Wells Fargo seeks to educate subprime borrowers

Filed under: Banking & Finance |

Amid predatory lending allegations, Wells Fargo has launched an educational program for those seeking high-interest, subprime loans.

The program, called Steps to Success, gives customers educational resources, direct contact with credit and finance specialists and advice about automatic banking to promote effective money management. Subprime customers are automatically enrolled once their loan is approved.

Critics have accused the bank of gouging subprime customers, but bank officials deny any malice or wrongdoing.

Still, the criticism drove the bank to change its subprime loan practices. Last year the bank capped some fees and reduced payment penalties. The Steps to Success program is the bank’s latest attempt prove its concern for the subprime market. It’s also a follow-up to promises to institute change that bank officials made at national housing symposium six months ago.

Wells Fargo is the nation’s fourth-largest subprime mortgage lender, making $42 billion worth of the high interest loans last year. Ameriquest, New Century Financial Corp. and Countrywide Financial Corp. are the top three, respectively.

About $625 billion worth of subprime loans were made last year.

Fund industry opposing broker voting proposal

The mutual fund industry is warning that a New York Stock Exchange proposal to eliminate broker voting in director elections would cost the industry at least as much as basic fund services such as custody and auditing, and that requiring shareholder votes in uncontested elections would be needless.

Brokers currently are allowed to vote their clients’ shares for directors of companies that they hold stock in or mutual funds that they hold shares in.

But, under a NYSE proposal made in October, only shareholders could vote for directors of companies or mutual funds. The Securities and Exchange Commission has not yet approved or denied the proposal.

Funds’ costs of soliciting proxies would more than double from $1.65 per shareholder account to $3.68 under the proposal, according to fund industry analysts.

Fed overseers offer advice about real estate lending

Federal banking authorities have released guidance about sound risk management for commercial real estate lending.

The Office of the Comptroller of the Currency, the Federal Reserve Board of Governors and the Federal Deposit Insurance Corp. say the information is intended to ensure that institutions with a large commercial real estate lending strategy remain healthy and profitable while continuing to serve the credit needs of their communities.

The agencies believe commercial real estate lending is an area in which some banks are becoming increasingly concentrated.

Officials say the trend is particularly evident among small- to medium-sized banks that are facing strong competition with other business lines. The agencies support banks serving a vital role in their communities by supplying credit for business and real estate development.

However, the agencies are concerned that rising commercial real estate loan concentrations might expose institutions to unanticipated earnings and capital volatility in the event of adverse changes in commercial real estate markets.

Stash your cash and invest your best, youngsters

Baby boomers have some valuable advice for younger generations — make good use of your piggy bank.

Seventy-one percent of baby boomers said that they wished they had begun to save for retirement when they started their first full-time jobs, according to a study by Thrivent Financial for Lutherans of Minneapolis.

When asked what kept them from being better prepared for retirement, 35 percent ranked “starting to save and invest too late in life.” Other obstacles were the cost of health care and low-paying jobs.

Investment firm launches crystal ball Web site

A one-year Web site subscription: $76.45. A month-long subscription: $8.95. Knowing what the future holds: priceless.

That’s the way the private investment firm Market Prophets hopes investors will see its latest venture.

The firm has launched a Web site that attempts to predict the future for individual investors.

For a nominal fee, investors can access themarketprophets.com, which provides short- and long-term predictions about the movement of the Dow Jones Industrial Average.

The Chicago-based firm has been making such predictions internally since 1997, and claims it has been right 85 percent of the time.

Correction

Last week’s banking and finance column misstated the number of Compass Bank branches in the Denver area. There are 24 in Denver.

Rob Larimer covers banking and finance for the Colorado Springs Business Journal.