We’ve been pushing for stronger protections on overdraft protection loans for years, and the Office of the Comptroller of the Currency (OCC), a federal bank regulator, recently released a proposed guidance that would eliminate some of the worst features of overdraft programs-such as ordering transactions to maximize fee income.  However, the proposed rule has a glaring flaw—it puts  bank-based payday loans, also known as deposit advance loans, in the same category as overdraft loans. Bank payday loans and overdraft loans are entirely different beasts—they’re structured differently, used for different purposes, and have different risks. The two products need regulations tailored to their unique characteristics. We recently submitted our comments on these rules; you can send regulators your thoughts until August 8, 2011.

A proposed ordinance, to be introduced today by Ald. Pat Dowell and supported by Mayor Rahm Emanuel, promises to hold mortgage servicers accountable for the nearly 1,900 vacant properties stuck in the foreclosure process–a problem that we estimate can cost the city approximately $36 million.

When it takes a long time to create a problem, it often takes even longer to fix it. In Black Wealth/White Wealth: A New Perspective on Racial Inequality, Melvin L. Oliver and Thomas M. Shapiro illustrated how various American tax, property and financial policies and practices precluded generations of African Americans from building wealth and created intergenerational poverty, the effects of which continue to reverberate today. The gains that some African Americans and other people of color made in wealth creation through home ownership, small business development and educational attainment during the late 1990s and early 2000s were all but wiped out by ongoing the financial and foreclosure crisis. If left unaddressed, the racial wealth gap will continue to grow.

The future of the housing finance system is on everyone’s minds. It’s clear that any changes to the system could have enormous impact on the ability of people of color and low-wealth individuals to sustainably purchase a home and build wealth.

Can we trust even the most seemingly reputable public figures? How will we address the needs of our aging population? Can destroying 70,000 homes actually make a city a better place to live? And, for good measure, what is real? Our staff has a lot to think about this week.

A new regulation from the USDA could help families get through hard times without giving up hope for a better future. The Supplemental Nutrition Assistance Program (SNAP), once known as the food stamp program, provides assistance to buy food to more than 40 million low-income individuals every month. This assistance helps families put food on the table as they work towards a more secure financial footing. Until this proposed regulation, certain retirement or education savings would disqualify someone from the SNAP program—which is counterintuitive, since those very savings help people advance economically. It’s difficult to build a better life for your children when you must sacrifice saving for their education in order to keep your source of food.

“In New York State, it would take lenders 62 years at their current pace, the longest time frame in the nation, to repossess the 213,000 houses now in severe default or foreclosure, according to calculations by LPS Applied Analytics, a prominent real estate data firm.

Clearing the pipeline in New Jersey, which like New York handles foreclosures through the courts, would take 49 years. In Florida, Massachusetts and Illinois, it would take a decade.”--Backlog of Cases Gives a Reprieve on Foreclosures (David Streitfeld, New York Times)

While much of the response of the foreclosure crisis has been focused on the negative effects on homeowners, they are far from the only victims. Tens of thousands of Chicago region renters have been displaced—sometimes illegally—due to rental buildings going into foreclosure as well. The Lawyers’ Committee for Better Housing (LCBH) recently released a report that found that, in 2010, nearly 6,000 apartment buildings went into foreclosure in the City of Chicago, affecting more than 17,000 units. Every week in 2010, 123 apartment buildings went into foreclosure.

We recently reported that three banks—Bank of America, Chase, and Wells Fargo—received punitive action from Treasury for failing to meet the standards of the Home Affordable Modification Program. The three servicers had their incentive payments for successful permanent modifications and short sales suspended for one quarter—and possibly longer, if they don’t shape up. We know that homeowners are facing difficulties working with many more servicers than only those three, however. How are the rest of them doing according to HAMP’s auditors? Take a look at these charts below the jump.

The latest report on the Obama Administration’s foreclosure prevention program includes the news that Treasury has, for the first time, taken punitive action against servicers who exhibit poor performance on the Home Affordable Modification Program (see our previous analyses). HAMP has been beset by difficulties, most notably that the 608,615 permanent modifications active today fall far short of the 3-4 million homeowners that Treasury aimed to reach. Consumer advocates have called for Treasury to take action against servicers who lose borrowers’ documents, give them conflicting or counterproductive advice, and erroneously reject borrowers from the program. We are pleased to see that Treasury is withholding incentive payments from three servicers in need of substantial improvement: Bank of America, Chase, and Wells Fargo.