Author Archive
Bank of America (NYSE: BAC) Sues First American Insurance Corp (NYSE:FAF)
Posted by: | CommentsLawsuits in the mortgage industry are becoming increasingly prevalent as banks are suing lenders and lenders are suing insurers in hopes of recouping losses from the sub-prime meltdown that occurred in 2008. The latest in this serious of suits comes from Bank of America (NYSE: BAC) which recently brought suit against insurer First American Corp (NYSE: FAF).
In the suit, Bank of America claims that First American failed to provide proper title searches on more than 5,500 home equity loans, resulting in $535 million in losses for the lender.
The suit, filed in Charlotte, N.C., alleges that First American relied on borrowers to disclose on information about liens and other issues that would cloud the title on their properties, rather than conducting traditional independent title searches which would demonstrate without a doubt that there are no other competing ownership claims.
“Bank of America had a reasonable expectation to be paid its charge-off amount or unpaid principal balance as the amount of loss in the event of an insured defect under the … policies,” the lawsuit states.
According to several media reports, the title policies were issued under what was called the “QuickClose Program”, which acted as more of a lien protection program rather than full-fledged title insurance.
Lenders, including Bank of America, started to turn to these protection plans because they could be processed more quickly and were less expensive than traditional title insurance.
Charlotte-based Bank of America says that it has had to write off between $1.5 billion and $2 billion in soured home-equity loans each quarter.
This article (Bank of America (NYSE: BAC) Sues First American Insurance Corp (NYSE:FAF)) was originally developed by and is property of American Banking News. Checkout American Banking News for up-to-date banking news and peer to peer lending news.
Prosper Marketplace Has 11 Days to Announce New Funding or May Face Bankruptcy
Posted by: | CommentsLast month Prosper Marketplace, a company that offers peer-to-peer loans, received a $2 million bridge loan due on April 1st to cover operating costs while it seeks its next round of venture capital funding. The loan is due in 11 days and Prosper Marketplace may find itself out of cash if it doesn’t announce a new round of venture capital by the time the bridge loan it took out comes due.
The interim round of capital was announced on February 3rd and at the time, Prosper Marketplace said that the process to seek its next major round of funding is “going well and we have strong interest from a number of world class investors.” The company said that hat they are looking “forward to announcing our Series D round soon.”
Others have been more skeptical of Prosper Marketplace’s chances in raising a next major round of capital. The company has been plagued by far higher than expected default rates from its borrowers and has not been able to get its loan demand up to anywhere near sustainable levels since the company was allowed to re-launch after registering with the SEC in 2009. We recently reported that the amount of new loans that Prosper is originating each month is declining.
No one is certain how much operating capital Prosper Marketplace has in its coffers, but many believe that it’s not much. On September 30th of 2009, Prosper Marketplace reported to the SEC that it had $2.07 million in operating capital. Since then, it’s received $3 million worth of warrants in terms of funding. Prosper has a relatively high burn-rate though, and some predict that it would be out of money in early April based on burn-rate calculations using the company’s previously released SEC filings.
Prosper Marketplace has not released a Form 10K to the Securities and Exchange Commission, but will be legally required to do so by April 1st. That report will tell the public the company’s financial status at the end of December.
The company will be required under the terms of its February loan to repay the $2 million with interest on April 1st if it does not receive a new round of funding. If the company does not announce a new round of funding and does not have capital to repay the loan, Prosper Marketplace will likely end up in a situation where it is out of cash. At that point, the company would either be forced to file for bankruptcy or wind-down its operations.
This article (Prosper Marketplace Has 11 Days to Announce New Funding or May Face Bankruptcy) was originally developed by and is property of American Banking News. Checkout American Banking News for up-to-date banking news and peer to peer lending news.
Fifth Third Bancorp (NYSE: FITB) President Bob James said an in an interview this week with the Charlotte Business Journal that his bank will follow a move made by Bank of America (NYSE: BAC) to stop charging customers overdraft fees.
James said that customers should have choices about whether or not they should pay overdraft fees.
“As I understand the Bank of America change, if you’re in the grocery store with $100 of groceries and you don’t have the money in your bank account, they’re going to decline you. There is no option. That’s going to be pretty embarrassing,” James says.
“What we want to do is offer the customer a choice. You can opt in to a program, and we will honor your debit card even if you don’t have the money, for a fee, because it’s a service we provide. But it will be a choice.”
Last week, Bank of America announced that it would be ending the practice of approving customer debit card purchases when there was no money in their account and charging them a $39.00 overdraft fees. Under Bank of America’s new policy, the megabank will instead be declining customers’ transactions when they have no money in their accounts.
Bank of America will allow also customers to link a savings account or credit card to cover a charge when there is no money in their account.
James said that Fifth Third hasn’t released any specific plans about their plans for their debit cards, but allowing customers to choose will be the “theme” of any coming changes.
This article (Fifth Third Bancorp (NYSE: FITB) May Follow Bank of America (NYSE: BAC) in Ending Overdraft Fees) was originally developed by and is property of American Banking News. Checkout American Banking News for up-to-date banking news and peer to peer lending news.