subprime loans

FDIC Proposed rule on Assessment Rates

On March 20, the FDIC proposed a rule to modify the deposit insurance assessment system for insured depository institutions with more than $10 billion of assets.  The proposed rule would amend the definitions of leveraged loans and subprime loans used to identify concentrations of higher-risk assets, without materially affecting the overall assessments that large institutions pay.  Comments must be submitted within 60 days of publication in the Federal Register.  FDIC Release.  FDIC Rule on Assessment Rates.

Nevada Attorney General and Morgan Stanley Agree to Settlement

On September 27, 2011, Nevada Attorney General Catherine Cortez Masto announced that her office resolved an investigation into Morgan Stanley Mortgage Capital Holdings’ (“Morgan Stanley”) purchase and securitization of subprime mortgages in the state. The investigation examined whether lenders misrepresented risks to borrowers who took out subprime loans and whether Morgan Stanley was aware of those misrepresentations. Ms. Cortez Masto filed an Assurance of Discontinuance (“Assurance”) of the investigation, which requires that Morgan Stanley review all Nevada subprime mortgage loans and confirm that they are in compliance with the Nevada Deceptive Trade Practices Act before financing, purchasing, or securitizing such loans going forward. Morgan Stanley must also adjust interest rates and refund certain interest payments to eligible borrowers and pay $7.2 million to be used to prevent foreclosures and mortgage fraud in Nevada. The Office of the Attorney General estimates the value of the relief as between $21 million and $40 million. Press Release.