Financial Stability Board seeks feedback on residential mortgage underwriting practices

Problems arising from poorly underwritten residential mortgages contributed significantly to the global financial crisis that began in 2007. Now the Financial Stability Board (FSB) has launched a review of residential mortgage underwriting and origination practices.

The review will survey existing practices across the FSB membership, including recent actions taken by national authorities to promote sound practices, and draw internationally applicable lessons.

The review will be based on the recommendations made by the Joint Forum in its January 2010 “Review of the Differentiated Nature and Scope of Financial Regulation”. In its review the Joint Forum focused on two fundamental areas of concern in the residential mortgage market:

1. poor underwriting practices and,
2. the lack of consistent supervisory and regulatory regimes for similar activities and products.

A questionnaire to collect information from national authorities has been distributed to FSB members, and the responses will be analyzed and discussed by the FSB later this year. The review is intended to be completed and published in early 2011.

As part of this review, the FSB has indicated that it will welcome feedback from financial institutions, industry associations, consumer groups and other stakeholders on their experiences regarding residential mortgage underwriting practices, either in a particular country or across several countries. This feedback could include comments on:

• gaps in regulatory and supervisory oversight,
• areas where regulations or guidance from different agencies might overlap,
• current or best practices for measuring a borrower’s ability and willingness to repay,
• how market practices have evolved in recent years, and
• challenges faced by underwriters or originators that operate in several countries.

The FSB is seeking feedback by 25 October 2010. For those interested the relative questionnaire is available at http://www.financialstabilityboard.org/press/pr_100920.pdf

The FSB has been established to coordinate at the international level the work of national financial authorities and international standard setting bodies and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies. It brings together national authorities responsible for financial stability in significant international financial centers, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts.

Want to track your interest rate? Use your mobile.

If customers are keen to keep an eye on what is happening to their bank balance, they could try mobile banking, according to Barclays bank.

Sean Gilchrist, digital banking director at the bank, suggested it can be easier for individuals to keep track of what is happening to their finances by being able to access the information on the move.

He accepted that mobile banking is a "relatively new" process, but claimed its popularity is growing at a "phenomenal" rate.

"Being in control of your money starts with knowing how much you've got and where it is being spent," said Mr Gilchrist.

His comments followed the publication of research by Barclays, which showed that nearly three-quarters of adults overestimate their bank balance, with Londoners believing they have an extra £91.62 on average.

This month, the same firm claimed many small enterprises in the UK are using smartphones to carry out a variety of business procedures, such as creating invoices and dealing with correspondence.

Six years jail for cyber-crooks money laundering scam

A 38-year-old California man has been sentenced to six years in prison for laundering money for cyber-thieves through an online payment system called e-Gold.

Cesar Carranza, also known by the handle "uBuyWeRush," participated in the money laundering scheme "between April 2004 and November 2006," the Department of Justice said in a recent news release.

According to the indictment Carranza received cash deposits from cyber-criminals who use stolen credit card information—and laundered the money by, among other things, "acting as a money exchanger for an online payment system known as e-Gold."

Three directors of e-Gold had been "convicted of operating an unlicensed money transmitting business," the DOJ said.

Carranza pleaded guilty to one count of conspiring to launder proceeds of unlawful activity. All told, Carranza was accused of helping to launder $2.5 million in illegal proceeds.

Phishing scam using the US tax system as bait - McAfee

Security researchers at McAfee have reported a new phishing scam targeting users of the US Department of Treasury's Electronic Federal Tax Payment System (EFTPS).

According to McAfee, phishers were seen using the free tax payment service as bait this week in a new round of e-mails.

The e-mails have the subject line "Your EFTPS Tax Payment ID has been rejected," and claim that the recipient's tax payment did not go through due to an invalid ID number. Victims are then directed to a phony Web site for more information.

"If you receive one of these messages claiming to be from the EFTPS or IRS, don't open it or click any link," blogged McAfee's Felix Martinez. "It's safer to manually type the URL (web address) instead of clicking a link. To verify whether a government or financial institution is trying to contact you, call that agency."

Fake credit card factory lands man in jail

A London court has jailed two men who it found guilty of running a fake credit card factory and using the counterfeit plastic to buy luxury goods worth hundreds of thousands of pounds.

Gabriel Yew and Cheng Chee Weng were sentenced to four years and 15 months in prison respectively at Southwark Crown Court after having pleaded guilty to conspiracy to defraud and supplying articles for use in fraud.

The pair were caught after a plain clothes officer from the Westminster Chinese Unit on patrol in Chinatown, central London, noticed a man handing over a sum of money in exchange for an envelope.

The officer approached the men and when they refused to explain themselves he opened the envelope, finding 11 counterfeit credit cards. The men ran off but the officer caught one who had 11 blank plastic cards on him.

The man - Weng - was arrested and the Dedicated Cheque and Plastic Crime Unit (DCPCU) was called in. After enquiries, the police ended up searching a flat belonging to Yew who was identified as the man who escaped in Chinatown.

In the flat police found thermal printers to produce counterfeit cards, plastic cards and holograms, over £10,000 in cash and gold ingots and other jewellery valued at between £8,000 and £10,000. A list of a number of stolen account numbers was also found at the address - 250 of them were already encoded onto the counterfeit cards and police recovered a further 450 compromised details.

The operation's mastermind, Yew used the fake cards to buy computer handsets, iPhones, expensive whisky, jewellery and other items worth up to £300,000.

SWIFT to reduce message prices by an average 20 percent

SWIFT, the provider of global financial messaging services, has announced that it is reducing the price of messages on its core FIN service by an average of 20 percent. This will represent an estimated saving of €70 million for SWIFT customers in 2011. The new pricing plan takes effect on 1 January 2011.

SWIFT is a member-owned cooperative that provides the communications platform, products and services to connect more than 9,500 banking organizations, securities institutions and corporate customers in 209 countries. SWIFT enables its users to exchange automated, standardized financial information securely and reliably, thereby lowering costs, reducing operational risk and eliminating operational inefficiencies. SWIFT also brings the financial community together to work collaboratively to shape market practice, define standards and debate issues of mutual interest.

"We have delivered the reduction by focusing on increased efficiencies and rigorous cost controls at SWIFT despite the tough global economic environment and the decreased volume growth" said Lázaro Campos, Chief Executive Officer, SWIFT. "Consistent with our strategy for the next five years - SWIFT2015 - we are committed to further decreasing the price of our messaging services in the future, while continuing to invest in the security and reliability of our platform."

“This is the largest price reduction since 1995 and SWIFT has ensured customers with smaller volumes also benefit,” said Yawar Shah, Chairman of the SWIFT Board and Managing Director, Citi. “In fact, the announced 20 percent reduction is in addition to the achievement, ahead of schedule, of a targeted 50 percent price reduction over five years set in 2006.”

The new pricing plan reflects the guiding principles of SWIFT’s pricing policy which aims to encourage traffic growth, increase market share and respond to market conditions and competitive threats. Additionally, the policy aims to reward both large and small volume users, and offer choice to customers.

The reduction applies to all types of FIN traffic and SWIFT is also extending the optional Fixed Fee programme to a broader group of customers. The Fixed Fee option has proven successful because it offers customers opportunities for significant savings as well as cost predictability.

Year-to-date average FIN traffic growth is above seven percent. SWIFT recorded its latest traffic peak on 11 May 2010, when it processed 18.36 million FIN messages.

Dutch banks and mobile operators form national m-payments consortium

Leading banks and mobile operators in the Netherlands are joining forces to create a joint venture company aimed at introducing mobile payments at the check-out. Consortium members ABN Amro, ING, KPN, Rabobank, T-Mobile and Vodafone have signed a letter of intent to create a single uniform system for mobile transactions in the Netherlands.

Research conducted by the group concludes that it is both "technically and commercially feasible" to create a national infrastructure for mobile payments at the check-out.

"To bring this about, the six companies plan to set up a joint venture," says the group in a statement. "By affiliating themselves to the system, all banks, mobile providers and other service providers will ultimately be able to provide their services by telephone."

Intended for introduction in 2012, the scheme will use NFC-based contactless technology and payment software located in a secure part of the SIM-card in the user's phone.

In addition to the potential to make in-store cash payments, other applications such as admission tickets, coupons and customer cards will also be made available says the group.