Subprime Lending News 7/14/17:
Wells Fargo wins lawsuit in Ohio, 18 states are suing the Secretary of Education and the next mortgage crisis could be just around the corner.
By Caroline Thompson
Happy Friday! Want to head into your weekend with all the knowledge you’ll need to debate the hottest financial topics at your Game of Thrones watch party? Here’s the top news on student loans, mortgage rates, and banking legal wins.
What are the worst mistakes parents and students make when taking out student loans?
Student loans are an invaluable resource for students who otherwise wouldn’t be able to afford going to college. But if you’re not careful, they can turn into a serious financial burden. When borrowing for school, USA Today recommends you don’t over-borrow Parent PLUS loans, don’t co-sign a private loan before you max out federal loans, and stick with loans that have a fixed interest rate instead of opting for a variable rate.
Mortgage crisis deja-vu.
The 2008 financial crisis was caused in large part by the collapse of private-label mortgage-backed securities. While the investment industry has largely steered clear of these in recent years, a few investment firms are again beginning to offer them, according to CNBC. While this could signal the start of yet another crisis, experts are quick to say that most investors and rating agencies are still very skeptical.
Wells Fargo wins lawsuit over city of Cincinnati.
A federal appeals court in Cincinnati ruled yesterday that Wells Fargo was not liable for creating a “public nuisance” by refusing to keep up properties it owned through foreclosure. The city claimed these properties fell into disrepair and became magnets for crime, resulting in higher police and fire expenses. But the court didn’t buy the city’s argument, stating it failed to show Wells Fargo intended to cause harm, or that the dilapidated state of properties in question actually endangered residents of the city.
18 states are suing the Secretary of Education to protect students from predatory lending.
Pennsylvania is the latest state to file a lawsuit against Secretary of Education Betsy DeVos for rolling back regulations designed to protect students against predatory lending. The regulations in question were put into place after a for-profit college was ordered to pay students $95 million for making illegal payments to recruiters, and were designed to make it harder for for-profit colleges to defraud students out of thousands of dollars.