Facebook to Shield Ads From Offensive Content

In a message posted on its Web site, the company wrote: “Our goal is to both preserve the freedoms of sharing on Facebook but also protect people and brands from certain types of content.”

“We know that marketers work hard to promote their brands, and we take their objectives seriously. While we already have rigorous review and removal policies for content against our terms, we recognize we need to do more to prevent situations where ads are displayed alongside controversial Pages and Groups. So we are taking action.”

Facebook said it would begin the manual review for pages containing sensitive content next week with a team of hundreds of employees in offices around the world.

The action comes a month after feminist groups campaigned for an improvement in Facebook’s process for identifying and removing pages that glorify violence against women. At the time, Facebook acknowledged that its procedures had not worked effectively. Activist groups sent more than 5,000 e-mails to Facebook’s advertisers and elicited more than 60,000 posts on Twitter, requesting the removal of pages featuring women who had been abused.

The protests caused Nissan and a number of smaller advertisers to temporarily withdraw their ads from the site. Other advertisers, including Zappos, Dove and American Express, stopped short of removing their ads but issued statements on digital media saying they did not support violence against women.

“The way you allocate your resources identifies what your priorities are,” said Soraya Chemaly, a writer and activist who was involved in the digital media campaign.

Ms. Chemaly said that since the protests in May Facebook had been “great” about removing content the groups flagged as offensive but that the procedure for removing such content had not been systematic. “Before you can remove the ads, you need to have an accurate assessment of what counts as controversial and that’s not happening now systemically,” she said.

Elisabeth Diana, a Facebook spokeswoman, said dealing with offensive content was something the company handled on a daily basis. “We take it really, really seriously,” she said, adding that the goal of the new procedure “won’t be as much content policing as there will be advertising policing.”

Removing the ads from such pages also removes a pressure point that activist groups have used to get media companies and advertisers to listen to their concerns. “They are hoping to dismantle the leverage,” Ms. Chemaly said. “From a business perspective that makes perfect logical sense.”

The company expects to automate the process of identifying such content after a manual review of thousands of its pages.

DealBook: Banks Seek a Shield in Mortgage Rules

Jonathan Ernst/ReutersHomes in the Capitol Hill section of Washington in August.

As regulators complete new mortgage rules, banks are about to get a significant advantage: protection against homeowner lawsuits.

The rules are meant to help bolster the housing market. By shielding banks from potential litigation, policy makers contend that the industry will have a powerful incentive to make higher quality home loans.

But some banking and housing specialists worry that borrowers are losing a critical safeguard. Industries rarely get broad protection from consumer lawsuits, and banks would seem unlikely candidates given the range of abuses revealed during the housing bust.

“A lot of bad things are done in the name of expanding access to credit, as we found out,” said Sheila C. Bair, former chairwoman of the Federal Deposit Insurance Corporation and now a senior adviser to the Pew Charitable Trusts.

The legal protection stems from the Dodd-Frank Act, the sweeping regulatory overhaul passed in 2010 to help repair the financial system.

The legislation mandated that loans be affordable, but Congress conceded that banks might fear the legal consequences if the mortgages did not comply. So lawmakers created a type of home loan that would have legal protection, called a “qualified mortgage.” In practice, the protection will make it harder for borrowers to sue their lenders in the case of foreclosure.

The Consumer Financial Protection Bureau, the fledgling agency that is shaping the rules, faces a crucial but difficult task. Banks are pressing for a strong version of the legal shield. They also want qualified mortgages to be available to a broad range of borrowers, not just those with pristine credit.

Consumer advocates also tend to favor a broad definition for qualified mortgages, to maximize the availability of home loans and increase homeownership. But they argue that banks do not deserve a high degree of protection, citing the problems during the housing crisis.

Big financial institutions have faced an onslaught of litigation since the downturn, although mostly by the government, investors and other companies instead of borrowers. In February, five large mortgage banks reached a $26 billion settlement with government authorities that aimed, in part, to hold banks accountable for foreclosure abuses.

The bureau has some leeway. In writing the proposed rules, the Federal Reserve suggested two approaches, and it is up to the consumer agency to define the safeguard for lenders.

One option, called a “safe harbor,” raises the threshold for litigation. In that case, a borrower may win a lawsuit only by showing that the disputed mortgage lacked the precise features required for a qualified mortgage, like a defined amount for points and fees.

A second option would increase borrowers’ ability to challenge a mortgage in court. A loan might appear to comply with the requirements for a qualified mortgage, but the borrower might be able to introduce other evidence that shows the underwriting fell short of the standards.

For example, a borrower’s payments could fall within the guidelines for the qualified mortgage, based on that person’s income at the time the loan was made. But the homeowner might have also told the bank that he was about to lose his job or get a divorce, events that could make it much harder to pay back the loan. Under a looser legal shield, the borrower might be able to cite records of such conversations, and contest the mortgage in court.

The new qualified mortgage rules won’t stop borrowers from using other laws to sue banks, like regulations about loan document disclosures.

Moira Vahey, a spokeswoman for the bureau, declined to comment on the specifics of the rule. She added that the bureau should be able to meet the Jan. 21 deadline for completing the rule.

A big question for the bureau is how seriously to take the banks’ assertions that they will cut back on lending without a strong legal shield. JPMorgan Chase said last year that weaker protection would lead to fewer loans and higher-cost mortgages. “A large percentage of Americans may arbitrarily be shut out of the residential mortgage market,” the bank wrote in a comment letter to regulators.

Some smaller institutions feel the same way. Steven H. Swartout, the general counsel of Canandaigua National Bank and Trust of Canandaigua, N.Y., says the bank will be strongly deterred from making mortgages without a strong legal shield.

“I want a safe harbor, and I want a safe harbor that makes sense,” he said. “This is a quantum change in the risk.”

But consumer advocates say banks are overstating the risks. They indicate that few borrowers have sued lenders over the recent foreclosure mess. And they note that states with tough consumer lending laws have not experienced large numbers of borrower lawsuits.

“A lot of this, quite frankly, is litigation paranoia,” said Michael D. Calhoun, president of the Center for Responsible Lending. “If you ask any of the lawyers in the financial industry, they’ll acknowledge there won’t be class actions.”

The banks may end up tolerating a weaker provision if the characteristics of a qualified mortgage are sufficiently clear and detailed.

That appeared to be the position banks set out in a July letter from the Clearing House Association, a financial industry group. It said its “priority has been and remains the issuance of clear and objective standards to ensure that the vast majority of borrowers have access to safe and affordable loans at reasonable cost.” If the standards are expansive and clear, the banks say they will feel more certain that they have met them.

Ted S. Warren/Associated PressWells Fargo, which in January held a “home preservation workshop” in Seattle, has had substantial growth in loans.

There is another reason that banks may continue to lend even if they end up with a less secure legal shield. They are making big profits in the mortgage market. Wells Fargo, the top mortgage lender, made $399 billion of home loans in the first nine months of this year, up substantially from $237 billion in the same period of 2011. The bank’s mortgage banking revenue surged to $8.6 billion in the first nine months of this year, compared with $5.5 billion last year.

Even a more modest legal shield would still favor the banks, says Alys Cohen, a lawyer at the National Consumer Law Center. In legal terms, it “presumes” from the outset that the banks have met the qualified mortgage standards. Borrowers merely get the chance to “rebut” that presumption. “You are still putting the finger on the scale on the side of the lender,” she said. “The burden for the borrower is still huge.”