WASHINGTON — The Federal Reserve would endorse congressional efforts to impose civil monetary penalties for lenders who establish a pattern of abuse when writing mortgages, governor Randall Kroszner said Thursday. Kroszner cautioned that there should be a mandated ceiling as well as a floor for such penalties, if approved by Congress, so the liability for bad behavior — chiefly predatory practices — is not open ended.Kroszner spoke a few hours before President Bush was set to announce an industry-wide agreement to freeze teaser rates for categories of distressed borrowers to be segmented and qualified by a combination of payment history and credit scores.Anticipating that announcement, Kroszner told Congress that it is necessary to limit the legal liability involved when workout solutions change the terms of securities based on distressed mortgages.Kroszner did not say the legal problems could be entirely eliminated nor the mortgage distress banished. Workout plans are critical but “there may be instances when such arrangements are not prudent or appropriate,” and careful steps should be taken to “recognize the existing legal rights of investors,” he said. Noting there is a source of “litigation risk” when servicers modify existing loans, Kroszner said the programs will be set up to handle loan modifications and should be arranged in “a bottom-up approach” which is “designed to balance the needs of all parties.” He recommended civil monetary penalties for lenders and servicers where there is a “pattern or practice of violations” when consumers are mislead with “penalties that are clearly articulated and that reasonably match the magnitude of the violation.” Kroszner repeated the challenges facing the housing market are significant and the Fed is initiating systematic steps to address irresponsible lending while curtailing the rising rate of foreclosures. — Market News International
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Fitch Ratings said the negative outlook on the BB-plus rating reflects Miami Jewish's thin operating profile.
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The new-issue calendar will be a "good test to see if the higher absolute yields can pull buyers off the sidelines or if underwriters need to widen spreads significantly enough to reprice the entire market to clear the deals," according to Birch Creek strategists.
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The state of emergency will let the governor use the central government's rainy-day fund to provide money to WAPA that semi-autonomous agencies of his government owe the authority. WAPA will use the money to make payments to bondholders and other creditors starting Tuesday.
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"The upgrade is supported by strengthened debt service coverage ratios due to better than expected recovery from the pandemic," Fitch said.
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S&P affirmed the state's AA issuer credit rating, citing healthy reserves and plans to increase permanent fund totals to mitigate revenue fluctuations.
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The top five bond financings have an average dollar volume of more than $1.9 billion.
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