliate incorporated in the tax haven of Luxembourg and an affiliate based in the tax haven of the Cayman Islands.

The structure of the companies and possibly of the hedge funds investing in them during their recent rapid growth begs the question of whether mutual stock price embetterment has been an objective and, if so, how that was done. It looks as if moving profits and losses around the world for tax benefit could also have been envisioned. You have to note the big banks’ balls in selling off their buggy business as “rights” rather than paying people to take it as a favor. The ways innovated to make money off such a venture might be instructive. They might include gaming of a U.S. system in which state regulators have to do the job of federal regulators while families lose their homes.

Ocwen itself said that servicing mortgages has a limited lifespan and it has been seeking to diversify. FT.com reported the company was planning to sell up to $1 billion in a new type of debt this year: mortgage-servicing-rights-backed bonds.

(FLAW tah.)

Gehaltszulage, Taschengeld, Spesen

“Extra salary,”

“pocket money,”

and the German word that, depending on how loosely your company defines it, may mean money for expenses, room and board, sundries, fees, entertainment. “Ausser Spesen nichts gewesen” (ow! sah   SHPAY zen   nix    geh VEY zen) means a sales trip occurred in which few positive results were achieved apart from enjoying the per diem for expenses.

After the E.U. capped bankers’ bonuses at 1x to 2x annual salary, London banks have started renaming their lagniappes in ways that don’t easily translate into German. Last fall some of the bonus lolly was being paid as “top up” money, and now they’re being called “allowances.”

NYTimes.com said new nomenclature may also include “role-based pay” and “reviewable salary.”

Gray areas are being found, NYTimes.com said, between fixed pay and variable pay. The new bonuses can include giving employees variable pay at fixed, regular time intervals, not having it count toward a pension, resetting it every year like a salary, changing it in response to environmental factors like a bonus.

Renaming bonuses may make it harder to “claw” them back after risk management mistakes, as well as impede efforts to encourage employees to take a longer-term view by e.g. requiring bonuses to be paid out in installments over several years.

(G’HALT soo log en,   TOSH en geld,   SHPAY zen.)

Bankenberatung bemängeln

German consumer protection groups “criticized the deficiencies in investment advice banks give to consumers,” saying the old issue persists that bank advisors’ recommendations depend more on the commission the advisor will earn from the investment than the return the customer will reap, the risk they will be exposed to, whether they can afford the product, and/or possibly also the harm propagated by the company invested in.

ZDF heute journal’s financial correspondent Valerie Haller said consumer protection groups such as the Verbraucherzentrale Baden-Württemberg warned that better and qualified bank advising would only happen if investment advisory services and investment sales were separated within the banks. Bank investment advisors ought to have specialist qualification (usually this means courses and a test) and the quality of their advice ought to be monitored by government with sanctions applicable after violations. These systemic changes need to be made via new legislation from the Bundestag, a consumer protection rep said.

Ms. Haller added that the banks countered by claiming ~90% of their customers said they were satisfied with the investments they’d been advised to make, to which the consumer protection groups responded that they had evidence many customers didn’t understand what they’d bought.

Apparently bank advisor’s commissions have been banned by law in the U.K., though either this was done recently or it was incomplete because a new fine was just imposed on Lloyds Banking Group for two billion pounds’ worth of bonus-fueled overselling from 2010 to 2012. The listed “products” oversold to the possibly up to 700,000 customers do not include stocks and bonds, and the Guardian quoted the U.K.’s Financial Conduct Authority’s director of enforcement and financial crime as saying customers will not be “‘put first'” while companies still “‘incentivise their staff to do the opposite.'” The Guardian said she mentioned that “the fine had been increased by 10% because Lloyds failed to heed repeated warnings about sales practices and because it had been fined 10 years ago for poor sales incentives.”

The Baden-Württemberg consumer protection group’s webpage reminds readers that Germany’s statute of limitations period for suing banks after incorrect investment advice was recently lengthened from three to ten years. Also that bank investment advisors have been required by law since 2010 to keep a record describing what was said in their meetings with clients and potential clients when discussing potential purchases of stocks or bonds [Wertpapiere]; this does not apply for consultations about other products, such as the ones Lloyds was just fined for overselling. After a consultation, German bank advisors must sign a copy of the protocol and give it to the consultee, who does not have to sign it even though some banks have claimed the opposite. The German law mostly lets the banks decide how the protocol will look but does define the following general requirements:

1. Reason for the consultation

2. Length of consultation

3. Advice-relevant information about the customer’s personal situation

4. Data about the financial instruments and investment services discussed

5. The customer’s wishes and investment goals, and their relevant weightings

6. Advisor’s product recommendations and reasons why

(BONK en bear AH toong   bem ENG elln.)

“Wenn das Angebot erst einmal in dieser Breite vorhanden ist, dann wird die Nachfrage sich einstellen”

“When supply is available in this [amplitude/latitude], then the demand will adjust,” transport minister Peter Ramsauer (C.S.U.) said at the May 2013 electromobility summit in Berlin, explaining how supply was going to drive demand for electric cars in Germany. Though his government certainly wanted more electric cars on German roads, they said they would continue not giving individual consumers subventions or tax rebates for purchasing the expensive but environmentally friendly vehicles. Only ~7000 electric cars were registered in Germany (pop. ~80 million). Electric car prices in Germany were considered high by consumers and everyone—government, car makers and consumers—agreed there weren’t many models to choose from. Auto manufacturers at the government-hosted electromobility conference said on 27 May 2013 they hoped to increase the electric car models for sale in Germany to ~15 by 2015.

Update on 26 Nov 2013: Norway is promoting electric cars more than any other country in the world, with free downtown parking, free downtown recharging, no taxes on purchases of new electric automobiles (omitting 25% V.A.T., import fees and tariffs, import customs charges), no highway tolls and permission to drive in bus lanes. Rich in oil and water, Norway has been selling the oil internationally and using the water to create free electricity for electric cars at home, to meet the country’s 2017 carbon emissions reduction goals. The ~5 million Norwegians own about 14,000 electric cars, which have become the most popular vehicles people are applying to register there, unseating the Volkswagen Golf.

(Ven   doss   ON geh boat   eahst   moll   inn   dee zah   BR-R-R-IGHT ah   foah hond en   issed,   don   vee ahd   dee   NOCHH fr-r-rog ah   zichh   eye n shtell en.)

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