http://64.49.194.83/ME2/Console/XmlSyndication/Display/RSS.asp?xsid=1CE45EB03D574BD3BD673C6DC5144C3D RESPA News tracks the latest regulatory developments so you don't have to. http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=DCCD08E19D9745BD9F8507FCD3550550 An internal audit of the Department of Housing and Urban Development (HUD)’s Home Equity Conversion Mortgage (HECM) program found that an increasing number of borrowers had not paid taxes or homeowner’s insurance premiums as required, thus placing their loans in default. Performed by the Office of the Inspector General (OIG), the audit also noted that HUD had granted foreclosure deferrals routinely on defaulted loans, but it had no formal procedures in doing so.  In this article: Office of Inspector General HUD Home Equity Conversion Mortgage program Vicki Bott foreclosure deferrals Single Family Data Warehouse The purpose of the audit was to determine if HUD’s adoption and reversal of an informal foreclosure deferral policy for HECM loans that defaulted due to nonpayment of taxes and insurance had a negative effect on the HECM program. “We found that HUD’s informal foreclosure deferral policy and its reversal had a negative effect on the universe of HECM loans and loan servicers,” the OIG reported .  “After cancelling its informal policy, HUD did not issue guidance to servicers advising them of what actions to take regarding defaulted loans.” According to the OIG, servicers continued to service these loans and paid the taxes and insurance for the borrowers, but they did not notify HUD. "As a result, four servicers contacted were holding almost 13,000 defaulted loans with a maximum claim amount of more than $2.5 billion, and two of the four servicers said they were awaiting HUD guidance on how to handle them,” the OIG stated in their audit report. “Further, the servicers had paid taxes and insurance premiums totaling more than $35 million for these 12,958 borrowers and if HUD does not take action, additional payments will occur in the next 12 months.” The audit also found that HUD could not identify the deferred or defaulted loans in the Single Family Data Warehouse and did not track the number of borrowers who were unable to pay their property taxes or insurance premiums. Therefore, HUD did not know how many loans had principal amounts increasing because the servicer had added payments for taxes and insurance to the loan amount. HUD also couldn’t determine the potential claim amount. “Since unreported defaulted loans were only obtained from four of a total of 16 HECM servicers nationwide, more defaulted loans may exist,” the report concluded. “In the event of foreclosure of the 7,673 loans for which HUD was aware and 12,958 loans of which it was not aware, HUD could lose an estimated $1.4 billion upon sale of the properties.” The OIG recommended that Vicki Bott , HUD’s deputy assistant secretary for Single Family Housing, do the following: Discontinue the practice of deferring foreclosure due to the nonpayment of taxes and insurance which will result in an estimated $35 million in funds being put to better use; Issue formal guidance to servicers regarding loans currently in default due to the nonpayment of property taxes and insurance, including requiring the servicers to foreclose if the borrowers do not pay the delinquent taxes and insurance; Develop and implement a plan to minimize the risk of future defaults due to the nonpayment of taxes and insurance; and Develop a tracking and reporting system, including making modifications to the Single Family Data Warehouse, to ensure that HUD can track the defaulted loans and the amounts paid for the borrowers.  The audit report was released on Aug. 25.   Thu, 02 Sep 2010 00:00:00 EST DCCD08E19D9745BD9F8507FCD3550550 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=718AB32808624C45813479DEE13BE5E6 A subcommittee of the House Financial Services Committee convened on Aug. 23 for a hearing titled, “Too Big Has Failed: Learning from Midwest Banks and Credit Unions,” to discuss the present viability of community banks and the outlook for these institutions in a new, stricter regulatory environment. Seven representatives, all from Kansas , testified in front of the Oversight and Investigations Subcommittee, which is chaired by Rep. Dennis Moore , D-Kan. In this article: Thomas Hoenig Dennis Moore community banks Federal Reserve Bank of Kansas City Mainstreet Credit Union Subcommittee on Oversight and Investigations According to Thomas Hoenig , president of the Federal Reserve Bank of Kansas City , in the past 20 years, the banking industry has consolidated into fewer and larger banks. Because of this, industry members and government entities are asking whether or not the community bank model is viable. Hoenig said the short answer is yes. "The longer answer is, yes, if they are not put at a competitive disadvantage by policies which favor and subsidize the largest financial institutions,” Hoenig said in his opening testimony. “I have worked closely with community bankers my entire career, through good and bad economic times. I know their business model works.” There are more than 6,700 banks in the United States , and all but 83 would be considered community banks based on a commonly used cutoff of $10 billion in assets. Hoenig said that in the 10th Federal Reserve District, there are about 1,100 banks, and all but three would be considered a community bank. According to Hoenig, because of the substantial role community banks play in the Midwest , without them, the economies in these states would suffer more significantly than other areas of the country. The worry for small banks is how much the new regulatory changes under the Dodd-Frank Wall Street Reform and Consumer Protection Act will affect their business. The American Bankers Association fear that the predicted 5,000 pages of new regulations drafted under the new law will put community banks out of business. John Beverlin Sr. , president and CEO of Mainstreet Credit Union, said in the past year alone, his credit union has spent almost $50,000 to educate its members on the imposed regulatory changes to its credit card portfolio. “We are concerned with where it will all stop. Any additional legislation or regulation will result in additional financial burden and more manpower to implement,” he said. David Herndon , president and CEO of First State Bank of Kansas City , Kan. and immediate past president of the Kansas Bankers Association, shared this concern. “ First State Bank employs 26. We know the recently passed financial reform legislation will create nearly 250 new regulations for these 26 people to read, comprehend, implement and then try to explain to clients. My concern is many small and medium-sized banks will decide the costs and risks of compliance are too great. Mergers and acquisitions will decrease the number of banks serving small and medium-sized communities or sections of larger metropolitan areas creating a void for small and medium-sized businesses,” he said. Herndon explained that a decrease in the number of smaller banks becomes a problem for consumers because small and medium-sized banks have unique business models that allow them to adapt and be flexible to meet the needs of the people in the communities they serve. Mainstreet Credit Union, formerly the Credit Union of Johnson County, is a $260 million cooperative that serves more than 52,000 members in the greater Kansas City Area. Hoenig said that in the near future, the community banking model will certainly face challenges. “Factors such as higher regulatory compliance costs and changing technology will encourage community bank consolidation. And despite the provisions of the Dodd-Frank Act to end ‘too-big-to-fail,’ community banks will continue to face higher costs of capital and deposits until investors are convinced it has ended,” he said. Hoenig added that these changes, however, will not entirely wipeout the community banking sector. “Community banks have always faced such challenges. They have survived and prospered. If allowed to compete on a fair and level playing field, the community bank model is a winner,” he said. For Hoenig, leveling the playing field with larger institutions will be the ultimate test on the viability of smaller banks. He said the more lasting threat to their survival concerns whether their model will continue to be placed at a competitive disadvantage to larger banks. He referred to the taxpayer bailout of large institutions, which will continue to negatively impact the smaller banks. “Because the market perceived the largest banks as being ‘too-big-to-fail,’ they have had the advantage of running their business with a much greater level of leverage and a consistently lower cost of capital and debt. The advantage of their ‘too-big-to-fail’ status was highlighted during the crisis, when the FDIC allowed unlimited insurance on non-interest-bearing checking accounts out of concern that businesses would move their deposits from the smaller to the largest banks.” Hoenig said unlike the largest banks that made poor lending and investment decisions during the housing boom of the mid-2000s, community banks that made similarly bad decisions were closed or sold. The ones that did survive have struggled to recover. The largest 20 banking organizations in the United States now control just less than 80 percent of the industry’s total assets. Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 26 Aug 2010 00:00:00 EST 718AB32808624C45813479DEE13BE5E6 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=96B78044DE35456A983848B4DE40B344 The Conference on the Future of Housing Finance, hosted by the Treasury Department and the Department of Housing and Urban Development (HUD), was held on Aug. 17 to discuss the future of housing finance, and what role the government should have in that future. The event provided a forum for public input as the Obama administration continues working to develop a comprehensive housing finance reform proposal for delivery to Congress by January 2011. In this article: Shaun Donovan housing finance reform Fannie Mae Freddie Mac Federal Housing Administration Treasury Department One of the key issues discussed during the conference was the fate of the government sponsored enterprises (GSEs). Fannie Mae and Freddie Mac were taken over by the government in September 2008. Along with the Federal Housing Administration (FHA), they are almost exclusively the only sources for backing new mortgage loans. Reform will likely unwind the giants and transition them back into a private sector role. “The question today isn’t whether we need a healthier, more robust system of housing finance — it’s how we get there,” said HUD Secretary Shaun Donovan . “And in answering that question, we need to ask ourselves what role the government should be playing in the housing market. To be clear, the government’s footprint in the housing market needs to be smaller than it is today — where FHA and the GSEs collectively guarantee over 90 percent of all mortgage loans.” In his opening remarks, Treasury Secretary Tim Geithner said the reform is essential to ensure Fannie and Freddie will not operate as they did in the past. “We will not support returning Fannie and Freddie to the role that they played before conservatorship, where they fought to take market share from private competitors while enjoying the privilege of government support,” said Geithner. “We will not support a return to the system where private gains are subsidized by taxpayer losses.” The Obama administration reported that it has already begun developing proposals for the reform. In early 2010, Geithner and Donovan delivered testimony before Congress regarding the ongoing work in this area and the broad principles that would guide those efforts. In April 2010, the Treasury Department and HUD issued a set of questions for public comment on the future of the housing finance system. More than 300 responses were submitted from a broad cross-section of consumer groups, industry groups, market participants, members of the public, think tanks and other stakeholders. In the months ahead, the administration said it will continue to gather input from a broad cross-section of stakeholders through a variety of events. "Let there be no doubt that the Obama administration is committed to hearing the best ideas from all sides of the discussion,” Donovan said. During the conference, Geithner and Donovan moderated panel discussions with a diverse group of experts about the critical issues surrounding housing finance reform. The panelists represented a cross-section of stakeholder groups, including citizen advocacy groups, economists, investors, market researchers, originators, securitizers, servicers and private mortgage insurers. Donovan noted that as the reform is drafted, discussions will focus on guarantee fees, risk-based capital and securitization, but what shouldn’t be forgotten is the affect the reform will have on the American people. “Today’s discussion is critical to ensure that we have a balanced national housing policy in which Americans have real choices about where they want to live,” he said. Donovan said Americans should have the following: Choices for responsible homeownership, which means homes that people can afford, with easy-to-understand mortgage products that make good economic sense; Choices that allow broad access to homeownership, including options for those families who have historically been shut out of these markets; and Choices for affordable rental housing. “It’s also about our ability to compete in the 21st century — so people can move to where the jobs are and so that America ’s entrepreneurs and innovators can attract the best minds to their businesses,” he said. “A healthy and robust housing finance system is the key to providing Americans with these choices.” Donovan said a healthy and robust financial system means: Ensuring that people who are in a financial position to own a home have access to the capital they need to take that important step; Making sure that families are not set up to fail with mortgages that enable them to buy homes they cannot afford; and Ensuring that financing is available for those who will build the rental housing that we need. On Aug. 17, Rep. Barney Frank , D-Mass., told the press that Fannie and Freddie should be abolished rather than reformed. “The only question is what do you put in their place,” Frank said. He added that the FHA should be fully self-financing and Freddie and Fannie should be replaced with some other mechanism that would help subsidize housing. Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 19 Aug 2010 00:00:00 EST 96B78044DE35456A983848B4DE40B344 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=D7C69021E09F4D1FBB7020953047C254 The Obama administration released additional details about its Aug. 17 housing conference, which is being held to discuss the future of the nation’s housing finance system, including Fannie Mae and Freddie Mac. The open forum event will bring together leading academic experts, consumer and community organizations, industry groups, market participants and other stakeholders. The announcement included a list of panelists and the conference agenda. The event will provide a forum for public input as the administration continues working to develop a comprehensive housing finance reform proposal for delivery to Congress by January 2011. “Across the spectrum, stakeholders agree that our current system of housing finance requires fundamental reform,” said Jeffrey Goldstein , under secretary of the Treasury for Domestic Finance. “This conference is an opportunity for us to broaden our perspectives on a number of key issues in a transparent way to make certain that all of the best ideas are on the table.” Fannie Mae and Freddie Mac were taken over by the government in September 2008. Along with the Federal Housing Administration, they are almost exclusively the only sources for backing new mortgage loans. Reform will likely unwind the giants and transition them back into a private sector role. The administration reported that it has already begun developing proposals for the reform. In early 2010, Treasury Secretary Tim Geithner and Department of Housing and Urban Development (HUD) Secretary Shaun Donovan delivered testimony before Congress regarding the ongoing work in this area and the broad principles that would guide those efforts. In April 2010, the Treasury Department and HUD issued a set of questions for public comment on the future of the housing finance system. More than 300 responses were submitted from a broad cross-section of consumer groups, industry groups, market participants, members of the public, think tanks and other stakeholders. In the months ahead, the administration said it will continue to gather input from a broad cross-section of stakeholders through a variety of events. “This conference is an opportunity to engage stakeholders and experts with broad knowledge and many perspectives,” said Raphael Bostic , assistant secretary for Policy Development and Research at HUD. “It is part of our larger effort to make sure that we have a deep and wide understanding of these issues as we chart a thoughtful, sound path forward in reforming our housing finance system.” During the conference, Geithner and Donovan will moderate panel discussions with a diverse group of experts about the critical issues surrounding housing finance reform. The panelists represent a cross-section of stakeholder groups with interests in the outcome of the reform process, including citizen advocacy groups, economists, investors, market researchers, originators, securitizers, servicers and private mortgage insurers. The panel will include: Barbara Desoer , president, Bank of America Home Loans; Ingrid Gould Ellen , professor, Urban Planning and Public Policy, New York University’s Wagner Graduate School of Public Service, and co-director, Furman Center for Real Estate and Urban Policy; Bill Gross , co-founder and co-chief, investment officer, PIMCO; Mike Heid , co-president, Wells Fargo Home Mortgage; S.A. Ibrahim , CEO, Radian Group Inc.; Marc Morial , president and CEO, National Urban League; Alex Pollock , resident fellow, American Enterprise Institute; Lewis Ranieri , chairman, Ranieri and Co. Inc.; Ellen Seidman , executive vice president, National Policy and Partnership Development, ShoreBank Corp., and chair of the board of directors at the Center for Financial Services Innovation; Michael Stegman , director, Policy and Housing, for the Program on Human and Community Development of the John D. and Catherine T. MacArthur Foundation; Susan Wachter , Richard B. Worley professor of financial management, professor of real estate, finance, and city and regional planning, University of Pennsylvania’s Wharton School; and Mark Zandi , chief economist, Moody’s Analytics. The event will be held in the Cash Room at the Treasury Department in Washington , D.C. It will also be streamed live online at www.treasury.gov . Topics and times for the panel discussions and breakout sessions are as follows:  9 a.m. EDT, Geithner opening remarks 9:15 a.m. EDT, Donovan remarks 9:30 a.m. EDT, panel discussion one — Housing Finance Reform and Broader Financial Markets, moderated by Geithner 10:30 a.m. EDT, panel discussion two — Housing Finance Reform and Broader Housing Policy Goals, moderated by Donovan 11:45 a.m. EDT, working breakout lunches, hosted by senior White House, HUD and Treasury officials Breakout session one: Key Players in a Reformed System: Role of the Private Sector and of Government Breakout session two: Delivering Access and Affordability Breakout Session Three: Funding Housing and the Role of Securitization Breakout Session Four: Aligning Private Market Incentives in the Housing Finance Chain Breakout Session Five: Supporting Capital for Multifamily Finance Breakout Session Six: Managing the Process of Transition 1:15 p.m. EDT, closing remarks Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 12 Aug 2010 00:00:00 EST D7C69021E09F4D1FBB7020953047C254 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=C39A433884EE4CC695E328257113F85C The Department of Housing and Urban Development’s (HUD) top administrator delivered remarks this week on the progress of the nation’s housing recovery, calling out three specific steps the Obama administration has taken to recover from the housing crisis and avoid another one. In this article: Shaun Donovan Making Home Affordable Obama administration Federal Housing Administration David Stevens Treasury Department Secretary Shaun Donovan spoke to a group of real estate professionals at the National Association of Real Estate Brokers Conference held on Aug. 3 at the Renaissance Worthington Hotel in Dallas . He said the Obama administration “first stopped the bleeding,” then addressed the crisis and finally, laid a foundation for the future. “I want to set the record straight about the totality of the administration’s housing efforts since we took office 18 months ago,” Donovan said. Step one To “stoop the bleeding,” Donovan said the Federal Reserve and the Treasury Department kept interest rates at an historic low for more than a year. According to Donovan, this has helped stabilize housing markets and the broader economy. He also noted that because low interest rates only benefit consumers if mortgages are available at those rates, the administration moved to restore confidence in Fannie Mae, Freddie Mac and the Federal Housing Administration to enable a robust refinancing market. “Over the last three years, FHA’s market share increased dramatically, helping those in need, especially those with low incomes and homeowners from minority communities. The most recent data shows that 51 percent of African American homebuyers purchase homes with FHA financing — and 45 percent of Hispanics,” he said. Donovan reported that in the last 18 months, the FHA has insured approximately 30 percent of purchases and 20 percent of refinances in the housing market. “FHA helped close to 1.1 million homeowners refinance into stable, affordable mortgages and insured loans for over 1.4 million homebuyers — more than 80 percent of whom were first-time homebuyers. Collectively, these initiatives have resulted in record affordability of mortgage credit across the market,” he said. He added that homeowner equity began growing again in the second quarter of 2009 and, to date, has increased by over a trillion dollars, or close to $14,000 on average for the nation’s nearly 78 million homeowners. Step two After the administration “stopped the bleeding,” Donovan said it addressed the housing crisis by increasing the supply of mortgage capital, increasing the demand for housing and protecting responsible homeowners in distress. “While tools like the expanded first-time homebuyer tax credit have helped more than 2.5 million Americans purchase a home, we have also been working with Treasury through the Making Home Affordable program to help troubled borrowers,” he said. The Home Affordable Modification program (HAMP) is intended to help 3 to 4 million Americans by 2012. Through its monthly scorecard, HUD reported a strong month-over-month increase in permanent modifications through HAMP, and Donovan said it is on track to meet the 3 to 4 million homeowner goal. Servicers report that since April 2009, 2.8 million borrowers have received restructured mortgages, and this number is more than twice the amount of foreclosures completed in that time. “However, two of the biggest threats to our housing recovery today are unemployment and underwater borrowers,” Donovan said. “Foreclosures are increasingly being driven by homeowners who find themselves unemployed or underemployed and can no longer make payments that were once affordable. Making matters worse, these borrowers often can’t move to find a new job because they can’t sell their homes when they owe more on their house than it is worth.” At the end of last year, more than 11.3 million, or 24 percent, of all residential properties with mortgages were underwater, with more than half of these homes located in Arizona , California , Florida , Michigan and Nevada . “But the Administration is responding — making changes to HAMP so that unemployed borrowers can get up to six months of relief while they look for work,” he said. “This is in addition to the $1 billion for HUD to assist unemployed borrowers and another $2 billion administered by the Treasury to help homeowners that was included in the Dodd-Frank bill. Another program Donovan said is producing good results is the Home Affordable Foreclosure Alternatives program, which is designed to prevent costly foreclosures by providing incentives for servicers and borrowers to pursue short sales and deeds-in-lieu. In addition, the Neighborhood Stabilization funding is being used to turn tens of thousands of abandoned and foreclosed homes that drag down property values into affordable rental housing. Donovan said HUD will also soon issue a mortgagee letter implementing a new FHA Short Refinance Program. “RealtyTrac’s mid-year report for metropolitan areas found that in the first six months of 2010, foreclosure activity actually went down in nine of the 10 metros with the highest foreclosure rates, which suggests our efforts are beginning to make a difference in the hardest hit markets,” Donovan noted. Step three The third step the administration has taken in recovery measures is laying a foundation for a better, secured future. Donovan spoke of managing risk to the FHA to ensure it is fiscally sound. Led by Commissioner David Stevens and a first-time permanent chief risk officer, Bob Ryan , Donovan said the FHA is undergoing the most thorough and comprehensive risk assessment it has ever been through “to ensure the quality and sustainability of new loans, increase FHA capital and crack down on fraud.” “Since we took office, FHA has announced and implemented new policies, increased enforcement reviews and established a risk management protocol that will strengthen FHA to better serve the American people,” he said. “These actions are the most sweeping and significant steps to improve FHA soundness in decades, if not in its entire history.” Donovan added that recent legislative proposals are providing the FHA with the ability to hold lenders accountable for the loans they underwrite and are also providing flexibility to respond to changes in the marketplace. According to Donovan, as the housing market recovers, the federal government will fall back and encourage the private market to step back up. “And in some ways, it’s already happening,” he said. Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 05 Aug 2010 00:00:00 EST C39A433884EE4CC695E328257113F85C http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=46CB94977E1B4E79971DCE1B4202AAE3 The Obama administration is planning a conference on Aug. 17 at the U.S. Treasury Department in Washington , D.C. , to discuss the future of the nation’s housing finance system, including Fannie Mae and Freddie Mac. The open forum event will bring together leading academic experts, consumer and community organizations, industry groups, market participants and other stakeholders. The event is part of the administration’s efforts to expand opportunities for public engagement on the future of Fannie and Freddie. The event will help provide critical public input as the administration continues its work to develop a comprehensive housing finance reform proposal for delivery to Congress by January 2011. “The future of our housing finance system is critical not only to our economic recovery, but also to millions of American homeowners in every corner of our country,” said Treasury Secretary Tim Geithner . “Now is the time to build on the foundation we laid with the historic Wall Street reform legislation President Obama signed last week and aggressively move forward to improve our nation’s housing finance system.” In the months ahead, the administration said it will continue to gather input from a broad cross-section of stakeholders through a variety of events.   “The need for reform is clear and we want to listen to a wide range of views as we chart a course to a more robust and stable housing market that works for the benefit of the American people,” said Department of Housing and Urban Development (HUD) Secretary Shaun Donovan .   Fannie and Freddie were taken over by the government in September 2008. Along with the Federal Housing Administration, they are almost exclusively the only sources for backing new mortgage loans. Reform will likely unwind the giants and transition them back into a private sector role.   The administration reported that it has already begun developing proposals for the reform. In early 2010, Geithner and Donovan delivered testimony before Congress regarding the ongoing work in this area and the broad principles that would guide those efforts.   “The Obama administration is committed to delivering a comprehensive reform proposal that protects taxpayers, institutes tough oversight, restores the long-term health of our housing market and strengthens our nation’s economic recovery,” Geithner said. In April 2010, the Treasury Department and HUD issued a set of questions for public comment on the future of the housing finance system. More than 300 responses were submitted from a broad cross-section of consumer groups, industry groups, market participants, members of the public, think tanks and other stakeholders.   HUD said the responses will help provide additional input and perspective as the administration moves forward to develop its comprehensive reform proposal.   To view the Federal Register Notice requesting public comment and the electronic public submissions, click here . Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Wed, 28 Jul 2010 00:00:00 EST 46CB94977E1B4E79971DCE1B4202AAE3 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=8C59B3C4A542458195E4227E8C875531 On July 21, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. The bill spans more than 2,000 pages and will bring about a massive overhaul of the nation’s financial regulatory framework. Contained in the colossal bill is a provision to create a new Consumer Financial Protection Bureau (CFPB) within the Federal Reserve System. This new consumer watchdog is an executive agency, which will be led by a director who will serve a five-year term. In this article: President Obama Sen. Christopher Dodd Dodd-Frank Wall Street Reform and Consumer Protection Act financial reform Elizabeth Warren Timothy Geithner Not long after Obama held the signing ceremony, which included nearly 400 individuals who were instrumental in passing the historic legislation, media organizations began running news flashes regarding who will head up the new CFPB. The Wall Street Journal named three people as possible candidates, while many other news organizations called out one name in particular, Elizabeth Warren , a Harvard Law School professor who is credited with the idea of creating a new consumer watchdog within the federal government. On June 21, The Huffington Post reported that more than 164,000 Americans have signed a petition in support of Warren ’s appointment. In addition, 57 representatives and 11 senators sent two letters to the White House backing her as a candidate. Meanwhile, U.S. Treasury Secretary Timothy Geithner privately expressed his support for Michael Barr , a senior Treasury Department official who was instrumental in crafting the original financial reform package that was released by the Treasury Department in the summer of 2009 and served as a starting ground for the drafting of the U.S. House bill. Reports are surfacing that Geithner is wary about Warren leading the new agency because of her strong consumer advocacy positions. Sen. Christopher Dodd , who drafted and led the passing of the financial reform bill in the Senate, said that Warren might not be “confirmable.” The Boston Globe published an editorial, stating that Warren is the “clear choice to run the new consumer agency.” Another name that has been mentioned for possible candidacy is Gene Kimmelman , chief counsel for competition policy and intergovernmental relations at the Justice Department. The White House has reported that it is open to all candidates at this point. Obama’s pick must be approved by the Senate. Among those present at the signing were consumer advocates, business leaders, state and local officials, members of Congress and individual citizens. Warren was present and had a front-row spot to witness the signing. Obama is expected to make his selection soon. The first director of the agency will have significant influence over its makeup, structure and activities. While much of the specifics on the direction and structure of the agency have yet to be released, The Wall Street Journal reported the director will manage an estimated $500 million annual budget that doesn’t require approval from Congress. At the bill-signing ceremony, Obama said the primary cause of the nation’s recession was a breakdown of the financial system. “It was a crisis born of a failure of responsibility from certain corners of Wall Street to the halls of power in Washington . For years, our financial sector was governed by antiquated and poorly enforced rules that allowed some to game the system and take risks that endangered the entire economy,” he said. “Firms like AIG placed massive, risky bets with borrowed money. And while the rules left abuse and excess unchecked, they also left taxpayers on the hook if a big bank or financial institution ever failed.” “Passing this bill was no easy task. To get there, we had to overcome the furious lobbying of an array of powerful interest groups and a partisan minority determined to block change. So the members who are here today, both on the stage and in the audience, they have done a great service in devoting so much time and expertise to this effort, to looking out for the public interests and not the special interests.” He continued, “Now, for all those Americans who are wondering what Wall Street reform means for you, here’s what you can expect. If you’ve ever applied for a credit card, a student loan or a mortgage, you know the feeling of signing your name to pages of barely understandable fine print. What often happens as a result is that many Americans are caught by hidden fees and penalties, or saddled with loans they can’t afford. With this law, we’ll crack down on abusive practices in the mortgage industry. We’ll make sure that contracts are simpler — putting an end to many hidden penalties and fees in complex mortgages — so folks know what they’re signing. And with this law, ordinary investors — like seniors and folks saving for retirement — will be able to receive more information about the costs and risks of mutual funds and other investment products, so that they can make better financial decisions as to what will work for them. These reforms represent the strongest consumer financial protections in history.” We want to hear from you. Who would you pick as the first director of the new CFPB and why? Write to us at kmccarel@octoberresearch.com . Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 23 Jul 2010 00:00:00 EST 8C59B3C4A542458195E4227E8C875531 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=EE17F96609934ADFAB0476FB3AFF5330 On July 16, the House of Representatives passed HR 5114 , legislation introduced by Rep. Maxine Waters , D-Calif., to improve the National Flood Insurance Program (NFIP) and reauthorize the program for 5 years. In this article: Rep. Maxine Waters HR 5114 National Flood Insurance Program House Financial Services Committee Flood Insurance Rate Map Federal Emergency Management Administration (FEMA) The House Financial Services Committee issued a statement on the NFIP, noting it is the primary source of reliable, affordable flood insurance coverage for more than five million American homes and businesses.  “Reauthorizing and improving the flood insurance program helps homeowners, businesses and communities throughout the country,” Waters said. “This legislation restores stability to NFIP which it lacked while subject to lapses and only temporary extensions. During lapses in the flood insurance program over the past year, FEMA was not able to write new policies, renew expiring ones or increase coverage limits.”  The bill makes additional improvements to the flood insurance program by phasing in actuarial rates for pre-Flood Insurance Rate Map (FIRM) properties — those built before the effective date of the first FIRM for a community. It also raises maximum coverage limits, provides notice to renters about contents insurance and establishes a Flood Insurance Advocate, similar to the Taxpayer Advocate at the IRS. Last month, Congress passed legislation ( HR 5569 ), introduced by Waters, to extend NFIP until Sept 30. This was the most recent of several short-term extensions and followed a month lapse during which new policies were not issued. Approximately 1,200 homebuyers a day were unable to close on their homes while NFIP had expired, according to the National Association of Mutual Insurance Companies. Flood insurance helps American families rebuild their lives after a devastating flood. The importance of flood insurance is underscored by a number of major floods which have occurred this year in various regions of the country, including Rhode Island , Tennessee , Arkansas and Oklahoma . Currently, hurricane season has officially started in the United States , and Texas is recovering from Hurricane Alex. In addition, the United States has in recent years experienced increased flooding in areas not designated as special flood hazard areas. The Federal Emergency Management Administration (FEMA) has been revising and updating flood insurance maps to better reflect the risk of flooding in additional areas. Many homeowners now find themselves in flood zones and required to purchase insurance. HR 5114 delays the implementation of new rate maps so homeowners in a neighborhood newly classified as a flood zone will not be immediately burdened with insurance costs. "This legislation addresses the challenges posed to communities nationwide by the imposition of new flood maps,” Waters said. “I saw these challenges in my home city of Los Angeles , and earlier this year, I was able to assist homeowners in the Park Mesa Heights area of Los Angeles , who had been mistakenly placed in a flood zone. In this case, FEMA acted quickly to respond to new data and correct the mistake. However, there are thousands of homeowners nationwide who now find themselves in flood zones and subject to mandatory purchase requirements. HR 5114 will protect them.” Organizations including the National Association of Realtors, the National Association of Home Builders, the American Insurance Association, the Property Casualty Insurers Association and the Independent Insurance Agents and Brokers of America support the legislation. Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 16 Jul 2010 00:00:00 EST EE17F96609934ADFAB0476FB3AFF5330 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=DC4C3F5604F048BFA90493D27228D7D6 In a recent statement, Sen. Christopher Dodd , D-Conn., pointed out numerous ways in which the Dodd-Frank Wall Street Reform and Consumer Protection Act will benefit community banks. Issued July 2 under the title, “Fact check: Community banks win with Wall Street reform,” the statement outlines more than 20 beneficial aspects of the bill for smaller banks. In this article: community banks Edward Yingling Dodd-Frank Wall Street Reform and Consumer Protection Act Christopher Dodd Federal Deposit Insurance Corp. consumer protection First, Dodd said community banks benefit when systemic risk is reduced and large banks pay for the risks they create to the nation’s financial system. Measures included in the 2,319-page reform bill to address this include: Advance warning system: Creates a systemic-risk regime that would rein in the size and scope of large, interconnected financial institutions.  Tougher supervision of large, interconnected financial companies: Large bank holding companies (those with over $50 billion in assets) and systemically important nonbank financial companies will face heightened risk-based capital, leverage, liquidity and other prudential standards for the risks they pose to financial stability. Dodd said these requirements will not apply to community banks. Tougher capital standards for large financial companies: Capital requirements for large bank holding companies going forward must be at least as strict as the standards that exist for community banks today. Small bank holding companies (those with under $15 billion in assets) will be allowed to continue counting their existing trust-preferred investments towards capital. Tougher derivatives regulation for large financial companies: Dealers and major participants in the derivatives market will face clearing and exchange trading requirements, while the Securities Exchange Commission and CFTC will have the authority to exempt small banks, savings associations, farm credit institutions and credit unions from these requirements. Ending too big to fail bailouts: The Federal Deposit Insurance Corp. (FDIC) will have the authority to liquidate failing systemically dangerous institutions. “Large financial companies, not community banks, will be on the hook for any shortfall in liquidating a large, interconnected financial company,” Dodd said. Dodd then pointed to “deposit insurance” as another area community banks should note. According to Dodd, community banks will benefit from a stronger Deposit Insurance Fund and fairer assessments. The bill does the following to strengthen this area: Expanded deposit insurance:  Making the $250,000 limit permanent will increase public confidence in deposit insurance and better enable community banks to serve their communities. Helping community banks support small business: Extending the guarantee on the full balance of non-interest bearing transaction accounts (that is, business checking accounts) for two years will increase the confidence of small businesses that their payroll and other operational accounts are secure in their local banks. This will help foster economic recovery. Strengths the FDIC Insurance Fund:  Large banks (those with assets over $10 billion) must pay for the increase in the FDIC’s fund from 1.15 percent to 1.35 percent of insured deposits. Community banks will not have to pay for the increase but will benefit from the added resources in the fund, which will help protect them from future premium increases. Fairer assessments: The FDIC will change the way it charges banks’ assessments to reflect the size of companies’ liabilities, easing the burden on community banks. The third area Dodd noted was that of consumer protection. “Community banks benefit when nonbanks play by the same rules and regulators consider the impact of rules on small institutions,” he said. According to Dodd, there are several measures in the bill that show how smaller banks will benefit by stricter consumer protection standards: New consumer protections level playing field: Community banks will no longer have to compete with unregulated non-banks. The Consumer Financial Protection Bureau (CFPB) will have the ability to adopt rules that prohibit unfair or deceptive practices. One Exam and Enforcement regulator: Rules written by the new CFPB will be enforced by the same regulator that enforces safety and soundness rules for banks with assets below $10 billion. Dodd added that the CFPB will not be able to tell banks what products to offer or to cap interest rates. Consumer protections are consistent with safety and soundness: The CFPB must consult with the safety and soundness regulators in writing rules to ensure consistency with the safe and sound operations of banks. Protections during rulemaking: The CFPB is required to consult with community banks before writing new rules, and consider the impacts they might face. Easier mortgage disclosure: The CFPB will create one form that combines the two federal mortgage disclosures currently required (RESPA form and Truth in Lending disclosure), eliminating this burden to small community banks.  Flexibility in applying new mortgage protections: The special needs of small banks in rural and underserved areas are recognized. Seasonal workers: Allows banks to consider seasonal and irregular income when making mortgage loans, recognizing the needs of farmers, fishermen, the employees in the tourism industry and other similar types of workers. Fairness for moderately priced homes: Requires regulators to adjust the points and fees cap for smaller mortgage loans when determining a qualified mortgage to protect areas with lower housing prices from being penalized unfairly. Rural and underserved communities: Provides authority to the Federal Reserve and CFPB to write regulations that allow for balloon mortgages to be defined as qualified mortgages for banks serving rural or underserved communities and to exempt banks serving those areas from escrow requirements. Dodd said this provides more flexibility than current law. Dodd noted that the bill also exempts small public companies from auditor attestations under Sarbanes Oxley section 404(b); preserves the federal thrift charter; preserves state lending limits for state chartered banks; strengthens the deposit cap on acquisitions of depository institutions by including thrift deposits in the 10 percent cap; and exempts the federal home loan banks from concentration limits. While Dodd is confidant the bill will help community banks, Edward Yingling , president and CEO of the American Bankers Association (ABA), said it will cause small banks to sell out to larger institutions because they will not have the staff necessary to implement the massive amount of regulations coming from the new bill. The ABA predicts that the new legislation will result in more than 5,000 pages of new regulations for traditional banks, including community banks. “Traditional banks are already being crushed by existing regulations, including 50 new or expanded regulations in the last two years,” said Yingling. “Adding 5,000 pages of new regulations to even the smallest banks, which had nothing to do with the financial crisis, constitutes a massive overkill.” On June 25, the joint House and Senate conference committee compromised on the final language of the bill. It passed the U.S. House on June 30 and is currently sitting in the Senate, awaiting a final vote. Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 09 Jul 2010 00:00:00 EST DC4C3F5604F048BFA90493D27228D7D6 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=3315EE75E9AD42D39DA1B9F52D9A8355 The National Association of Realtors (NAR) commended Congress for the timely passage of two bills: HR 5623 , the extension of the homebuyer tax credit closing deadline; and HR 5569 , the reauthorization of the National Flood Insurance Program (NFIP). Strongly supported by NAR, both bills were passed by the Senate on June 30. They now head to the President for his signature. The tax credit closing deadline and the NFIP reauthorization were extended to Sept. 30. NAR worked closely with congressional leaders on both sides of the aisle to enact these pieces of legislation. Extending the tax credit closing and flood insurance deadlines will help provide additional stability to real estate markets across the nation, NAR said. “What a great way to begin celebrating our nation’s most patriotic holiday by opening the door to the American dream of homeownership to thousands of homebuyers who would have been shut out of the homes of their dreams through no fault of their own,” said NAR President Vicki Cox Golder , owner of Vicki L. Cox Real Estate in Tucson, Ariz. “We know that up to 180,000 homebuyers eligible for the tax credit are rejoicing this morning. And we all thank both houses of Congress for their work to ensure passage of both bills.” Golder acknowledged the following members of Congress for their efforts to extend the tax credit closing deadline: Senate Majority Leader Harry Reid , D-Nev., Senate Minority Leader Mitch McConnell , R-Ky., Senate Banking Committee Chairman Christopher Dodd , D-Conn., Sen. Johnny Isakson , R-Ga., House Majority Leader Steny Hoyer , D-Md., Rep. Shelley Berkley , D-Nev., and Rep. Joe Courtney , D-Conn. “I thank my colleagues for joining me to pass this important extension and giving homebuyers in Nevada and around the country the opportunity to purchase their first home,” Reid commented. “In addition to helping thousands of families experience the American dream, this successful and popular program provides a much needed boost to Nevada ’s housing market and economy.” The passage of HR 5623, the Homebuyer Assistance and Improvement Act, applies the homebuyer tax credit closing deadline extension only to homebuyers who have ratified contracts in place as of April 30, but could not close before June 30. According to NAR, there will be no gap between June 30 and the date the President signs the bill into law. The passing of HR 5569, the National Flood Insurance Program Extension Act of 2010, reauthorizes the NFIP until Sept. 30, allowing currently stalled transactions to move forward. The bill is retroactive and covers the lapsed period from June 1 to the date of enactment of the extension. Any new policy applications or renewals that were signed and submitted during the lapsed period will be effective from the date of application. In the case of waiting periods, the waiting period will start from the date of application. “We know that thousands of property owners seeking flood insurance policies will now be able to close transactions,” Golder said. “NAR appreciates the extraordinary efforts by both houses of Congress to end the lapse in flood insurance.” She thanked the following members of Congress for their efforts in passing the bill: Reid, McConnell, Dodd, Sen. David Vitter , R-La., House Financial Services Committee Chairman Barney Frank , D-Mass., and Rep. Maxine Waters , D-Calif. Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 01 Jul 2010 00:00:00 EST 3315EE75E9AD42D39DA1B9F52D9A8355 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=B9535E86E64C4589A1344DEE0220E514 On June 25, the joint House and Senate conference committee, charged with reconciling the House Wall Street Reform and Consumer Protection Act, HR 4173 , and the Senate’s Restoring American Financial Stability Act of 2010, SB 3217 , compromised on the final language of the bill. In this article: American Bankers Association Edward Yingling Wall Street Reform and Consumer Protection Act Restoring American Financial Stability Act too big to fail Wall Street Reform The bill creates a new consumer financial protection watchdog and is intended to end “too big to fail” bailouts, set up an early warning system to predict and prevent another economic crisis, and bring transparency and accountability to financial instruments such as derivatives. According to Edward Yingling , president and CEO of the American Bankers Association (ABA), the legislation does more harm than good and will make it exceedingly difficult for banks to be the drivers of economic growth and recovery going forward. “Bankers have supported key reform principles since the beginning of this debate.  Creating a systemic risk council, creating a robust method for handling the failure of large institutions, ending the concept of ‘too big to fail,’ closing gaps in regulatory oversight and enhancing consumer protection are all laudable goals that the industry supports,” Yingling said. “But these important provisions are overshadowed by a number of other provisions in the bill that run far afield from Wall Street reform and will ultimately harm Main Street . The consequences involved are very real and will have a very negative impact on traditional banks, on consumers and on the broader economy.” Yingling said the bill will add more than a thousand pages of new regulations for even the smallest bank. “As a result of this volume and the new restrictions, many small banks are telling us they will simply have to sell out to larger institutions that have the staff to deal with the massive volume of new reports and rules. Above all, the capability of traditional banks to provide the credit needed to move the economy forward has been undermined in numerous ways,” he said. The bill needs the full House and Senate approval before going to the President. Related article: ABA to Treasury: ‘Stop the regulations!’ Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 25 Jun 2010 00:00:00 EST B9535E86E64C4589A1344DEE0220E514 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=45D3F8AA32384CA2B667F55C4B4D5168 Ginnie Mae announced June 10 that it launched a new Manufactured Housing Mortgage-Backed Securities Program (MH MBS) for Title 1 mortgage loans. Effective immediately, Ginnie Mae will begin accepting applications for participation into the program. In this article: Ginnie Mae president Theodore Tozer mortgage-backed securities manufactured housing Housing and Recovery Act of 2008 Federal Housing Administration Issuers who are currently approved to issue manufactured housing securities are required to re-apply in order to participate in the new program. The MH MBS program is being implemented in conjunction with recent changes to the Federal Housing Administration’s (FHA) Title 1 Program for manufactured housing and the Housing and Recovery Act of 2008. “We recognize the vital role that manufactured housing plays for millions of families in this country,” said Theodore Tozer , Ginnie Mae president. “The ability to offer an enhanced manufactured housing securitization vehicle that is backed by the full faith and credit of the U.S. Government will increase secondary market liquidity for manufactured housing lenders, which should reduce costs for borrowers.” Ginnie Mae said it will provide full program guidance no later than Sept. 1, 2010. The new MH MBS program will have the following features: Eligible manufactured housing loans will be pooled under the Ginnie Mae II MBS program using the Manufactured Housing Custom Pool type; The MH MBS program applies only to manufactured housing loans with an FHA application date of June 1, 2009, and thereafter; The guarantee fee for MH MBS pools will be 30 basis points; however, the minimum pool origination balance will increase to $1 million; Issuers of Ginnie Mae II MH MBS will be required to maintain a minimum net worth of $10 million, plus 10 percent of the amount of MH securities outstanding; and MH loans will not be eligible for pooling as multiple issuer pools and for immediate issuance transfer pools. Manufactured housing comprised 12 percent of the new housing market in 2008. The average sales price of a manufactured home in 2008 was $64,900, compared with $292,600 for site-built homes. According to the 2006 U.S. census information, the states of South Carolina (19.1 percent), New Mexico (17.2 percent) and Mississippi (15.7 percent) had the most residents living in manufactured housing. “Ginnie Mae’s commitment to this new security is a reflection of our mission to expand affordable housing,” Tozer continued. “Manufactured housing provides affordable housing for many low- and moderate-income borrowers seeking affordable housing in high-cost and rural areas.” For more than 40 years, Ginnie Mae has securitized loans insured or guaranteed by the FHA, the Department of Veterans Affairs, the Department of Agriculture’s Rural Development and the Department of Housing and Urban Development’s Office of Public and Indian Housing. An MBS enables a mortgage lender to aggregate and sell mortgage loans as a security to investors. Ginnie Mae securities carry the full faith and credit of the U.S. government. Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 11 Jun 2010 00:00:00 EST 45D3F8AA32384CA2B667F55C4B4D5168 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=5919266B5D7F44F69AC260862EF0F363 Rep. Barney Frank , D-Mass., has indicated that any proposals drafted behind closed doors regarding the financial regulatory reform legislation will be presented and debated publicly. Frank is the chair of the joint House-Senate committee tasked with drafting a final bill that will overhaul the nation’s financial regulatory structure. Frank told reporters on June 3 that he intends to have a bill ready for the president’s signature by June 24. Republican members on the committee have expressed concern about conversations taking place behind closed doors and are calling for a fair and open process, according to a report by Reuters , which indicated that one senator said he had “no idea whether they will be part of backroom discussions on the most sensitive issues.” Frank countered this statement, noting that “any conversation about what the bill should look like will be presented publicly in conference, debated and voted on” by the joint committee members. The committee was formed following the Senate’s passing of SB 3217 , the Restoring American Financial Stability Act of 2010, on May 20. The bill, along with its House companion, HR 4173 , which passed on Dec. 11, have been the subject of substantial controversy in the past year. Lawmakers are now working to reconcile the bills’ differences, as well as discuss items that some feel should be included in the bill. One concern for Republicans is that the bills do not include reforms for Fannie Mae and Freddie Mac. The two have been blamed for being the root cause of the recent economic crisis. Lawmakers opposed to addressing Fannie and Freddie at this time indicate that reform should take place only after the house market recovers. Related articles: Senate passes landmark financial reform bill House passes hefty financial reform legislation Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 04 Jun 2010 00:00:00 EST 5919266B5D7F44F69AC260862EF0F363 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=CA0A0CE17CE7478CA6C0E5B1A8E0003C The American Bankers Association (ABA) sent a letter to U.S. Treasury Secretary Timothy Geithner and other government bodies, arguing that the regulatory burden faced by traditional banks is reaching a “breaking point,” and calling on the administration to address the situation. In this article: U.S. Treasury U.S. Treasury Secretary Timothy Geithner American Bankers Association Edward Yingling regulatory burdens new RESPA forms In the May 26 letter, Edward Yingling , ABA president and CEO, said that banks were already subject to thousands of pages of regulations before the financial crisis, but that the regulatory burden continues to grow. The letter contained a list of 50 new or expanded regulations that have been imposed over the last two years, along with a list of a further 30 regulations contained in the financial regulatory reform legislation passed by the Senate on May 20. The new legislation includes the drafting and implementation of a new Truth in Lending and RESPA disclosure. The ABA noted that banks are already working at great expense to implement the new RESPA forms that went into effect Jan. 1. “There seems to be no consideration of the totality of the burden,” Yingling stated in the letter. “It is now reaching a breaking point. Many community bank leaders are telling ABA that they simply see no future for their institutions under the mound of regulatory costs they are facing.” Yingling further noted that the median-sized bank in the U.S. has less than 40 employees. The letter also explained that while leaders throughout the administration, Congress and the regulatory agencies, continue to call on banks to lend more, they are simultaneously increasing their regulatory burden, which makes it harder for banks to lend.  “If the administration truly wants to enable traditional banks to increase lending and to continue to support their communities, business customers and consumers, the impact of the aggregate regulatory burden must be addressed,” Yingling said.  Those copied on the letter include: Ben Bernanke , chairman of the Federal Reserve System; Sheila Bair , chairman of the Federal Deposit Insurance Corp.; John Dugan , Comptroller of the Currency; John Bowman , acting director of the Office of Thrift Supervision; Rep. Barney Frank , D-Mass., chairman of the House Financial Services Committee; Rep. Spencer Bachus , R-Ala., ranking member of the House Financial Services Committee; Sen. Christopher Dodd , D-Conn., chairman of the Senate Committee on Banking, Housing and Urban Affairs; and Sen. Richard Shelby , R-Ala., ranking member of the Senate Committee on Banking, Housing and Urban Affairs. For the list of 50 new or expanded regulations imposed on banks over the last two years, click here . For the list of 30 new or expanded regulations contained in the Senate’s financial reform legislation, click here . Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 28 May 2010 00:00:00 EST CA0A0CE17CE7478CA6C0E5B1A8E0003C http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=07CDED282640426F973284A75041B44D Department of Housing and Urban Development (HUD) Secretary Shaun Donovan announced that the Obama administration will work with Congress to find ways to help state and local governments more effectively combat the ongoing effects of the housing crisis and home foreclosures through additional funding for HUD's Neighborhood Stabilization Program (NSP) and foreclosure prevention counseling. Donovan made the announcement on May 18 at a roundtable with Washington, D.C.-based reporters sponsored by the Christian Science Monitor . The administration also announced plans to reallocate funds awarded through NSP that have not yet been committed to specific projects, in order to drive more funding to hardest hit communities. HUD has already awarded nearly $6 billion in NSP1 grants to help state and local governments respond to rising foreclosures and falling home values: $4 billion funded NSP1 through the Housing and Economic Recovery Act of 2008 (HERA); and, an additional $2 billion funded NSP2 through the American Recovery and Reinvestment Act of 2009. The initial NSP1 funds provided each state government with a “base allocation” of $19.6 million, without regard to varying degrees of need. Eighteen months later, HUD said it will recapture money from communities that have not yet committed NSP1 funding, and reallocate it to city and county governments with very high foreclosure and/or vacancy rates and their jurisdiction. Additionally, the administration said it plans to work with Congress on new foreclosure counseling efforts to help homeowners facing foreclosure stay in their homes. HERA provided $150 million for housing counseling to connect homeowners with their mortgage servicer or lender to explore options that will keep them in their homes as a result of these counseling funds. Additional funds in this area would broaden the administration’s reach in its ongoing foreclosure prevention efforts. “Through HUD’s recapture process, the administration is working to use the resources we have already received and build on the success and lessons from NSP1 and NSP2, ideally with additional funding for a third round, to really target the recovery in hard hit areas directly,” Donovan said. “The recapture process would provide additional resources to areas based on their foreclosure and delinquency rates, vacancy problems and unemployment. We also want to go a step further by providing funds to help homeowners avoid foreclosure.” The Neighborhood Stabilization Program was created to address the housing crisis, create jobs and grow local economies by providing communities with the resources to purchase and rehabilitate vacant homes. HUD said the NSP grants awarded are helping state and local governments, as well as non-profit developers, acquire land and property; demolish or rehabilitate abandoned properties; and/or offer downpayment and closing cost assistance to low- to middle-income homebuyers. So far, more than 63,000 homes are projected to be impacted by NSP1. For NSP2, applications were submitted for more than $15 billion worth of projects nationwide, with only $2 billion available for funding. “Both the reallocation of NSP1 funds and a third round through NSP3 would help to expand efforts to clear blighted properties, like those in Detroit where I visited last month,” Donovan added. “ Detroit is demolishing 10,000 properties over three years, with the first two years funded by NSP. A third round of funding could help complete projects like the one in Detroit .” HUD plans to explore with Congress a number of technical changes that could improve the flexibility and impact of the NSP program if a third round of funding can be secured. HUD said it will also work with Congress to help local grantees access more of the administrative capacity needed for effective implementation and, as part of this effort, to secure additional funds for technical assistance as well. Local communities would design and set their own program targets, but HUD would provide options for implementation. To ensure best use of taxpayer dollars, grantees would, based on NSP1 performance, either be required to: Work with a sub-grantee — an entity that is granted the legal obligations and authority to implement NSP on behalf of the grantee; Sign a Technical Assistance agreement with HUD; or Work in a consortium with a high capacity lead grantee. In order to reallocate NSP1 funding, HUD would follow guidelines set forth in HERA, which says that states and units of general local government have no more than 18 months to dedicate NSP1 funds to specific projects. HUD estimates that 70 percent of the $3.9 billion in NSP1 funds would be obligated by the 18-month deadline this fall, for a recapture of approximately $1 billion. Following a 30-day review period, funds that grantees have not yet committed to specific projects will be reallocated either to new grantees or as additional funds for first round grantees. “HUD is committed to helping local communities recover from the blight and vacancies that have become visual symbols of difficult economic times,” Donovan said. Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 21 May 2010 00:00:00 EST 07CDED282640426F973284A75041B44D http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=EF6A4DC6C62B44949B12C5BEB964DD10 Department of Housing and Urban Development (HUD) Secretary Shaun Donovan unveiled the agency’s strategic plan, which he said will serve as the agency’s roadmap toward accomplishing its mission to “create strong, sustainable, inclusive communities and affordable homes for all.” “This Strategic Plan isn’t just a paper exercise to produce a set of marching orders, but a real attempt to express what we want our agency, our homes and our neighborhoods to look like in the years to come,” said Donovan during his address to all HUD staff nationwide. “The plan sets out clear goals and defines success as we take HUD to its 50th anniversary in 2015.” The plan will guide the agency through fiscal years 2010-2015. Through it, HUD will: Strengthen the housing market to bolster the economy and protect consumers: To restore stability to the market, HUD will reduce the foreclosure rate and in partnership with the Department of the Treasury, assist 3 million homeowners who are at risk of losing their homes due to foreclosure by the end of the fiscal year 2011. HUD will also increase FHA capital reserves to above 2 percent and stabilize neighborhoods by helping communities purchase abandoned and vacant properties. Meet the need for quality affordable rental homes: HUD will balance the support for sustainable homeownership and rental housing by directly contributing to the production of millions of new rental homes while also preserving their affordability, quality, accessibility and energy efficiency. Utilize housing as a platform for improving quality of life: Stable housing provides an ideal platform to deliver a wide variety of services to improve education, health, economic security and the safety of residents. Building upon HUD’s recent efforts to reduce chronic homelessness, HUD will use technology and improved accessibility to data to make federally subsidized housing a catalyst for investments in education, health and job training, and leverage private capital to expand housing for the growing number of seniors and homeless Americans — and end homelessness altogether. Build inclusive and sustainable communities free from discrimination: Many of the neighborhoods hit hardest by the economic and housing crisis are among the least sustainable — with limited access to economic opportunity, the longest commuting times, the unhealthiest homes and the poorest quality schools. To transform neighborhoods, we will link housing to schools, jobs and better transportation through the Choice Neighborhoods Initiative and Office of Sustainable Housing and Communities, and provide gap financing through a Catalytic Investment Fund for innovative, high-impact development projects that will create jobs in communities with longstanding development challenges. Transform the way HUD does business: HUD recognizes that it cannot accomplish the goals in the Strategic Plan without changing the way the agency does business. HUD plans to work now to affect change by building capacity within the agency; improving performance management and accountability; decentralizing decision-making to empower staff; and simplifying programs, rules and regulations. Although details of the plan were released May 12, HUD said it has already begun meeting President Obama ’s challenge for federal agencies to collaborate on all levels to deliver meaningful results to all Americans. In just 16 months, HUD said it demonstrated this commitment by: Allocating all $13.6 billion from the American Recovery and Reinvestment Act of 2009 to all 50 states in just eight days. In only six months, all funds from the Recovery Act were available to be spent by communities across the country to create jobs and help families facing foreclosure. Working alongside nearly 350 public housing authorities nationwide to provide temporary housing to the more than 30,000 families that were displaced from their homes by Hurricanes Katrina and Rita. Collaborating with its partners in the administration to stabilize housing markets — stabilizing home prices, rebuilding homeowners’ equity and revitalizing communities overrun with foreclosures. “By engaging thousands of our employees and partners this Strategic Plan reflects the spirit of President’s Obama’s community organizing work on Chicago ’s South Side — the importance of consensus-building, listening to people’s needs and trying to find common ground,” said Donovan. “This Plan isn’t about my legacy or even President Obama’s, but the legacy we all leave here at HUD at a time in which the agency has never been more important.” Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 14 May 2010 00:00:00 EST EF6A4DC6C62B44949B12C5BEB964DD10 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=B1C0E8B245814EDD951A27E1B095DC37 In a speech at the Federal Reserve Bank of Chicago on May 6, Federal Reserve Chairman Ben Bernanke said the Federal Reserve is not waiting on Congress’ financial regulatory reform package to implement some changes that he said can be made now within the Fed’s existing authority. “While these legislative steps are necessary, we are not waiting to implement improvements,” Bernanke said. “We are toughening capital and liquidity rules in cooperation with other regulators here and around the world, and we are taking other significant steps, including issuing proposed guidance to help ensure that compensation structures at banking organizations do not encourage excessive risk-taking.” Bernanke stated that the Fed is also leading cooperative efforts by market participants and regulators to strengthen the infrastructure of key markets, including the market for securities repurchase agreements and the markets for credit derivatives and other over-the-counter derivative instruments. He added that the Fed has already taken a number of steps to strengthen its supervision of the largest, most complex financial institutions. “The financial crisis has made clear that supervisors must adopt a macro-prudential, or systemically oriented, approach that addresses both safety and soundness risks at individual institutions and risks to the stability of the financial system as a whole,” Bernanke said. “A systemic approach to regulation, which of necessity involves the monitoring of the interactions of a range of financial firms, markets and instruments, requires a multidisciplinary perspective.” Bernanke said the Fed’s Supervisory Capital Assessment Program, also known as the bank stress test, which was implemented in February 2009 to assess the health of numerous major U.S. financial institutions and measure their exposure to certain risks, has helped stabilize the economy. He added that surveillance mechanisms will be essential moving forward. “We will use supervisory information, firm-specific data and financial market data to identify developing strains and imbalances that may affect multiple institutions, as well as specific firms. As in the stress tests, our staff members will conduct forward-looking scenario analyses to gauge the potential effects of adverse changes in the operating environment on individual firms and on the system as a whole,” Bernanke said. Bernanke noted that while the Fed is moving toward increased oversight of financial institutions, it supports Congress’ goals to reform financial regulation and close existing gaps in the nation’s regulatory framework. He added that the new framework should include enhanced consolidated supervision of bank holding companies and similar supervision for systemically important nonbank financial firms. “We also need a strong resolution framework that allows policymakers to wind down failing, systemically important financial institutions without a destabilizing bankruptcy and without a taxpayer bailout,” he said. This week, the Senate began debates over several portions of the financial reform legislation, including a bipartisan deal to unwind big financial firms that are considered "too big to fail" and discussing a number of other proposals, including new rules for the derivatives market and new consumer protections. Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 07 May 2010 00:00:00 EST B1C0E8B245814EDD951A27E1B095DC37 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=3669F083E162480C8CAA162B4C598E80 President Obama nominated Janet Yellen, Peter Diamond and Sarah Bloom Raskin to the Board of Governors of the Federal Reserve System, according to a statement released from the White House on April 29. Obama sent the nominations to the Senate, naming Yellen, a former member of the Board of Governors at the Fed, as governor and vice chair for a term of four years and a member for a term of 14 years. Yellen currently serves as president of the Federal Reserve Bank of San Francisco , a position she has held since 2004. She was with the Fed from 1994-1997 and served as chair of the Council of Economic Advisers from 1997-1999. She is a professor emeritus at the Haas School of Business at the University of California , Berkeley and received a Ph.D from Yale University .   Diamond and Raskin were nominated to serve as a board members for a term of 14 years. “The depth of experience these individuals bring in economic and monetary policy, financial regulation and consumer protection will make them tremendous assets at the Fed,” Obama said. “I am grateful they have chosen to dedicate their talents to serving the American people.” Diamond currently serves as a professor at the Massachusetts Institute of Technology, where he has been a member of the economics faculty since 1966. He previously served as president of the American Economic Association, president of the Econometric Society, and president of the National Academy of Social Insurance. The author or editor of 12 books and more than 130 articles, Diamond is a fellow of the American Academy of Arts and Sciences and a member of the National Academy of Sciences. He received a Ph.D. from the Massachusetts Institute of Technology. Raskin currently serves as commissioner of Financial Regulation for the state of Maryland , where she regulates diverse financial institutions including banks, credit unions, mortgage lenders, mortgage servicers, mortgage originators, trust companies, collection agencies, debt management companies and consumer installment lenders. She chairs the Federal Legislation Committee for the Conference of State Bank Supervisors as well as the Regulatory Restructuring Task Force and the Consumer Financial Products Agency Task Force. Previously, she served as banking counsel to the U.S. Senate Committee on Banking, Housing, and Urban Affairs and as managing director at Promontory Financial Group. Raskin received a J.D. from Harvard Law School . Obama announced several other nominations this week, including: Denise Jefferson Casper , of Massachusetts , for U.S. district judge for the District of Massachusetts; Charles Gillen Dunne , of New York , for U.S. marshal for the Eastern District of New York for a term of four years; Dabney Langhorne Friedrich , of Virginia , for member of the U.S. Sentencing Commission for a term expiring Oct. 31, 2015 (reappointment); Barry R. Grissom , of Kansas , for U.S. attorney for the District of Kansas for a term of four years; Paul Kinloch Holmes III , of Arkansas , for U.S. district judge for the Western District of Arkansas; Carlton W. Reeves , of Mississippi , for U.S. district judge for the Southern District of Mississippi; Patti B. Saris , of Massachusetts , for member of the U.S. Sentencing Commission for a term expiring Oct. 31, 2015; Malcolm D. Jackson , of Illinois , for assistant administrator of the Environmental Protection Agency; and Tracie Stevens , of Washington , for chairman of the National Indian Gaming Commission for a term of three years. The nominees will be reviewed and are subject to approval by the Senate. Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 30 Apr 2010 00:00:00 EST 3669F083E162480C8CAA162B4C598E80 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=8655720D91D94315BE4E7105BA97602A On April 22, to mark Earth Day, the House Financial Services Committee approved HR 2336 , the GREEN Act (Green Resources for Energy Efficient Neighborhoods), by a voice vote. The bipartisan legislation, authored by Reps. Ed Perlmutter , D-Col., and Judy Biggert , R-Ill., provides incentives to lenders and financial institutions which are intended to help move the housing and building stock towards greater energy efficiency, create jobs and make places to live and work more sustainable and affordable. “In order to save green, we must go green,” Perlmutter said. “The GREEN Act will save our country money, help revitalize our economy by making energy efficiency practices more affordable, accessible and achievable by consumers, businesses and government entities.” “The GREEN Act will forge a new path for achieving energy and cost savings in our nation’s buildings, homes and offices,” said Biggert, co-chair of the Congressional High-Performance Building Caucus.  “It utilizes creative financing mechanisms, demonstrations and incentives to promote the use of the latest in sustainable building designs and technologies.” Biggert added that the legislation will also place a premium on energy efficient construction and upgrades that will revitalize investment in future green jobs. “Speeding these technologies out of the lab and into our nation’s building supply will pay dividends for years to come for homeowners, the economy and for the environment,” she said. The American Institute of Architects published a report on the potential job creation from this bill and found that the GREEN Act could create or save as many as 140,000 jobs in the building design and construction industry every year. In 2008, the bipartisan GREEN Act passed the House as part of the Comprehensive Energy Security and Consumer Protection Act. In 2009, the bill passed the House as part of HR 2454 — the American Clean Energy & Security Act (ACES). Perlmutter and Biggert made some consensus changes to the bipartisan bill, and it now will go to the House floor for a vote. According to a statement by the House Committee on Financial Services, Perlmutter and Biggert’s bill has broad support from consumers, Realtors, environmental and business groups, financial institutions, home builders and developers. Key provisions in the bill include:  Provides incentives for new and existing structures financed by the Department of Housing and Urban Development (HUD) to meet or exceed the minimum energy efficiency standards established in the bill. Directs HUD to establish a four-year, 50,000-unit demonstration program to highlight the cost-effectiveness of funding a portion of the costs of meeting the enhanced HUD energy efficiency standards. In addition, the Federal Housing Authority (FHA) is encouraged to insure at least 50,000 energy efficient mortgages by Dec. 31, 2012. As FHA begins seeking these types of mortgages, a market will emerge among homebuilders, home owners and lenders seeking to acquire federal insurance on mortgage products. Provides resources to the nonprofit and for-profit community organizations to extend the availability of energy efficient products for existing homes. Establishes a residential energy efficiency block grant program, according to established formulas under the community development block grant program, to distribute grants for the sole purpose of improving the energy efficiency of single-family or multi-family housing, with preference given to projects that meet the efficiency standards highlighted in section 5(b) of the reported bill. Partnerships are created with the secretary of HUD and planting organizations to promote energy efficient location of buildings and utilize landscape architecture, including strategically planted trees, shrubs and grass, aimed at improving energy efficiency and sustainability.  Requires HUD to insure certain loans made by qualified energy lenders to finance the acquisition of renewable energy systems for use at residential properties. This provision will improve the accessibility of leased renewable energy systems for home dwellers. Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 23 Apr 2010 00:00:00 EST 8655720D91D94315BE4E7105BA97602A http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=DB4F43EC9DBA4ED2AF04C77D6D09A79D Discussions of moving forward with financial regulatory reform took place in the White House this week, as President Obama met with members of Congress to encourage swift bipartisan consensus on new legislation that would overhaul the financial services industry. The president issued a statement on April 14 prior to his meeting with bipartisan Congressional leadership, announcing that a top priority is to move quickly on its passage. “I think all of us recognize that we cannot have a circumstance in which a meltdown in the financial sector once again puts the entire economy in peril, and that if there’s one lesson that we’ve learned, it’s that an unfettered market where people are taking huge risks and expecting taxpayers to bail them out when things go sour is simply not acceptable,” he said. Obama added that he is confident a bipartisan package will be worked out to assure that the country is never again in a situation where companies are “too big to fail,” that consumers are adequately protected; and that the government has a strong mechanism to regulate derivatives. “And I am confident that if we work together diligently over the next several weeks, we can come up with a package that serves the American people well and does not put Americans ever again in a position where they’re having to choose between a terrible economic situation or rewarding people for failed policies and bad risk-taking,” he said. Obama also reported that while there appears to be significant improvement in the economy and stabilization, there is still work to be done. “There are too many people who are still unemployed, the housing market is still very soft [and there are] too many small businesses who aren’t getting credit,” he said. A 1,336-page financial regulatory reform bill moved to the Senate floor March 22, one week after Sen. Christopher Dodd , D-Conn., introduced and passed it out of the Senate Committee on Banking, Housing and Urban Affairs with a split party-line vote of 13-10. At the heart of the bill’s debate is whether to create a new Consumer Financial Protection Bureau (CFPB) and whether the Bureau would be a stand-alone agency or one housed within another governmental body. As written in the bill, the CFPB would, among other things, oversee consumer protection statutes, such as RESPA, the Truth in Lending Act, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, the Right to Financial Privacy Act of 1978, the Truth in Savings Act and numerous others. A CFPB would have the authority to examine and enforce regulations for banks and credit unions with assets of over $10 billion and all mortgage-related businesses (lenders, servicers, mortgage brokers and foreclosure rescue operators) and large non-bank financial companies, such as large payday lenders, debt collectors and consumer reporting agencies. Banks with assets of $10 billion or less would be examined by the appropriate bank regulator. The bureau would also be charged with coordinating with other bank regulators when examining banks to prevent undue regulatory burden and consulting with the other regulators before a proposal is issued. Regulators would have the right to appeal regulations if they believe the proposed regulations would put the safety and soundness of the banking system or the stability of the financial system at risk.  Rep. Barney Frank , D-Mass., who was successful at getting his financial regulatory reform legislation passed in the U.S. House in December ( HR 4173 ), continues to rally efforts toward a new consumer protection agency (see House passes hefty financial reform legislation ). HR 4173 included the proposed new agency as a stand-alone regulator. In an attempt to gain Republican support, which is needed to pass the Senate bill, Dodd has downgraded the agency in his reform package from a stand-alone entity to one housed within another regulatory body, such as the Federal Reserve. Bloomberg recently reported that Federal Reserve governors are discussing whether to publicly oppose placing a new consumer watchdog within the Fed. According to the news site, the governors are worried that they would not be able to control its budget, personnel or rulemaking, but would be held responsible for any missteps made by the new entity. “The Fed’s board has remained silent because it doesn’t want to undo the other part of the deal that would allow it to retain bank supervisory powers. In negotiating the bill, Senate Republicans, led by Bob Corker of Tennessee , last month sought to keep prudential oversight and consumer protection under the same roof to prevent banks from getting conflicting orders from separate regulators,” the report stated. While housing a new agency in the Fed is not ideal for some, the alternative option mentioned in the debate is to house it within the U.S. Treasury Department. However, some believe the agency would sit too close to the White House and be influenced by it. While Obama and Frank continue pushing for a stand-alone agency, Dodd believes a compromise will have to be met on this issue in order to pass reform legislation. Todd Zywicki , a professor at the George Mason University School of Law, has spoken out against a new consumer watchdog entirely, arguing that it will hinder competition and therefore cause higher prices for consumers. “It’s an unbelievably radical regulatory proposal. It’s something like I’ve never seen. I think one of the reasons why it has slowed down so much is that as soon as you start reading it, you’re shocked. It’s an intrusion into the market. It’s an unbelievable regulatory blanket that I think has rightfully scared people when they actually looked at the details of it,” Zywicki said in a speech given at the National Association of Mortgage Brokers’ 2010 Legislative and Regulatory Conference on Feb. 23. Zywicki has authored more than 30 articles in leading law reviews and economics journals and has testified before Congress about financial regulatory reform. He believes that the government, with the new legislation, is taking on a “paternalistic view,” meaning it is telling consumers what’s right for them, rather them consumers choosing for themselves. “There are two basic ways to regulate areas of consumer protection. Either market reinforcing regulation or market substitute regulation,” Zywicki said. Zywicki explained that market reinforcing regulation makes markets work better on expanding consumer choices, expanding competition and helping consumers to find the products that they think are right for them. He refers to the alternative method, market substitution, as a “paternalistic” approach that views consumers as “hapless victims” who can’t figure out what’s best for themselves. “Competition forces down prices. What economists have found is that in areas where competition is more intense, where there are more mortgage brokers, where there are more lenders, where there are more banks, prices tend to be lower,” Zywicki noted. “The obvious [conclusion] is that you want to have more competition and more consumer choice. Zywicki said a new CFPB would reduce competition, reduce consumer choice and result in higher prices for consumers. “When you ramp up regulation, you end up with lower quality and higher prices for consumers. Rather than repealing old regulations, streamlining disclosures and going back to a process that is actually focused on consumer choice, they’re making more regulations and ending up interfering with consumer choice,” he said. However, Pamela Banks , senior policy counsel for the Consumers Union, views a new CFPB as something that would help consumers. In a column in The Huffington Post on April 15, Banks said if a CFPB had existed before the recent economic crisis, cracking down on subprime and nontraditional mortgage practices, the crisis might have been avoided. “This new financial watchdog is meant to protect consumers from the kind of lending abuses that hurt millions of homebuyers and ultimately sparked the deepest economic downturn since the Depression,” she said. “We need a strong and wholly independent financial watchdog that has the power to protect consumers against tricky financial products and practices, without having its decisions delayed or second guessed by the banking regulators. An independent financial watchdog could focus on ensuring that financial products were once and for all presented in clear, understandable language that would enable consumers to do some comparison shopping.” Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 16 Apr 2010 00:00:00 EST DB4F43EC9DBA4ED2AF04C77D6D09A79D http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=6A628C4A42884BF6BC1FB1525E5D9FB7 The Federal Housing Administration (FHA) announced on April 5 new regulations to further reduce and better manage counterparty risks to its insurance funds as it continues to play a critical role in today’s housing market. The FHA said it will issue regulations to increase the net worth requirements of FHA-approved lenders, strengthen lender approval criteria and make lenders liable for the oversight of mortgage brokers. In this article: Federal Housing Administration FHA Commissioner David Stevens FHA final rule FHA-approved lenders credit policy changes FHA-endorsed loans “These changes support quality mortgage lenders while excluding organizations that are ill-equipped to handle the risk associated with market variations,” said FHA Commissioner David Stevens . “That is particularly important now when a robust, competitive mortgage finance market is a crucial element in rebuilding the American economy. Lenders bear the overall risk of FHA-endorsed loans, therefore it makes sense for them to approve their counterparties and have sufficient capital to operate.” The FHA said that the final rule permits it to more effectively focus its resources on lenders that pose the greatest potential threat to its insurance funds and to ensure that lenders possess the resources appropriate for the financial services they deliver. The FHA solicited public comments on the new regulation and considered those comments in the development of the final rule. On Sept. 18 2009, Stevens announced a set of credit policy changes that enhanced FHA’s risk management function, including the hiring of a chief risk officer for the first time in the agency’s 75-year history. In addition, Stevens announced his intent to propose new regulations to further strengthen FHA’s risk management. According to a statement from the FHA, the final rule makes good on that promise and will: Strengthen the capacity of FHA-approved lenders — Since 1993, FHA has required approved lenders to have a net worth of at least $250,000. To ensure that FHA lenders are sufficiently capitalized to meet potential need, effective immediately, all new lender applicants for FHA programs must now possess a minimum net worth of $1 million. Provide sufficient time for current FHA lenders to increase net worth — Effective one year following the enactment of this rule: current FHA approved lenders, with the exception of small businesses, must possess a minimum net worth of $1 million; and current FHA approved small business lenders must possess a minimum net worth of $500,000. Effective three years following the enactment of the provision: Approved lenders and applicants to FHA single-family programs must have a net worth of $1 million plus 1 percent of total loan volume in excess of $25 million; Approved lenders and applicants to FHA multifamily programs must have a minimum net worth of $1 million; Multifamily lenders that also engage in mortgage servicing must have an additional 1% of total volume in excess of $25 million; and Multifamily lenders that do not perform mortgage servicing must have an additional 0.5 percent of total loan volume in excess of $25 million. “Together, these new regulations align with risk management practices within the conventional marketplace and permit FHA to mitigate losses and decrease risk to its insurance funds. These represent significant steps toward ensuring that FHA resources are entrusted to lenders strong and healthy enough to meet the needs of the market,” FHA said. Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 09 Apr 2010 00:00:00 EST 6A628C4A42884BF6BC1FB1525E5D9FB7 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=7DE2CF4FD64747538F4E0F281C01979E As part of its ongoing commitment to continuously improve housing relief efforts, the Obama administration announced on March 26 adjustments to the Home Affordable Modification Program (HAMP) and to the Federal Housing Administration (FHA) programs.   In this article: Home Affordable Modification Program Federal Housing Administration Obama Administration FHA programs Troubled Asset Relief Program Department of Housing and Urban Development According to a press release from the Department of Housing and Urban Development (HUD), the program adjustments will better assist responsible homeowners who have been affected by the economic crisis through no fault of their own.   “The program modifications will expand flexibility for mortgage servicers and originators to assist more unemployed homeowners and to help more people who owe more on their mortgage than their home is worth because their local markets saw large declines in home values,” the release stated.   According to HUD, the changes will help the administration meet its goal of stabilizing housing markets by offering a second chance for 3 to 4 million struggling homeowners through the end of 2012. Costs will be shared between the private sector and the federal government. The federal cost of the changes will be funded through the $50 billion allocation for housing programs under the Troubled Asset Relief Program (TARP).   Adjustments to HAMP The HAMP program will now provide for temporary assistance for unemployed homeowners while they search for reemployment. This assistance will consist of reducing the homeowner’s mortgage payments for a minimum of three months to a maximum of six months while the homeowner actively searches for a job.   The changes will also include a requirement for servicers to consider alternative principal write-down approaches and increase principal write-down incentives. As stated in the “HAMP Improvements fact sheet,” all servicers are now required to consider an alternative modification approach that emphasizes principal write-down with incentives based on the dollar value of the principal reduced. The principal reduction and the incentives will be earned by the borrower and investor based on a pay-for-success structure.   Improvements to the program are also being implemented to reach more borrowers with HAMP modifications and to prohibit against the initiation of a new foreclosure referral when a borrower is cooperating with the servicer to obtain a modification. Other changes include:   Borrowers in active bankruptcy must be considered for HAMP upon request; Increased incentives for servicers to provide permanent HAMP modifications; and The expansion of HAMP to include homeowners with FHA loans. In addition, relocation assistance payments to homeowners receiving foreclosure alternatives is being doubled and there are now increased incentives to servicers and lenders, including increased incentives for extinguishment of subordinate liens, to encourage more short sales and other alternatives to foreclosure.   Adjustments to FHA programs   Highlights of changes to the FHA program, which have been implemented to support refinancing for underwater homeowners, will, among other things:   Encouraging responsible restructuring and refinancing through its voluntary option. This will encourage lenders and borrowers to work together, when appropriate, to restructure underwater mortgages. Because it is voluntary for lenders, not all underwater borrowers who meet the criteria will receive an FHA refinance loan. Enable refinancing into more sustainable loans that are no higher when compared to the value of the home than the standard FHA refinance loan (97.75 percent). Enable refinancing to a reduced monthly payment at current low interest rates to facilitate affordable homeownership. In addition, HUD outlined incentives for principal write-downs on second liens, but to qualify for a refinance, all mortgage debt including second liens must be written down to a maximum of 115 percent of the current value of the home.   FHA has promised more transparency on the impact of the refinancings. It has indicated it will publish data on the number of loans, average percentage written down and quantity of the principal that is reduced quarterly. In addition, TARP funds, up to $14 billion in total, will provide incentives to support write-downs of second liens and encourage participation by servicers as well as provide additional coverage for a share of potential losses on the loans. Housing policy overview HUD stated that the administration’s goal is to promote stability for both the housing market and homeowners. To meet these objectives, it has developed a comprehensive approach using state and local housing agency initiatives, tax credits for homebuyers, neighborhood stabilization and community development programs, mortgage modifications and refinancing and support for Fannie Mae and Freddie Mac. The administration’s efforts for homeowners have focused on giving responsible households an opportunity to remain in their homes when possible while they get back up on their feet, or to relocate to a more sustainable living situation.   “Today, mortgage rates are at record lows and, thanks in large part to these programs, more than 4 million homeowners have refinanced their mortgages to more affordable levels helping to save more than $7 billion annually, more than 1 million are saving an average of over $500 per month through the administration’s modification program, home equity increased by more than $12,000 for the average homeowner in the last three quarters last year and the economy is growing,” HUD reported. However, even with these improvements, homeowners and servicers still face challenges. HUD said servicers were slow to implement HAMP, so the program got off to a slow start. Recent improvements have accelerated the pace of modifications, and the announced adjustments are expected to improve performance.   “But our strategy to address the crisis must evolve because our challenges have also evolved,” HUD said. “Our housing initiatives must balance the need to help responsible homeowners struggling to stay in their homes, with the recognition that we cannot and should not help everyone. The President has said: ‘We can’t stop every foreclosure.’ And in fact, we can’t maintain the balance described above if we assist every borrower.”   For example, investors and speculators should not be protected under the efforts, nor should Americans living in million dollar homes or defaulters on vacation homes. Some people simply will not be able to afford to stay in their homes because they bought more than they could afford. Instead, HUD said the administration must focus on providing responsible homeowners opportunities to obtain a modification or to refinance and prevent avoidable foreclosures and, when necessary, must facilitate the transition to a more sustainable housing situation.   “The adjustments announced today are tailored to accomplish these goals by helping a targeted group of borrowers,” HUD said. Eligible homeowners for modifications under HAMP must, for example: live in an owner occupied principal residence, have a mortgage balance less than $729,750, owe monthly mortgage payments that are not affordable (greater than 31 percent of their income) and demonstrate a financial hardship. The new flexibilities for the modification initiative announced today continue to target this group of homeowners. “The FHA refinance options being announced today will provide more opportunities for lenders to restructure loans for some families who owe more than their home is worth. This is a voluntary program for lenders and homeowners. The population eligible for a FHA refinance must be current on their mortgage. This rewards responsible homeowners and creates stabilizing incentives in the housing market,” HUD said. Through its housing initiatives, the administration has taken the following actions to strengthen the housing market: Provided strong support to Fannie Mae and Freddie Mac to ensure continued access to affordable mortgage credit across the market; Together, Treasury and the Federal Reserve have purchased more than $1.4 trillion in agency mortgage backed securities, which have helped keep mortgage rates at historic lows, allowing homeowners to access credit to purchase new homes and refinance into more affordable monthly payments; and The FHA has played an important counter-cyclical role, providing liquidity for housing purchases at a time when private lending has declined; Launched a modification initiative to help homeowners reduce mortgage payments to affordable levels and to prevent avoidable foreclosures; Supported expanding the limits for loans guaranteed by Fannie Mae, Freddie Mac and FHA from previous limits up to $625,500 per loan to $729,750; Expanded refinancing flexibilities for the Fannie Mae and Freddie Mac loans, particularly for borrowers with negative equity, to allow more Americans to refinance; Launched a $23.5 billion Housing Finance Agencies Initiative which is helping more than 90 state and local housing finance agencies across 49 states provide sustainable homeownership and rental resources for American families; Supported the first time homebuyer tax credit, which has helped hundreds of thousands of Americans purchase homes. Is providing over $5 billion in support for affordable rental housing through low income housing tax credit programs and $2 billion in support for the Neighborhood Stabilization Program to restore neighborhoods hardest hit by concentrated foreclosures; and On Feb. 19, 2010, announced the $1.5 billion HFA Hardest Hit Fund for housing finance agencies in the nation’s hardest hit housing markets to design innovative, locally-targeted foreclosure prevention programs. Today mortgage rates remain at historic lows. The primary interest rate of around 5 percent is lower than at any time in the three decades before the crisis. HUD reported that it is also seeing encouraging signs in housing indicators — home prices and the pace of home sales have stabilized in recent months. Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 26 Mar 2010 00:00:00 EST 7DE2CF4FD64747538F4E0F281C01979E http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=ED2FC89116204DD8B9CEBDDF47B37590 Federal Reserve Chairman Ben Bernanke stated his opposition to Congress’ recent proposals that would limit the Fed’s supervisory authority to bank holding companies with more than $50 billion in assets. Bernanke testified to the House Committee on Financial Services in a hearing on March 17 that examined the link between the Fed’s bank supervision and monetary policy. He believes that the central bank should retain its oversight of smaller banks as well as the larger institutions. Currently, the Fed has oversight of about 5,000 bank holding companies, including the umbrella supervision of large, complex financial firms; the supervision of about 850 banks nationwide that are both state-chartered and members of the Fed (state member banks); and the oversight of foreign banking organizations operating in the United States. Bernanke said that the Fed’s involvement in regulation and supervision for both large and smaller financial institutions has two benefits. The first is that because of its wide range of expertise, the Fed is suited to supervise large financial organizations and to address both safety and soundness risks and the stability of the financial system as a whole. The second benefit is that its participation in the oversight of banks of all sizes significantly improves its ability to carry out its central banking functions, including making monetary policy, lending through the discount window and fostering financial stability. In this article: Ben Bernanke Sen. Christopher Dodd financial regulatory reform bank supervisory oversight Federal Reserve System safety and soundness “The financial crisis has made clear that all financial institutions that are so large and interconnected that their failure could threaten the stability of the financial system and the economy must be subject to strong consolidated supervision,” Bernanke told the committee. “Promoting the safety and soundness of individual banking organizations requires the traditional skills of bank supervisors, such as expertise in examinations of risk-management practices. The Federal Reserve has developed such expertise in its long experience supervising banks of all sizes, including community banks and regional banks.” The financial regulatory reform bill proposed March 16 by Sen. Christopher Dodd , D-Conn., would take from the Fed the regulation of state banks and thrifts of all sizes and bank holding companies of state banks with assets below $50 billion. These would be supervised by the Federal Deposit Insurance Corp. In addition, if passed, the legislation would require that the Office of the Comptroller of the Currency regulate national banks and federal thrifts of all sizes and the holding companies of national banks and federal thrifts with assets below $50 billion. While Bernanke has indicated his support of financial regulatory reform, he is opposed to any reform that would diminish the Fed’s supervisory role. He claims that the retention of such authority complements monetary policy. “Federal Reserve staff members have expertise in macroeconomic forecasting for the making of monetary policy, which is important for helping to identify economic risks to institutions and markets,” Bernanke said. “In addition, they acquire in-depth market knowledge through daily participation in financial markets to implement monetary policy and to execute financial transactions on behalf of the U.S. Treasury. Similarly, the Federal Reserve’s extensive knowledge of payment and settlement systems has been developed through its operation of some of the world’s largest systems, its supervision of key providers of payment and settlement services and its long-standing leadership in the international Committee on Payment and Settlement Systems. "No other agency can, or is likely to be able to, replicate the breadth and depth of relevant expertise that the Federal Reserve brings to the supervision of large, complex banking organizations and the identification and analysis of systemic risks," he continued. Bernanke added that as the Fed’s central banking functions enhance its supervisory expertise, its involvement in supervising banks of all sizes across the country significantly improves its ability to effectively carry out its central-bank responsibilities. Bernanke said that while the Fed awaits the reform legislation, it has been conducting an intensive self-examination of its regulatory and supervisory performance and has been implementing improvements. “We are strengthening regulation and overhauling our supervisory framework to improve consolidated supervision as well as our ability to identify potential threats to the stability of the financial system. And we are taking steps to strengthen the oversight and effectiveness of our supervisory activities,” Bernanke said. The House’s financial reform legislation that passed in December is similar to Dodd’s bill in many ways, but does have some fundamental differences, one being that it preserves the supervisory authority of banks. Dodd’s bill has been introduced to the Senate Committee on Banking, Housing and Urban Affairs and is expected to be marked up the week of March 22. For the full text of the bill, click here . The two bills represent a sweeping overhaul of the nation’s financial regulatory structure intended to prevent a repeat of the current economic crisis that prompted the taxpayer-funded bailout of American International Group Inc. as well as others. Some members in Congress have criticized the Fed for what they believed to be a sluggish response to the nation’s economic downturn. Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 18 Mar 2010 00:00:00 EST ED2FC89116204DD8B9CEBDDF47B37590 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=7884789A13C743F58AE9CFB181CAF8FB Sen. Christopher Dodd , D-Conn., announced on March 11 that he is ready to present a new version of the original financial regulatory reform bill he drafted last November. In this article: Sen. Christopher Dodd Consumer Financial Protection Agency financial regulatory reform Sen. Richard Shelby Sen. Bob Corker Senate Committee on Banking, Housing and Urban Affairs “Over the last few months, Banking Committee members have worked together to try and produce a consensus package. Together we have made significant progress and resolved many of the items, but a few outstanding issues remain,” Dodd commented. Dodd has been making efforts to come up with a financial regulatory overhaul bill that he is confident will pass. The delay in getting the bill heard in committee is due to disagreements over whether an independent consumer protection agency is necessary and if so, if it should be housed within another federal regulator. “It has always been my goal to produce a consensus package. And we have reached a point where bringing the bill to the full committee is the best course of action to achieve that end,” Dodd said. The bill will be reviewed in the Senate Committee on Banking, Housing and Urban Affairs beginning March 15 and a full committee markup is scheduled for the week of March 22. The Washington Post reported that although Dodd said he will continue bipartisan talks, unveiling the measure on March 15 puts pressure on GOP senators by creating a sense of urgency and forcing the debate into the open. While the scope of enforcement powers of a new Consumer Financial Protection Agency (CFPA) and the Federal Reserve’s regulation over banks are still up for debate, Dodd said he decided to introduce the bill now so the committee could begin discussing it before the Senate breaks for recess in early April. The Washington Post also reported that Dodd has been facing pressure from liberals who “feared he was compromising too much during recent negotiations.” Dodd had been working with Republicans in order to ensure the bill would pass in the Senate. Sixty votes would be needed to pass the legislation and Democrats control only 59 of the votes. “Our talks will continue and it is still our hope to come to agreement on a strong bill all of the Senate can be proud to support very soon,” Dodd said. If Dodd’s bill is passed with the inclusion of a new CFPA, all consumer financial protection laws (including RESPA and the Truth in Lending Act) would be pulled from existing regulators and housed within the new agency. In addition, the agency would have control over new regulations in the financial services sector. Initially proposed by President Obama , the agency has been paramount in the disagreements between Dodd and Sen. Richard Shelby , R-Ala., during the drafting stages of the financial regulatory reform legislation. Dodd recently shut out Shelby due to an impasse and began working on the reform with Sen.  Bob Corker , R-Tenn., who said he would work with the Democrats on getting the new legislation passed. Media reports have indicated that Corker is displeased with Dodd’s announcement to introduce the bill at this stage and that the two were close to coming to an agreement on the terms of a new CFPA. “I still think we’re going to get there,” Corker told The Washington Post . “I think we are going to get there, but it’s going to be far messier.” Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 12 Mar 2010 00:00:00 EST 7884789A13C743F58AE9CFB181CAF8FB http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=49F6FD0B2048477AA8CC096D9BC7A5B2 First the U.S. Treasury Department, now the Federal Reserve Board (Fed). If enacted, which existing agency, if any, will end up housing the proposed Consumer Financial Protection Agency (CFPA)? Over the past two weeks, efforts have been made on Capitol Hill to come up with a financial regulatory overhaul bill that Sen. Christopher Dodd , D-Conn., is confident will pass. The delay in getting the bill heard in the U.S. Senate Committee on Banking, Housing and Urban Affairs is due to disagreements over whether an independent consumer protection agency is necessary and if so, if it should be housed within another federal regulator. “A lot of attention is being paid to what address the new consumer watchdog will have, but the critical question is: Will this office have the authority and independence it needs to prevent a replay of the abuses we have seen in recent years that burned so many Americans?” Dodd said in his latest statement on the CFPA. If created, the CFPA would pull all consumer financial protection laws (including RESPA and the Truth in Lending Act) from existing regulators and house them under one roof. In addition, the agency would have control over new regulations in the financial services sector. Initially proposed by President Obama , the agency has been paramount in the disagreements between Dodd and Sen. Richard Shelby , R-Ala., during the drafting stages of the financial regulatory reform legislation. Dodd recently shut out Shelby due to an impasse and began working on the reform with Bob Corker , R-Tenn., who said he would work with the Democrats on getting the new legislation passed. Dodd, who serves as chairman of the Senate Banking Committee, supports a new CFPA. However recent reports have indicated that he has downgraded it from a stand-alone agency into an agency housed by another existing regulator in his attempts to come up with a bill that would win Republican votes. In the past, he spoke of housing the CFPA within the U.S. Treasury Department. There is now speculation that he is leaning toward housing it within the Fed. Dodd said he is pushing for a new CFPA with an independent head, appointed by the President and confirmed by the Senate that would have an independent budget to do its work, the autonomy to craft rules and an ability to enforce those rules. “This is different than the system that led to the failures we saw in the past,” Dodd said. “In the past, consumer protections were under the control of the Federal Reserve System and other regulators. So while we haven’t settled on the Fed as the place for this to be housed, there’s a vast difference between what is being suggested today and the status quo that failed so miserably in the past.” Rep. Barney Frank , D-Mass., who was successful at getting his financial regulatory reform legislation passed in the U.S. House in December ( HR 4173 ), continues to rally efforts toward a new CFPA (see House passes hefty financial reform legislation ). HR 4173 included the proposed new agency as a stand-alone regulator. “I do not support housing the Consumer Financial Protection Agency in the Federal Reserve,” Frank said in a recently issued statement. “I continue to vigorously support the House-passed bill that establishes an independent agency with strong rule-writing authority and enforcement powers to implement consumer protections.” Frank commented that he could, if necessary, support housing the CFPA in the Treasury Department, “provided that the entity has sufficient independence and broad regulatory scope to accomplish the mission of protecting consumers.” Frank said he objects to housing the CFPA in the Fed because of its “historical failure to implement consumer protection as a central part of its mission and role.” Those in favor of a CFPA say it will centralize consumer protection laws and allow for the enforcement of those laws more effectively. They believe that the Fed and others did a poor job of consumer protection that resulted in abusive mortgages and ultimately, the recent financial crisis. Those opposed to the CFPA, including banks and Wall Street, have called the CFPA an unnecessary governmental behemoth that would intrude on the private sector and negatively impact bank profits due to enforcing increased administrative burdens. Republicans opposed have said that the same federal agency assigned to supervise the financial health of lenders should also oversee consumer protection and the two should not be separated. Dodd is expected to introduce his final bill to the Senate Banking Committee sometime next week. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 05 Mar 2010 00:00:00 EST 49F6FD0B2048477AA8CC096D9BC7A5B2 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=279960AF7AF34871A86491EC6AF5D601 Members of the mortgage broker community warmly welcomed two U.S. congressmen to speak at the National Association of Mortgage Brokers’ 2010 Legislative and Regulatory Conference that took place in Washington , D.C. , Feb. 21-24. RESPA News was on site live to meet the government officials and hear their remarks. In this article: Rep. Gary Miller Rep. Travis Childers Home Valuation Code of Conduct Government Sponsored Enterprises Consumer Financial Protection Agency Fannie Mae National Association of Mortgage Brokers   Reps. Gary Miller , R-Calif., and Travis Childers , D-Miss., both members of the House Financial Services Committee, voiced their positions on a number of issues in front of conference attendees. Both presented themselves as advocates for small businesses and spoke of supporting legislation that has helped the housing market and opposing legislation that they believe would or has already hurt it.   In his remarks, Miller spoke about yield spread premiums (YSP) and the mortgage brokerage industry’s right to earn them; administration talks of raising taxes for banks; the need for Government Sponsored Enterprises (GSE); and the damaging effects of the Home Valuation Code of Conduct (HVCC).   Childers spoke of his opposition to the HVCC and the newly proposed Consumer Financial Protection Agency (CFPA). While opposed to these major issues, he spoke highly of his support of the first-time homebuyer tax credit and said he is working toward another extension.   Eliminate Fannie and Freddie?   Miller, who supports reforming the GSEs, namely Fannie Mae and Freddie Mac, said those who think we should eliminate them completely need to look at the reality of the GSEs’ important role in today’s marketplace.   “The concept of the GSE was to provide liquidity to the marketplace,” Miller said. “Why in the world would we get rid of the only individual group out there providing liquidity?”   Those opposed to the GSEs have suggested that what the GSEs do in the market could be handled by a private sector group. But Miller said this would not work.   “If there was a private sector group that could do it, would they not have been there in 2005 and 2006? They wouldn’t. There is no private sector alternative to the GSEs.”   Miller said reform is needed in the GSEs to minimize taxpayer risk and to make sure Freddie and Fannie pay the government back for the losses incurred by taking conservatorship of the GSEs.   “The loans [Fannie and Freddie] are making today are performing very well, especially in high-cost areas,” Miller said. “Freddie and Fannie have been blamed for everything that went wrong in the marketplace. They’ve made some mistakes without a doubt. But do we need to completely turn the industry upside down and create a recession in the housing industry unlike anything we’ve ever see? I say no.”   Miller added that the facts regarding the GSEs’ performance speak for themselves.   “When you say that ‘Fannie and Freddie have made some bad loans,’ they have made some bad loans. There is no doubt about it. But when they have a default rate of 3 percent compared to 6.9 percent of the private sector, they’ve done something right also,” Miller said.   Miller said numerous attempts were made to reform the GSEs between 2001 and 2006. The reform included guidelines the GSEs had to comply with. According to Miller, each bill was approved in the U.S. House, but failed by a majority Democratic vote in the Senate.   YSP and HVCC   Miller said he fought to keep YSP payments to mortgage brokers legal. While Congress has been drafting mortgage reform legislation to eliminate predatory lending, Miller noted that throughout the process many have placed blame on the mortgage broker community and wanted to do away with YSPs.   “That was more of a debate than you may have realized and we ended up winning in the end,” Miller said. “That was one in which I think we did a pretty good job in helping [mortgage brokers] because [they] need to be compensated for what they’re doing. And, if people want to roll points into their loan resulting in interest rate increases, they should be able to do that."   Regarding the HVCC, Miller said he immediately introduced an amendment to strike the bill when Rep. Paul Kanjorski , D-Pa., introduced it.   “I got one vote from the Democratic side in committee the first time I tried to strike it and I said you’re going to see prices have a dramatic impact on appraisals. People cannot get the value they sold their house for because you don’t know what they used as a comparison,” Miller said.   Childers is also opposed to the HVCC and has joined Miller in efforts to abolish it.   “The problem I have with the HVCC is it’s a one-size-fits-all. And one size doesn’t fit all in this business. It was not good for rural America . In New York the attorney general pushed it hard. And if it’s good for New York , I can understand that. But it wasn’t good for Mississippi and it wasn’t good for a lot of the South,” Childers said.   Childers and Miller worked on bipartisan language to first impose an 18-month moratorium for the HVCC. They then took these efforts a step further when they drafted legislation that would abolish the HVCC completely. This amendment, which was passed as a part of HR 4173 , currently sits in the Senate for consideration.   “The HVCC creates serious obstacles for selling a home in an already stressed market that extends the process for both buyers and sellers,” Childers said. “We don’t need to make things harder when we’re in the middle of a recession. We need to make things easier.”   Childers believes appraiser management companies have been putting small-town and independent appraisers and mortgage brokers out of business.   Rise in taxes?   Miller said he is against any talks of the government taxing banks.   “If they’re going to tax $90 billion out of the banking industry, that’s $90 billion less they have. If you have $90 billion less to lend, how are you going to lend more money? You can’t be punitive toward businesses, industry and the American people. We can’t continue to raise your taxes,” Miller said.   He added that in the down market, mortgage brokers have had to downsize their businesses, including laying people off and moving to smaller facilities. However, the government wants to charge businesses and banks higher taxes so it does not have to cut back its operations.   “We’re doing everything wrong,” Miller said. “If you really want to help the American people, then do everything you can to create the best environment you can for businesses. The overall economy is getting killed. If this government wants to help you, we better get the heck out of your business and let you do what you need to do to make a good profit.”   Homebuyer tax credit a success   Childers said a major accomplishment with a proven success record is the passing and extension of the first-time homebuyer tax credit. He credited this homebuyer benefit with making possible the sale of hundreds of thousands of new homes at the end of last year.   “My colleagues and I successfully fought to extend it. Some of them fought to extend it further than what we got, but nevertheless, we did get it extended through April 30 of this year,” Childers said. “The extension legislation also provided a $6,500 benefit to new purchasers who had lived in their current residents for five years or more. It also helped military families who are struggling to make their mortgage payments by making those payments tax exempt. Extending this tax credit represents a significant step in restoring the mortgage and housing industry.”   Childers said he has gone as far as introducing legislation that would extend the credit for an additional year and extend it to all individuals who are planning to purchase a home.   “I intend to continue to work toward that goal and seek these provisions. According to the National Association of Realtors, home sales increased by 5 percent nationally. Additional data shows that sales would have dropped sharply near the end of 2009 had that credit not been extended.”   While Childers is in favor of the first-time homebuyer tax credit, he is less supportive of another piece of legislation that has caused tremendous controversy in all aspects of the mortgage and housing industries. Childers voted against the proposed CFPA and said he is not sure that this proposal is the appropriate measure to take for consumer protection.   “While I do support regulatory reform legislation in general, I am still skeptical of the need to create a government run consumer financial protection agency,” he said.   Childers said prior to HR 4173 passing in the House, which included the creation of a new CFPA, he formed a bipartisan amendment to the bill that would “provide needed oversight without instituting unnecessary government control.” The amendment did not make it into the final bill.   HR 4173 is currently up for consideration in the Senate.   Over the next several weeks, RESPA News will be issuing reports on the National Association of Mortgage Brokers' 2010 Legislative and Regulatory Conference. Check back often for stories featuring conference sessions.   Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 26 Feb 2010 00:00:00 EST 279960AF7AF34871A86491EC6AF5D601 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=83DF5A314F4A49ABB69ACFAE5B655493 The Department of Housing and Urban Development (HUD) has announced that it is extending the deadline for the public to submit comments on its proposed rule under the Secure and Fair Enforcement Mortgage Licensing (SAFE) Act of 2008. The comment period will remain open until March 5. In this article: SAFE Act proposed rule Secure and Fair Enforcement Mortgage Licensing of 2008 Housing and Economic Recovery Act Nationwide Mortgage Licensing System and Registry Federal eRulemaking Portal Department of Housing and Urban Development The proposed rule, which addresses HUD’s responsibilities under the SAFE Act, was published on Dec. 15 and the comment period was set to end on Feb. 16. However, HUD has determined that an extension is necessary in order for interested parties to have ample time to submit comment. “Due to the severe inclement weather not only in Washington, D.C. but in the mid-Atlantic states that resulted in the closing of the federal government as well as many local governments and private and public businesses and organizations, HUD determined that an extension of the public comment period is appropriate to ensure interested parties have the opportunity to comment on this proposed rule,” the Federal Register notice stated. Comments can be submitted via mail or electronically. However, HUD is strongly urging comments be submitted electronically through the Federal eRulemaking Portal at http://www.regulations.gov . Comments submitted via mail should be sent to: The Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th St., S.W. , Room 10276 , Washington , D.C. 20410-0500 . The proposed rule sets the minimum standards that states must meet in licensing loan originators to comply with the SAFE Act. The SAFE Act was enacted into law on July 30, 2008, as part of the Housing and Economic Recovery Act of 2008. It is designed to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators. The SAFE Act also mandates the creation of a Nationwide Mortgage Licensing System and Registry, and encourages all states to provide for a licensing and regulatory regime for all residential mortgage loan originators. While states are charged with enacting licensing standards that meet the requirements of the SAFE Act, overall responsibility for interpretation, implementation and compliance rests with HUD. If HUD determines that a state’s licensing standards do not meet the minimum requirements of the Act, it is required to implement and administer a licensing system for that state. The proposed rule: Addresses the criteria that HUD will use to determine whether a state has put into place a system for licensing and registering loan originators as required by the SAFE Act. The rule sets forth the statutorily imposed minimum requirements that a state would have to meet to be in compliance with the SAFE Act; Provides the requirements that HUD would put into place if HUD must establish a licensing and registration system for a state that is determined to not be in compliance with the SAFE Act; and Addresses the enforcement authority provided to HUD in the SAFE Act including: summons authority for information on any loan originator operating in any state that is subject to a licensing system established by HUD; the authority to appoint examiners to assist HUD in its responsibilities in a state in which HUD established a licensing system; and the authority to conduct cease-and-desist proceedings with respect to any person who is violating, has violated or is about to violate any provision of the SAFE Act under a licensing system established by HUD, including the authority to issue temporary orders. According to a report issued by Washington, D.C.-based K&L Gates LLP, the rule proposes several interpretations, including HUD’s assertion that loan originator licensing is required of loss mitigation personnel. In addition, K&L Gates said some of HUD’s definitions of key terms in the Act could fundamentally alter its scope.  To read comments submitted to date (more than 300 posted), go to the Federal Regulations Web site at www.regulations.gov or click here . For a copy of the proposed rule, click here . Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 18 Feb 2010 00:00:00 EST 83DF5A314F4A49ABB69ACFAE5B655493 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=D6C169AA4EC14465B18BC9AAC5E8B6F6 The financial services industry is keeping an eye on the U.S. Senate Committee on Banking, Housing and Urban Affairs as it nears debate of its new sweeping financial regulatory reform proposal spearheaded by Committee Chair Sen. Christopher Dodd , D-Conn. While reports of committee talks ensue, a major decision took place this week that could ensure the viability of a new Consumer Financial Protection Agency (CFPA) as part of the reform package. Dodd announced this week that he is no longer working with Sen. Richard Shelby , R-Ala., on bi-partisan efforts for the legislation and will instead begin talks with the newcomer to the committee, Bob Corker , R-Tenn. In this article: Christopher Dodd Consumer Financial Protection Agency Barney Frank Bob Corker Elizabeth Warren HR 4173 Truth in Lending Act Dodd had been working with Shelby on bi-partisan efforts for the financial reform package for more than a year, but the partnership came to a halt last week when Dodd said he had hit an impasse with the senior Republican. According to an article in Reuters , this move by Dodd will cut Shelby out of the loop, and possibly increase the likelihood of a new CFPA. Shelby is against this type of agency, which, if created, would pull all consumer financial protection laws (including RESPA and the Truth in Lending Act) from existing regulators and house them under one roof. In addition, the agency would have control over new regulations in the financial services sector. The agency, initially proposed by President Obama , has been paramount in the disagreements between Dodd and Shelby during the drafting stages of the financial regulatory reform legislation. According to Reuters , Corker has also opposed the proposed agency, having referred to it as “a tremendous overreach” and “way out of bounds.” However, Reuters also reported that Corker admitted to CNBC on Feb. 11 that he is willing to work with Democrats on financial reform and that the Dodd-Shelby impasse would lead “toward a legislative train wreck.” Those in favor of a CFPA say it will centralize consumer protection laws and allow for the enforcement of those laws more effectively. They believe that the Federal Reserve Board and others did a poor job of consumer protection that resulted in abusive mortgages and ultimately, the recent financial crisis. Those opposed, including banks and Wall Street, have called the CFPA an unnecessary governmental behemoth that would intrude on the private sector and negatively impact bank profits due to enforcing increased administrative burdens. Although Obama has personally met with Dodd regarding the inclusion of a CFPA in the legislation, Dodd has discussed the possibility of downgrading it. He has mentioned that it could be created as a division of the Treasury Department. According to a report in The Wall Street Journal , to win Senate approval for the legislation, Dodd may need to make this compromise with the Republican members, many of whom oppose a CFPA. Republicans opposed have said that the same federal agency assigned to supervise the financial health of lenders should also oversee consumer protection and the two should not be separated. Rep. Barney Frank , D-Mass., who was successful at getting his financial regulatory reform legislation passed in the U.S. House in December ( HR 4173 ), continues to rally efforts toward a new CFPA (see House passes hefty financial reform legislation ). Recently, he commented on remarks made by Elizabeth Warren , a Harvard law professor and advocate for the consumer protection proposal. “I welcome Elizabeth Warren’s forceful op-ed in today’s Wall Street Journal , making a strong case for increased consumer protection in the financial industry,” Frank said. “No one familiar with the track record of the bank regulatory agencies with respect to protecting consumers can deny the need for an independent agency if we are going to have effective consumer protection. Bank regulators have traditionally treated their responsibilities for consumer protection as a second priority.” Warren wrote in her commentary that Wall Street executives “might have had some thoughtful suggestions for how to better shape a consumer agency. Instead, they have unleashed lobbyists who are determined to do anything to kill the consumer agency.” Frank said that those who cite safety and soundness as a major reason to oppose increased consumer protection “have it backwards. The inability to protect consumers from abuse was a major cause of the financial crisis from which we are just emerging.” Frank added that Warren importantly notes the example of Citigroup’s unsuccessful and unilateral attempt to bring fairness to credit card practices. “This experience demonstrates that competitive pressures will obstruct reform unless it is done by thoughtful legislation and regulation that applies to all,” he continued. Dodd is expected to present a version of the legislation to committee members in late February. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 11 Feb 2010 00:00:00 EST D6C169AA4EC14465B18BC9AAC5E8B6F6 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=3FD8FA3DA5A945C8B40902F696D7DC4A Department of Housing and Urban Development (HUD) Secretary Shaun Donovan was on the move this past week, visiting Portland State University and speaking at a national community growth conference in Seattle , Wash. , making announcements along the way of a newly created office at HUD and several new hires. In this article: Shaun Donovan Department of Housing and Urban Development Office of Sustainable Housing and Communities HUD Deputy Secretary Ron Sims HUD regional director New Partners for Smart Growth Conference Department of Transportation HUD’s new office During speeches at a sustainability forum at Portland State University in Portland , Ore. and the New Partners for Smart Growth Conference in Seattle , Wash. , Donovan announced the launch of HUD’s new Office of Sustainable Housing and Communities (OSHC). This office will be overseen by HUD Deputy Secretary Ron Sims . According to Donovan, OSHC is designed to help build stronger, more sustainable communities by connecting housing to jobs, fostering local innovation and building a clean energy economy. Funded by Congress for the first time in HUD’s 2010 budget, OSHC is a key component of the Obama administration’s Partnership for Sustainable Communities initiative. “Through our new Office of Sustainable Housing and Communities, we will begin to tie the quality and location of housing to broader opportunities such as access to good jobs, quality schools and safe streets,” said Donovan. “By working with the Department of Transportation (DOT), the Environmental Protection Agency (EPA) and other federal agencies and with Deputy Secretary Sims’ guidance, we will finally begin to meet the needs of today without compromising the futures of our children and grandchildren.” Under the management of Director Shelley Poticha , OSHC will be the center point for all of HUD’s sustainability efforts. According to HUD, the average household spends more than half of its budget on housing and transportation. With OSHC as lead, HUD said it will work to improve access to affordable housing and transportation options, saving money for American families while allowing them more time to spend at home and less time traveling. In addition, HUD said that the office will invest in energy-efficient homes and buildings, renewable energy and in next-generation infrastructure. “To meet that goal, OSHC will strengthen HUD’s Energy Efficient Mortgage product and other energy retrofit financing options — for both single family homes and multi-family rental housing — through a $50 million Energy Innovation Fund. HUD will also make available an Affordability Index that measures the costs of where a home is located in relation to jobs, schools and transportation,” HUD reported. Congress provided $150 million to HUD for a Sustainable Communities Initiative. Of that amount, $100 million has been made available for regional integrated planning initiatives through HUD’s Sustainable Communities Planning Grant Program. Last June, the DOT, EPA and HUD created an interagency Partnership for Sustainable Communities. The idea behind it is to have the three agencies working together more closely to meet President Obama’s challenge to coordinate federal policies, programs and resources to help urban, suburban and rural areas build more sustainable communities. “Traditionally there has been no coordination among federal housing, transportation and land use investments,” HUD said. “For the first time the federal government will speak with one voice when it comes to housing, transportation and environmental policy and in doing so will be partner to regions and local governments instead of a barrier.” Transportation Secretary Ray LaHood and Environmental Protection Agency Assistant Administrator Mathy Stanislaus joined Donovan in Seattle to make the announcement on Feb. 4. The three leaders spoke before an audience of more than 1,500 key planners, public health professionals, developers, government staff and elected officials. “EPA, HUD and DOT are working together to rebuild our foundations for prosperity, a process that starts with rethinking the ways our communities grow,” said EPA Administrator Lisa P. Jackson . “The interagency Partnership for Sustainable Communities is working to give our communities what they need to grow and thrive with economic resilience and environmental sustainability.” “Our Partnership really is a new way of doing business in Washington , to help our nation meet 21st century challenges,” LaHood added. “Working together, we’re creating jobs to revitalize our economy, while helping state and local transportation agencies to build the capacity they need to promote livable, walkable, sustainable communities.” The President proposed $527 million in his budget for an ambitious new livability initiative at the U.S. Department of Transportation. The New Partners for Smart Growth Conference is a national conference, bringing together experts from a wide range of disciplines to discuss transportation, housing and urban development, public health, equitable development, environmental protection and other topics. HUD’s new hires On Jan. 29, Donovan announced three new regional directors at HUD, all of whom were selected by Obama. Edward L. Jennings Jr. was picked to serve as HUD regional director for the eight states in HUD’s Southeast region including Tennessee , Kentucky , North Carolina , South Carolina , Georgia , Alabama , Mississippi and Florida . A native of Florida and son of the former mayor of Gainesville , Jennings served as a state representative from 2000-2006 where he worked to expand access to health care, employment, transportation and was an affordable housing advocate to underserved communities. As founder of Jennings Development Group Inc., he helped to develop hundreds of units of affordable housing and to promote economic and community development in Gainesville . “Today, we need to have people on our senior management team who have the experience to get the job done, and I have no doubt Ed Jennings is just such a person,” Donovan said “The eight states that make up our Southeast Region will benefit enormously from his experience, and I’m proud he’s answered the call to serve.” Denver City Councilman Rick Garcia was selected to serve as HUD regional director for the six states in HUD’s Rocky Mountain region which includes Colorado , Montana , North Dakota , South Dakota , Wyoming and Utah . Garcia was elected to the Denver City Council in June 2003, and has made economic revitalization, access to new transit projects and business development his priorities. He is a board member and serves as chair of the Denver Regional Council of Governments (DRCOG) and has served as chairman of the Metro Vision Issues Committee and as a voting member of the Regional Transportation Committee of DRCOG.  “When we look to improve communities, this administration is focused on addressing housing, transportation, education and energy together,” Donovan said. “Rick Garcia understands and embraces the sustainable community concept. When you combine that with his extensive work on the affordable housing front and foreclosures, he became the ideal candidate for this position.” Mary McBride was selected to serve as HUD regional director for the four states in HUD’s Northwest region including Washington , Idaho , Oregon and Alaska . “Mary knows the region and is the ideal person to help us build partnerships that will ultimately improve upon our services and the delivery of programs to the communities that rely on them,” Donovan commented. “Her economic and community development experiences will be great assets to us as we assist communities during these challenging economic times. I am excited to have her as a part of our team.” Most recently, McBride served as the South Sound regional director for U.S. Sen. Patty Murray . She was a lead resource to Senator Murray for statewide initiatives involving affordable, public and farm-worker housing and community and economic development issues. Prior to joining Murray ’s staff, McBride was an appointee of the Bill Clinton administration serving in the position of director of USDA – Rural Development for Washington State . There are 10 regional directors for HUD in the U.S. The position requires serving as HUD liaison to mayors, city managers, elected representatives, state and local officials, Congressional delegations, private and non-profit developers, stakeholders and customers. The regional directors oversee the delivery of HUD programs and services to communities and evaluate their efficiency and effectiveness. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 05 Feb 2010 00:00:00 EST 3FD8FA3DA5A945C8B40902F696D7DC4A http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=BECC90F017D6493F87FCBA294C020C58 There has been a tremendous amount of speculation in the media on the status of the Consumer Financial Protection Agency (CFPA) since the U.S. House approved it as part of the Wall Street Reform and Consumer Protection Act ( HR 4173) on Dec 11. For now, the CFPA remains intact as part of HR 4173, which was referred to the Senate Committee on Banking, Housing and Urban Affairs on Jan. 20 for consideration. In this article: Christopher Dodd Wall Street Reform and Consumer Protection Act U.S. Senate HR 4173 Barney Frank Restoring American Financial Stability Act of 2009 Consumer Financial Protection Agency As we await the bill’s markup by the committee, as well as the markup of Sen. Christopher Dodd ’s, D-Mass., companion bill, it will continue to get interesting as the Senate debates its contents and developments occur behind the scenes. According to a report in The Huffington Post , at one point, Dodd was moving toward compromising away the CFPA in order to gain Republican support for other provisions of the bill. President Obama intervened, calling Dodd to the White House to gain his support of the proposed agency. “What’s interesting about Obama’s move last week is not just that he is supporting tough reform legislation, but that he got involved personally, calling Dodd to the White House and extracting his support. Until now, Obama has been mostly hands-off when it comes to financial reform, leaving the details to Tim Geithner and Larry Summers ,” the report noted. The CFPA was first introduced by the Obama administration on June 17 as part of Obama’s major financial regulatory overhaul plan. Under the plan, the CFPA would have the sole job of looking out for the financial interests of Americans by banning unfair practices and enforcing rules. The elimination of a CFPA from the bill has become a sticking point in negotiations with Republican members of the House and Senate, but something Obama, and consumer advocates want included. The CFPA is designed to take consumer protection regulation and oversight authority from other financial services regulators. It would oversee RESPA, the Truth in Lending Act, the Home Ownership and Equity Protection Act, the Community Reinvestment Act, the Equal Credit Opportunity Act, the Gramm-Leach-Bliley Act and numerous other consumer protection statutes. RESPA would no longer be governed under the Department of Housing and Urban Development. Those in favor of the CFPA have said that it would be beneficial for RESPA and TILA to be regulated by the same agency. With the Federal Reserve Board overseeing TILA, many times the two statutes conflict, particularly in the ways in which they require disclosure of information to consumers in the mortgage loan transaction process. Those opposing have said that creating a behemoth financial protection agency would be an ineffective and counterproductive move by our government. Some are worried that the recent win by Scott Brown , R-Mass., to the U.S. Senate will give Republicans more influence on the financial reform issues, which have been dominated by the Democrats. Investment News reported that “the stunning result in Massachusetts will give Republican members of the Senate Banking Committee a stronger hand in shaping financial reform. Already in jeopardy is the administration’s proposal for a consumer financial protection agency.” Dodd has indicated that he would be willing to extract the CFPA from the bill as long as an existing agency, such as the Treasury Department formed a consumer protection division. Rep. Barney Frank , D-Mass., the original sponsor of HR 4173 and strong advocate for the establishment of a CFPA, has been working closely with Dodd on the reform package. He has issued numerous statements on the reform, including what it entails and why it’s necessary. His most recent announcement came out on Jan. 21 and hammered the media for reporting some inaccuracies about the bill. “Yesterday’s New York Times reported that [the CFPA] ‘exempted smaller community banks, credit unions, retail merchants …’ Not true. All of those institutions will be subject to all rules issued by the agency with respect to the extension of credit. They also will be subject to agency enforcement. The exemption for smaller financial institutions is only with respect to examination which will continue to be the responsibility of the institutions’ prudential regulators,” Frank said. Frank added that the exemption is limited to institutions with less than 2 percent of bank assets. However, he added that the CFPA will have back-up inspection authority and may independently take enforcement action on these smaller financial institutions. “Consumer protection has long been a weak link in our system of financial regulation and the meltdown of the subprime mortgage market is only the most dramatic example of the consequences of our failure in this area. The president’s position on closing this gap is of great importance,” Frank said. In addition to banks, the agency will also have authority with respect to payday lenders and check cashing firms, and independent mortgage brokers and lenders. While the title insurance industry was eliminated from regulatory oversight by the CFPA under HR 4173, the industry would still be overseen by the CFPA under the Senate version, the Restoring American Financial Stability Act of 2009. The direction of this bill is relatively unknown. Each bill is more than 1,000 pages long and includes several provisions. As these bills continue to move toward adoption, RESPA News will continue to report on them as they relate to the mortgage, real estate and settlement services industries and RESPA. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Wed, 27 Jan 2010 00:00:00 EST BECC90F017D6493F87FCBA294C020C58 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=DF540C4DF1504337A5BB560E0B0B2D73 President Obama’s nominees for leadership positions at the Government National Mortgage Association (Ginnie Mae) and the Department of Housing and Urban Development (HUD) were well-received by the Senate Committee on Banking, Housing and Urban Affairs during their nomination hearing on Jan. 21. In his opening remarks, Sen. Christopher Dodd , D-Conn., offered his support of the nominees, noting that they bring with them the leadership abilities and experience necessary for the challenging roles. In this article: Christopher Dodd Douglas Criscitello Theodore Tozer Ginnie Mae president HUD CFO Shaun Donovan Theodore Tozer , current senior vice president of capital markets for National City Mortgage, which is part of the PNC Financial Services Group, was Obama’s choice to serve as president of Ginnie Mae. Douglas Criscitello , current director at PricewaterhouseCoopers, was selected by Obama to serve as chief financial officer for HUD. In his testimony, Tozer said his 30 years of experience in the mortgage capital markets has uniquely prepared him to manage Ginnie Mae. “An effective president of Ginnie Mae must balance the needs of all three of its major stakeholders: issuers, investors and the U.S. Treasury,” Tozer said. “During my 24 years in the mortgage banking industry, I have developed strong relationships with the capital market managers whose companies account for over 80 percent of Ginnie Mae issuances. During my career, I have worked closely with the Federal Housing Administration (FHA) commissioner and the FHA chief risk officer, two mortgage industry leaders with whom I will work very closely if confirmed as president of Ginnie Mae.” Dodd, who serves as chairman of the Senate Banking Committee said Ginnie Mae is currently facing tremendous challenges and needs a leader with Tozer’s experience. “Ginnie Mae has grown enormously over the past two years as other sources of mortgage credit have dried up,” Dodd said. “Ginnie Mae needs a strong, experienced manager to lead it through this period of unprecedented growth.” At National City Mortgage, Tozer’s responsibilities include pricing, hedging, loan delivery, loan sales and new product design. Previously, he served in various roles at BancOhio Mortgage Co. and BancOhio National Bank. He has also served as chairman of the Mortgage Bankers Association’s (MBA) secondary and capital markets committee and the MBA’s residential board of governors, in which he worked with Ginnie Mae in the overhaul of the GNMA II program. Tozer stated that he has developed strong relationships with Wall Street mortgage traders, which has increased his understanding of how they view mortgages and their value. “If confirmed, these experiences and relationships will help Ginnie Mae fulfill its responsibilities both to educate investors about loan program modifications and to be a capital markets advisor to federal housing agencies. Having a president of Ginnie Mae with capital markets expertise is more critical now than ever as the government uses various loan programs to stabilize the housing market,” he added. Ginnie Mae’s former president, Joe Murin , announced he was stepping down after 13 months at the agency’s helm. Murin went on to join Brian Montgomery , former FHA commissioner, to form The Collingwood Group, a business advisory firm to the financial services industry. Currently, Thomas R. Weakland , Ginnie Mae’s acting executive vice president, is overseeing its day-to-day operations. Criscitello testified to Congress that he would provide timely and reliable financial information on HUD’s spending of taxpayers’ money. If confirmed, Criscitello would be responsible for ensuring proper spending is taking place at HUD, which has a roughly $40 billion budget and another $158 billion in FHA loans. “Clearly, expanded programs with increased levels of funding have occupied management at HUD over the past year while the ongoing work of promoting sustainable homeownership, community and urban development, and access to affordable housing has continued,” Criscitello said. “If confirmed by the Senate, I will work to ensure transparency and accountability of these programs through an effective financial management and internal controls program aimed at deterring waste, fraud and abuse of taxpayer dollars.” In commenting on Criscitello’s nomination, Dodd reminded the committee of HUD Secretary Shaun Donovan ’s testimony regarding the importance of developing better financial systems and procedures within HUD. He emphasized that Criscitello has the financial experience needed to do this. “As this committee heard in the testimony from HUD secretary Donovan, the modernization of HUD financial systems is both a need and a priority for the administration,” Dodd said. “Mr. Criscitello has extensive public and private sector budget experience and has a particular specialty in government finances and modeling the financial risks of credit programs. It is the hope of this committee that Mr. Criscitello’s extensive experience and leadership ability will reinvigorate the office of CFO so that it functions as more than an office to produce regular and accurate budget materials, but rather that it begins the process of implementing the state-of-the-art financial technologies and practices that are so needed.” As director of PricewaterhouseCoopers, Criscitello has assisted the firm in the establishment of a public sector financial services practice. He has experience in forecasting government finances, modeling financial risk of credit programs, performing budgetary and legislative analysis and helping public sector agencies implement state-of-the-art financial technologies and practices. Prior to joining PricewaterhouseCoopers, Criscitello served as executive director at JPMorgan Securities Inc. where he provided operational, investment banking, and financial advisory services to U.S. government agencies. Before JPMorgan, Criscitello worked extensively with U.S. credit agencies in roles at the Small Business Administration, Office of Management and Budget and Congressional Budget Office. Other nominees testifying in the hearing included: Kevin Wolf , a partner in the Washington, D.C. office of Bryan Cave LLP, for assistant secretary of Commerce, Export Administration, Department of Commerce; Suresh Kumar , president and managing partner of KaiZen Innovation, for assistant secretary of Commerce and director general, U.S. and Foreign Commercial Service, Department of Commerce; David W. Mills , an attorney at DLA Piper, for assistant secretary of Commerce, Export Enforcement, Department of Commerce; Orlan Johnson , a partner in the business department of Saul Ewing LLP, for director, Securities Investor Protection Corp.; and Sharon Y. Bowen , a corporate partner of Latham & Watkins LLP in New York, for director, Securities Investor Protection Corp. Within the next few weeks, the committee is expected to make a recommendation to the full Senate on the nominations. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 22 Jan 2010 00:00:00 EST DF540C4DF1504337A5BB560E0B0B2D73 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=5490B4E3D57D4A77A13CD6D5CB17ABD8 The U.S. Department of the Treasury, the Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA) announced on Jan. 13 the completion of all transactions under the recently introduced state and local Housing Finance Agency (HFA) Initiative. The initiative is a key element of the Obama administration’s Homeowner Affordability and Stability Plan. “The assistance provided under the HFA Initiative will help maintain the viability of state and local HFAs, which play key roles in HUD’s efforts to promote expanded access to affordable rental housing and serve as important players in making homeownership possible for hardworking Americans who otherwise would not be able to purchase or remain in their homes,” said HUD Secretary Shaun Donovan . The initiative is intended to support low mortgage rates and expand resources for low and middle income borrowers to purchase or rent homes that are affordable over the long term. Government Sponsored Enterprises Fannie Mae and Freddie Mac played a central role in both Initiative design and transaction execution, according to a statement by HUD. HUD also indicated that the HFA Initiative is expected to come at no cost to taxpayers. “Through more than 90 participating HFAs, the HFA Initiative will make affordable financing available to hundreds of thousands of new homebuyers and existing homeowners, as well as support the development and rehabilitation of multi-family rental properties,” HUD reported. “Mortgages can be used to purchase or rehabilitate homes, as well as refinance existing mortgages at more affordable rates.” In addition, HUD said that participating HFAs are also expected to provide affordable multifamily loans that will help keep rents affordable for tens of thousands of renters. Participating state and local agencies have already begun providing affordable mortgages financed through the HFA Initiative. “Supporting the work of state and local HFAs is critical to the administration’s broader initiative to stabilize the housing market, which is helping to keep mortgage rates low and mortgage finance flowing for American households across the country,” said Treasury Secretary Tim Geithner . “Working together we were able to address the stresses on HFAs created by the housing market turmoil,” said FHFA Acting Director Edward J. DeMarco . “The Enterprises played a critical role, consistent with their mission and on commercially reasonable terms. Their successful execution of over 125 separate transactions, all in the final month of 2009, was an impressive achievement.” Freddie Mac CEO Ed Haldman said he applauds the successful completion of the HFA Initiative. “Freddie Mac is proud to provide an essential financial link to the nation’s state and local HFAs that will support affordable homeownership and rental housing and help stimulate America ’s housing markets,” he added. The U.S. Treasury announced the new initiative on Oct. 19, 2009. Following up on the intent to support HFAs first outlined in February under the Homeowner Affordability and Stability Plan, the administration’s initiative has two parts: a New Issue Bond Program (NIBP) to support new lending by HFAs and a Temporary Credit and Liquidity Program (TCLP) to improve the access of HFAs to liquidity for outstanding HFA bonds. The NIBP provided temporary financing for HFAs to issue new housing bonds. The U.S. Treasury purchased securities of Fannie Mae and Freddie Mac backed by these new housing bonds. With these investments, the HFAs have issued an amount of new housing bonds equal to what they are authorized to issue with the allocations provided to them by Congress, but have been unable to issue them given the current challenges in housing and related markets. Fannie Mae and Freddie Mac are administering the TCLP for HFAs to help relieve current financial strains and enable them to continue to serve their important role in providing housing resources to working families. The Treasury Department has agreed to purchase a participation interest in the Temporary Credit and Liquidity Facilities (TCLFs) provided to HFAs under the program, providing a credit and liquidity backstop. The TCLP provides HFAs with temporary credit and liquidity facilities to help the HFAs maintain their financial health and preserve the viability of the HFA infrastructure so that HFAs can continue to provide affordable mortgage credit to low and moderate income Americans. Over 90 state and local HFAs representing 49 states participated in the NIBP for an aggregate total new issuance of $15.3 billion. Twelve HFAs participated in the TCLP for an aggregate total usage of $8.2 billion. “These bond proceeds, combined with the $7.7 billion in retail housing bonds the Initiative requires state HFAs to issue, will allow HFAs to finance more than 200,000 affordable homes, while generating jobs and tax revenue for the economy,” said Susan Dewey , president of the National Council of State Housing Agencies and executive director of the Virginia Housing Development Authority. “HFAs are already putting these resources to work to provide first-time home buyer mortgages and finance rental housing.” Fri, 15 Jan 2010 00:00:00 EST 5490B4E3D57D4A77A13CD6D5CB17ABD8 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=3E917E50D6CA4E50B61556AE8B520D65 On Jan. 6, at a news conference in East Haddam, Conn. , U.S. Sen. Christopher J. Dodd announced that he will not seek reelection in November. In this article: Christopher Dodd Barney Frank U.S. Senate financial services industry reelection Dodd, 65, has served eight terms over the past four decades in the national assembly. He was elected to the U.S. Senate in 1980, after serving three terms in the House. While he has taken on a leadership role in health reform efforts, he has also been tireless in his efforts to develop legislation that would overhaul the entire financial services industry. Dodd has served as head of the Senate Committee on Banking, Housing and Urban Affairs since 2007. Rep. Barney Frank , D-Mass., said he looks forward to working closely with Dodd in 2010 on finishing the financial regulatory reform legislation. “I will miss his leadership in future Congresses, but I do look forward to working closely with him for the rest of this year on finishing the job of significant financial regulatory reform, to which he is committed and to which he has already worked to advance,” Frank said. “While I greatly admire his leadership on health care reform, obviously the area where we have worked together most closely is in our capacity as chairs of the House and Senate committees with jurisdiction over the financial industry and the economic crisis that the industry caused.” Frank, who serves as chair of the House Financial Services Committee, said after he and Dodd served many years in the minority, they were faced with a great deal of responsibility to fix the problems of the prior period. “I was consistently impressed with Sen. Dodd’s ability to act effectively in the difficult parliamentary environment of the Senate as we responded to the Bush Administration’s request to deal with the financial crisis, and working at the same time to prevent another occurrence. Those who admire the work done by Kenneth Feinberg to put the first constraints in American history on excessive compensation for financial executives should remember that it was Sen. Dodd’s amendment that gave him that power,” Frank said. In his remarks, Dodd said that the past year has raised personal challenges for him that have caused him to take “stock” of his life. He said he was proud of his accomplishments as a Connecticut Senator over the last 30 years, but he realized that now is the time to let another candidate take the reigns. “In the long sweep of American history, there are moments for each elected public servant to step aside and let someone else step up,” Dodd said. “This is my moment to step aside. There will be time to reflect in more detail on the years I’ve spent in public service. There will be time to celebrate victories, mourn setbacks, share laughs and memories and to thank profusely the talented, tireless and numerous staffers who have made my Senate work possible.” Dodd said over the past year, he has dealt with managing four major pieces of legislation through Congress; serving as chair and acting chair of two major Senate committees, which has placed him at the center of health care and financial services reform; and losing a sister and colleague Sen. Ted Kennedy . Dodd added that he is fully committed to serving out the remainder of his term. “My service is not over. I still have one year left on my contract with the people of Connecticut . One year from this week, our state will have a new senator. In the meantime, we have important work to do,” he said. The Washington Post reported that Dodd’s decision to retire comes after months of speculation about his political future and a growing sense among the Democratic establishment that he could not win a sixth term in the Senate. “Dodd’s poll numbers plummeted last spring before rebounding somewhat over the summer. But another dive in the polls late last year led to widespread concern that Dodd needed to vacate the seat for Democrats to have a chance at retaining it in the 2010 elections,” The Washington Post reported. While Dodd authored or co-authored mortgage legislation and the nearly $900 billion health care legislation, he has also been instrumental in the $700 billion bailout of Wall Street and key portions of the $787 billion stimulus package. Dodd’s announcement means there will be four open Senate seats Democrats must defend to protect their majority.   Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 08 Jan 2010 00:00:00 EST 3E917E50D6CA4E50B61556AE8B520D65 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=87B40734649C4192A4F403396DDFBD9E The U.S. Department of Housing and Urban Development (HUD) has published a proposed rule setting the minimum standards that states must meet in licensing loan originators to comply with the Secure and Fair Enforcement Mortgage Licensing Act of 2008 (SAFE Act). The proposed rule was posted on Dec. 15 in the Federal Register. “By introducing nationwide standards of uniform licensing for loan originators, the SAFE Act is taking an important step in returning integrity and accountability to the residential mortgage loan market,” said FHA Commissioner David Stevens . “Implementation of this Act is a critical addition to our system of regulatory protections that will benefit both consumers and financial institutions.” The SAFE Act was enacted into law on July 30, 2008, as part of the Housing and Economic Recovery Act of 2008. It is designed to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators. The SAFE Act also mandates the creation of a Nationwide Mortgage Licensing System and Registry, and encourages all states to provide for a licensing and regulatory regime for all residential mortgage loan originators. While states are charged with enacting licensing standards that meet the requirements of the SAFE Act, overall responsibility for interpretation, implementation and compliance rests with HUD. If HUD determines that a state’s licensing standards do not meet the minimum requirements of the Act, it is required to implement and administer a licensing system for that state. To comply with the Act, states must put into place a loan originator licensing program that requires originators to take an education course, pass a test and undergo civil, criminal and financial background checks. States have until July 31, 2010, to have their loan originators licensed under the SAFE Act criteria, unless they already have them licensed under a different system. If already using a different licensing system, states then have until Dec. 31, 2010, to bring loan originators in line with the Act’s requirements.   The proposed rule:   Addresses the criteria that HUD will use to determine whether a state has put into place a system for licensing and registering loan originators as required by the SAFE Act. The rule sets forth the statutorily imposed minimum requirements that a state would have to meet to be in compliance with the SAFE Act. Provides the requirements that HUD would put into place if HUD must establish a licensing and registration system for a state that is determined to not be in compliance with the SAFE Act. Addresses the enforcement authority provided to HUD in the SAFE Act including: summons authority for information on any loan originator operating in any state that is subject to a licensing system established by HUD; the authority to appoint examiners to assist HUD in its responsibilities in a state in which HUD established a licensing system; and the authority to conduct cease-and-desist proceedings with respect to any person who is violating, has violated, or is about to violate any provision of the SAFE Act under a licensing system established by HUD, including the authority to issue temporary orders.   As part of the rule-making process, HUD is soliciting comments on its proposal for 60 days, which gives the industry until Feb. 16 to respond. Comments received will be considered in the development of a final rule and should be submitted by mail or electronically. To submit a comment electronically through the Federal eRulemaking Portal, go to http://www.regulations.gov .   In a comment already posted, one individual said they have concern over the definition of “state.” “According to the wording, ‘State means any state of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, and the Northern Mariana Islands.’ It is my understanding that the Trust Territory of the Pacific is no longer in place and all the former counties in the Trust have now become individual countries and under the compact of free association with the USA ,” the comment stated.   It was recommended that the Trust Territory be removed or reclassified in the rule and that HUD should make clear what the definition of a “state” includes.   Click here for a copy of the proposed rule.   Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 18 Dec 2009 00:00:00 EST 87B40734649C4192A4F403396DDFBD9E http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=712D035AB4F04EC89FE757E252A61471 The House is expected on Dec. 11 to pass legislation that would overhaul the nation’s financial regulatory structure. Part of the legislation is to create a new Consumer Financial Protection Agency (CFPA) that would oversee numerous protection statutes, including RESPA and the Truth in Lending Act.  The bill, HR 4173 , referred to as The Wall Street Reform and Consumer Protection Act, is a comprehensive set of reforms that responds to the recent economic crisis by modernizing America ’s financial regulations. Several amendments have been offered to modify it. One in particular would replace the proposed CFPA with a council of existing regulators. The agency was originally proposed by the U.S. Treasury as part of the Obama administration’s plan to reform the financial regulatory landscape. The agency would have power to regulate home loans, credit cards and other financial products and has been opposed by the financial industry. Rep. Barney Frank , D-Mass., said he expects the amendment to fail. Illinois Democrat Melissa Bean successfully lobbied for the addition of an amendment to the proposed consumer protection legislation that would give the federal government the power to preempt state consumer protection laws. Bean and several other conservative Democrats refused to approve the CFPA legislation unless the amendment was added, leading to a hurry-up compromise late Wednesday between Democrats pushing for the reform and more moderate democrats with strong ties to the banking industry.  The Bean amendment will give the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision powers to preempt state consumer protection laws. The amendment also would make federal consumer protection statutes the ceiling for states.  State attorneys general have voiced support for the CFPA legislation, but have opposed any mention of preemption. Illinois Attorney General Lisa Madigan wrote to Bean arguing against her amendment, citing the importance of a state’s ability to prosecute abuses in the industry.  “State attorneys general saw the abuses of prepayment penalties, which often locked borrowers into unaffordable subprime mortgages,” Madigan said in her letter. “Yet federal preemption barred the states from enacting tougher laws to address these abuses, even as applied to those entities we regulate.”  Earlier this fall the state attorneys general sent a letter to Congress saying the federal government should not preempt state laws aimed at protecting consumers from frauds and abuses, particularly in the enforcement of state banking and mortgage foreclosure laws, if lawmakers create the new agency.  “Rather than limiting the states’ role in consumer financial protection, as some have advocated,” the letter said, “we believe Congress should encourage an active and effective partnership between the states and federal financial regulatory agencies to the ultimate benefit of all consumers.”  The AGs called for a joint approach in protecting consumers. “Weakened consumer protections and limited enforcement authority already have damaged many consumers and the economy in general,” the letter said. “Early state action can prevent a local problem from becoming a national one.” The agreement yesterday reaffirms the deference given to the OCC’s rulings by the courts.  The amendment also calls for: The preemption of a state consumer protection law by simply writing a letter or issuing a ruling; The preemption of all equivalent state standards at once; and The lowering of the threshold required for the OCC to preempt state standards by saying that it can override any law that "prevents, significantly interferes with, or materially interferes" the business of banking.  Under the original bill language, the OCC would have only been able to preempt state consumer laws on a case by case basis when it interfered with the business of banking.   The banking industry complained that the bill as originally written did not give the OCC's preemption rulings deference by state and federal courts, potentially making it substantially more difficult for national banks to operate across state lines. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 11 Dec 2009 00:00:00 EST 712D035AB4F04EC89FE757E252A61471 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=5BD092CB9714426B9DD42DC8BCE5D480 The Senate Committee on Banking, Housing and Urban Affairs convened on Dec. 3 for a confirmation hearing that discussed whether Ben Bernanke will continue serving as chairman of the Board of Governors of the Federal Reserve System. During the hearing, which entailed four hours of questioning, Sen. Christopher Dodd , D-Conn., chairman of the committee, said he supports Bernanke’s appointment. “Under your leadership, Mr. Chairman, the Federal Reserve has taken extraordinary actions to right the economy,” Dodd said. “I intend to vote to support your nomination in this committee and on the floor of the United States Senate, because I believe that you are the right leader for this moment in our nation’s economic history, and I believe your reappointment sends the right signal to the markets.” Dodd noted to Bernanke that although he is congratulatory of the efforts he’s made as chair, he still remains concerned about the weaknesses in the overall financial regulatory system. “You and I agree that the Federal Reserve should be strong, and very independent, and able to perform its core functions… I worry that over the years, loading up the Federal Reserve with too many piecemeal responsibilities has left important duties without proper attention and exposed the Fed to dangerous politicization that threatens the very independence of this institution,” he said. In his remarks, Dodd said the questions to be answered during the hearing are: “Should Ben Bernanke, our nominee, stay on as the chairman of the Federal Reserve? And second, as this committee works to create a financial regulatory structure for the 21st century, what should be the role of the institution that the nominee would oversee?” Bernanke testified that today, most indicators suggest that financial markets are stabilizing and that the economy is emerging from the recession, yet the task at hand is far from complete. “Far too many Americans are without jobs, and unemployment could remain high for some time even if, as we anticipate, moderate economic growth continues,” Bernanke said. “The Federal Reserve remains committed to its mission to help restore prosperity and to stimulate job creation while preserving price stability. If I am confirmed, I will work to the utmost of my abilities in the pursuit of those objectives.” Bernanke noted that the outcome of the economic crisis the nation is facing could have been worse if Congress, the Treasury Department, the Federal Reserve and other authorities hadn’t stepped in. “For our part, the Federal Reserve cut interest rates early and aggressively, reducing our target for the federal funds rate to nearly zero. We played a central role in efforts to quell the financial turmoil, for example, through our joint efforts with other agencies and foreign authorities to avert a collapse of the global banking system last fall; by ensuring financial institutions adequate access to short-term funding when private funding sources dried up; and through our leadership of the comprehensive assessment of large U.S. banks conducted this past spring, an exercise that significantly increased public confidence in the banking system.” Bernanke said the Fed also created targeted lending programs that have helped to restart the flow of credit in a number of critical markets, including the commercial paper market and the market for securities backed by loans to households and small businesses. “Indeed, we estimate that one of the targeted programs — the Term Asset-Backed Securities Loan Facility — thus far helped finance 3.3 million loans to households (excluding credit card accounts), more than 100 million credit card accounts, 480,000 loans to small businesses, and 100,000 loans to larger businesses. And our purchases of longer-term securities have provided support to private credit markets and helped to reduce longer-term interest rates, such as mortgage rates,” he said. Bernanke said the actions the Fed has taken have been a contributing factor to the “significant improvement in financial conditions and to what now appear to be the beginnings of a turnaround in both the U.S. and foreign economies.” Many committee members agreed that Bernanke’s actions during the crisis helped the country avoid what could have been a worse situation. Bernanke also noted that he would like to work with Congress to achieve fundamental reform of financial system regulations and stronger, more effective supervision. “It would be a tragedy if, after all the hardships that Americans have endured during the past two years, our nation failed to take the steps necessary to prevent a recurrence of a crisis of the magnitude we have recently confronted,” he said. Some senators were critical of Bernanke at the hearing. According to The Washington Post , some members of the committee expressed grave concern about unemployment rates being the highest they’ve been in a generation and the reluctance of banks to stimulate economic activity by lending to businesses. “Unemployment is at 10.2 percent and climbing, and Fed officials forecast it to remain elevated for years to come,” the Post reported. Bernanke also received criticism for the Fed’s failures prior to and during the financial crisis and its decisions during the bailout of American International Group. The Washington Post also reported that Sen. Bernard Sanders , I-Vt., said that he will place a hold on Bernanke’s nomination, “a parliamentary maneuver that could delay a confirmation vote into next month and make it necessary for the Senate leadership to muster 60 votes in his favor, rather than the usual 51-vote majority.” Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 04 Dec 2009 00:00:00 EST 5BD092CB9714426B9DD42DC8BCE5D480 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=E279964910584A218ED3E24235759E80 U.S. Attorney General Eric Holder, Treasury Secretary Tim Geithner, Housing and Urban Development (HUD) Secretary Shaun Donovan, and Securities and Exchange Commission (SEC) Chairwoman Mary Schapiro announced that President Barack Obama has established by executive order an interagency Financial Fraud Enforcement Task Force to strengthen efforts to combat financial crime. The Department of Justice will lead the task force and the Treasury, HUD and the SEC will serve on the steering committee. The task force’s leadership, along with representatives from a broad range of federal agencies, regulatory authorities and inspectors general, will work with state and local partners to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, address discrimination in the lending and financial markets and recover proceeds for victims. The task force, which replaces the Corporate Fraud Task Force established in 2002, will build upon efforts already underway to combat mortgage, securities and corporate fraud by increasing coordination and fully utilizing the resources and expertise of the government’s law enforcement and regulatory apparatus. The attorney general will convene the first meeting of the Task Force within the first 30 days following Obama’s order and continue to meet thereafter as the attorney general deems appropriate. “This task force’s mission is not just to hold accountable those who helped bring about the last financial meltdown, but to prevent another meltdown from happening,” Holder said. “We will be relentless in our investigation of corporate and financial wrongdoing, and will not hesitate to bring charges, where appropriate, for criminal misconduct on the part of businesses and business executives.” “Through the Financial Fraud Task Force, we are making clear that the Obama administration is going to act aggressively and proactively in a coordinated effort to combat financial fraud,” Geithner said. “It’s not enough to prosecute fraud only after it’s become widespread. We can’t wait for problems to peak before we respond. We’re seeking comprehensive financial reform to create a more stable, safer financial system and stepping up our enforcement strategy. Doing so will help to stop emerging trends in financial fraud before they're able to cause extensive, system-wide damage to our economy.” “To give American families the protection and peace-of-mind they need, it’s clear the federal response must be as interconnected and multi-dimensional as the challenges we face,” Donovan said. “No one agency is going to be able to stop financial fraud. This Task force will build upon many of the inter-agency collaborations already underway to protect consumers and restore confidence.” “Many financial frauds are complicated puzzles that require painstaking efforts to piece together. By formally coordinating our efforts, we will be better able to identify the pieces, assemble the puzzle and put an end to the fraud,” Schapiro said. The task force is composed of senior-level officials from the following departments, agencies and offices: The Department of Justice; The Department of the Treasury; The Department of Commerce; The Department of Labor; The Department of Housing and Urban Development; The Department of Education; The Department of Homeland Security; The Securities and Exchange Commission; The Commodity Futures Trading Commission; The Federal Trade Commission; The Federal Deposit Insurance Corporation; The Board of Governors of the Federal Reserve System; The Federal Housing Finance Agency; The Office of Thrift Supervision; The Office of the Comptroller of the Currency; The Small Business Administration; The Federal Bureau of Investigation; The Social Security Administration; The Internal Revenue Service, Criminal Investigations; The Financial Crimes Enforcement Network; The United States Postal Inspection Service; The United States Secret Service; The United States Immigration and Customs Enforcement; Relevant Offices of Inspectors General and related Federal entities, including without limitation the Office of the Inspector General for the Department of Housing and Urban Development, the Recovery Accountability and Transparency Board and the Office of the Special Inspector General for the Troubled Asset Relief Program; and Such other executive branch departments, agencies or offices as the President may, from time to time, designate or that the Attorney General may invite. In addition, the attorney general will invite representatives of the National Association of Attorneys General, the National District Attorneys Association and other state, local, tribal and territorial representatives to participate in the task force through its Enforcement Committee. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks.   Fri, 20 Nov 2009 00:00:00 EST E279964910584A218ED3E24235759E80 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=E26E8C1837324F77BEEBBB9E3F349CAA On the heals of the introduction and passage of several similar bills revolving around federal financial regulatory reform   in the House, Sen. Chris Dodd , D-Conn., chairman of the Senate Committee on Banking, Housing, and Urban Affairs, unveiled his proposal to bring sweeping change to the regulatory landscape. Joined by fellow committee members Jack Reed , D-R.I.; Charles Schumer , D-N.Y.; Robert Menendez , D-N.J.; Daniel Akaka , D-Hawaii; Jon Tester , D-Mont.; Mark Warner , D-Va.; Jeff Merkley , D-Ore.; and Michael Bennet , D-Colo., Dodd released a discussion draft of the Restoring American Financial Stability Act on Nov. 10. “It is the job of this Congress to restore responsibility and accountability in our financial system to give Americans confidence that there is a system in place that works for and protects them,” Dodd said at a press conference. “We must create a sound foundation to grow the economy and create jobs.” “This is a thorough and carefully constructed plan. It will promote innovation and job creation while protecting consumers and our economy as a whole from another crisis like the one we are now in. I look forward to the continued input and cooperation of my colleagues from both sides of the aisle,” he added. The 1,136-page piece of legislation proposes several changes to the current financial regulatory landscape, including establishing a Consumer Financial Protection Agency (CFPA), Office of National Insurance and Office of Credit Rating Agencies. Like HR 3126 , which is up for consideration in the House, Dodd’s bill would establish a CFPA consolidating consumer protection responsibilities that are currently handled by the Office of the Comptroller of the Currency, Office of Thrift Supervision, Federal Deposit Insurance Corporation, the Federal Reserve, the National Credit Union Administration and the Federal Trade Commission. The CFPA would be led by a five-member board with an independent director. Included on the board would be the chairman of the proposed single federal bank regulator, the Financial Institutions Regulatory Administration. In a summary of the bill, Dodd states that the CFPA will “unite rule-writing, supervision and enforcement for consumer protection in a single, stand-alone agency with broad authority to investigate and react to abuses as they develop.” The bill would allow states to pass tougher consumer protections that apply to all lenders, preventing federal regulations from preempting stronger state laws. In addition, the CFPA would coordinate with other regulators when examining banks to prevent undue regulatory burdens.   The bill also creates a new Office of National Insurance within the Treasury Department to monitor the insurance industry, coordinate international insurance issues and requires a study on ways to modernize insurance regulation and provide Congress with recommendations. The office would streamline the regulation of surplus lines insurance and reinsurance through state-based reforms.   In addition, the bill would establish a new Office of Credit Rating Agencies at the Securities and Exchange Commission (SEC) “to strengthen regulation of credit rating agencies.” The bill would also establish new rules for internal controls, independence, transparency and penalties for poor performance to address shortcomings and restore investor confidence in agencies’ ratings. Among other things Nationally Recognized Statistical Ratings Organizations would be required to: Disclose their methodologies, their use of third parties for due diligence efforts and their ratings track record; and Consider information in their ratings that comes to their attention from a source other than the organization being rated if they find it credible. The bill would also prohibit compliance officers from working on ratings, methodologies or sales. Investors would be able to bring private rights of action against ratings agencies for knowing or reckless failure to investigate or to obtain analysis from an independent source. It would also give the SEC the authority to deregister an agency for providing bad ratings over time. “I congratulate Senator Dodd and I am pleased at the progress Senator Dodd and other members of the Senate have made,” said Rep. Barney Frank , D-Mass., chairman of the House Financial Services Committee. “Obviously the bills aren’t going to be identical, but it confirms that we are moving in the same direction and reaffirms my confidence that we are going to be able to get an appropriate, effective reform package passed very soon.” While the Mortgage Bankers Association (MBA) supported improved federal oversight of independent, non-depository mortgage lenders, the association was disappointed that the bill does not provide for a uniform national standard to protect all consumers consistently. “Instead, the proposal would continue the patchwork of state and local lending laws and regulations that cause confusion and allow bad actors to prey on vulnerable borrowers,” said Jon Courson , president and CEO of the MBA. “We are also concerned with the broad ‘skin in the game’ provisions included in this proposal that would put certain business models at risk,” Courson added. “These regulations would thus unnecessarily deprive consumers and businesses of competition for safe and sustainable mortgage options and reduce the available funds for home financing by billions of dollars.  ”On a final note, rating agency regulatory reform should strike the delicate balance of providing a robust regulatory framework that avoids stifling the introduction of new and innovative commercial and residential mortgaged-backed security products. MBA will work with Senator Dodd to achieve this appropriate balance.” Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 13 Nov 2009 00:00:00 EST E26E8C1837324F77BEEBBB9E3F349CAA http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=9AA6448D52AF4B0FAD0156170032972E The Government National Mortgage Association (Ginnie Mae) announced on Oct. 5 that it guaranteed more than $38.6 billion in mortgage-backed securities (MBS) in October. For the first 10 months of 2009, Ginnie Mae provided nearly $376 billion of liquidity to the secondary market, compared to $219 billion for the first 10 months of 2008. Ginnie Mae also reported that in September, 3.48 percent of the single-family loans in Ginnie Mae guaranteed securities were 90 days or more delinquent, down slightly from 3.7 percent in August and down from the 3.59 percent reported in December 2008. “Ginnie Mae — whose securities carry the full faith and credit of the U.S. government — has been quick to modify and create securitization products that provide additional liquidity to help stabilize the U.S. housing market,” said Thomas R. Weakland , Ginnie Mae’s acting executive vice president. “And for the past 11 months, we’ve consistently shown — with industry-wide low single-family delinquency rates — that our conservative approach to risk-taking is working for U.S. taxpayers.” Ginnie Mae II single-family pools led the way with nearly $20 billion in MBS issuance, while Ginnie Mae I single-family pools totaled more than $18 billion. Total single-family issuance for October was nearly $38 billion. Ginnie Mae’s multifamily MBS issuance was nearly $828 million. In a recent statement, Ginnie Mae reported that for the last 40 years, the industry has turned to the safety and security of Ginnie Mae MBS, and as a result, Ginnie Mae’s commitment to its mission has remained constant. “This has allowed Ginnie Mae to provide homeownership opportunities for more than 30 million households by securitizing loans insured or guaranteed by the Federal Housing Administration, the Department of Veterans Affairs, the Department of Agriculture’s Rural Development and the Department of Housing and Urban Development’s (HUD) Office of Public and Indian Housing,” Ginne Mae stated. Ginnie Mae is a wholly-owned government corporation within HUD. An MBS enables a mortgage lender to aggregate and sell mortgage loans as a security to investors. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 06 Nov 2009 00:00:00 EST 9AA6448D52AF4B0FAD0156170032972E http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=A75A292AE33042F1AAC70C1F1A25C7E8 HUD Secretary Shaun Donovan , along with Treasury Secretary Tim Geithner called on Congress to approve three measures they believe will improve housing and the housing market for Americans. The three measures are: An extension of the federal first-time homebuyer tax credit for a limited period; an extension of higher loan limits for home mortgages; and securing funding for the Housing Trust Fund. In addition, more than 170,000 Realtors have written or called their representatives in Congress to urge them to extend and expand the first-time homebuyer tax credit. The tax credit is set to expire on Dec. 1. According to HUD, the credit has made the difference in bringing new families into the housing market. Those buyers, in turn, have reduced the inventory of unsold homes and contributed to three months in a row of increases in home prices nationwide. “A stronger housing market benefits homeowners and strengthens the financial system,” said HUD and the U.S. Treasury in a combined statement. “In order to reinforce the progress already made this year, the administration urges Congress to extend the credit for a limited period. A stronger housing market benefits homeowners and strengthens the financial system.” HUD and the Treasury Department are also urging Congress to include effective measures to combat tax fraud, including setting a minimum age for home purchases and requiring documentary proof of the purchase in order to receive the credit. Realtors, homebuilders lobby In addition to the administration’s efforts, more than 170,000 Realtors have written or called their representatives in Congress, urging them to extend and expand the first-time homebuyer tax credit, according to Ken Trepeta , director of real estate services for the National Association of Realtors (NAR). The amount of participation, which includes more than 500,000 letters, is the highest in the history of NAR lobbying efforts. “The response rate is pretty phenomenal,” Trepeta said. “It beats the second best by 40,000 more Realtors and 120,000 more letters, and every day it creeps up, so people are still responding to it.” NAR recently organized a fly-in to Washington , D.C. , sending its federal political coordinators to talk to their Congress members about the extension. The association also called upon the large players in the real estate industry to talk to legislators and convey the urgency of the matter. The latest word from Capitol Hill is that Senate members have agreed on a proposal that would extend the $8,000 tax credit through June 2010, with the stipulation that a valid contract is signed by April 30 to allow 60 days to close, Trepeta said. The proposal would also make the credit available to repeat buyers, though they would only receive a maximum of $6,500. The income limit would also be raised to $125,000 per year for individuals and $225,000 for couples, according to MarketWatch. The National Association of Home Builders (NAHB) has also shown their support for the extension. On Oct. 28, NAHB President and CEO Jerry Howard issued a statement on the need for Congress to act swiftly. “U.S. Senate leaders are poised to attach a homebuyer tax credit proposal to legislation that would expand unemployment benefits,” Howard said. “The Senate plan has bipartisan support but is being held up by political wrangling. Senators must put aside their parochial interests and stand up for the American people. Failure to act now could derail the fragile housing recovery even before it has time to take root. The consequences would be devastating for both housing and the economy.” Other housing measures In addition to the first-time homebuyer tax credit expansion, HUD and the Treasury Department have also called on Congress to act swiftly to extend the loan limits that currently apply to most mortgages in order to help make rates more affordable for middle-class families. “The administration supports a one-year extension of the current loan limits for the Federal Housing Administration, Fannie Mae and Freddie Mac,” HUD said. “This extension is vital in helping support the continued availability of affordable mortgages for many working families and aiding the recovery in the housing markets.” Under present law, the current loan limits will expire on Dec. 31. According to HUD, families are already applying for mortgages that are being turned down or priced higher due to this impending deadline. “The extension of the loan limits is being considered in the upcoming Continuing Resolution, and we urge Congress to enact the extensions immediately in order to assure the smooth supply of capital to the housing market,” HUD said. Finally, the administration said it will work with Congress to identify a financing source for the Housing Trust Fund, which HUD says will help provide decent housing for families hardest hit by the current economic downturn. “This fund is an important source of support for extremely low income families who otherwise cannot afford decent housing. The fund was created in the 2008 HERA (spell out?) legislation, but has not had an effective funding source and so has not been able to fulfill its important mission,” HUD said. According to HUD, President Obama ’s budget proposed to fund the Housing Trust Fund for $1 billion and fully offset it within the budget. However, now the administration would like to actively work with Congress to identify a specific offset to assure that level of financing for the fund. In commenting on the three housing measures, Donovan said they will provide comprehensive support to the nation’s recovering housing market and continued access to affordable housing. “While extending the tax credit and higher loan limits will help promote homeownership, funding the Housing Trust Fund will provide assistance to renter households impacted by the economic crisis,” he said. Comments or questions? Contact Kelly McCarel at kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 30 Oct 2009 00:00:00 EST A75A292AE33042F1AAC70C1F1A25C7E8 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=881D4C2465F04A54A92605541351B8FC As part of its comprehensive plan to stabilize the U.S. housing market, the Obama administration announced a new initiative for state and local housing finance agencies (HFAs) that will help support low mortgage rates and expand resources for low and middle income borrowers to purchase or rent homes that are affordable over the long term. Following up on the intent to support HFAs first outlined in February under the Homeowner Affordability and Stability Plan, the administration’s initiative has two parts: a new bond purchase program to support new lending by HFAs; and a temporary credit and liquidity program to improve the access of HFAs to liquidity for outstanding HFA bonds. The HFA initiative, using authority provided to the Treasury Department by the Housing and Economic Recovery Act of 2008 (HERA), will provide hundreds of thousands of affordable mortgages for working families and enable the development and rehabilitation of tens of thousands of affordable rental properties, according to a report from the Department of Housing and Urban Development (HUD) and the U.S. Treasury. The initiative will do this at little or no cost to the taxpayer because it is paid for by the HFAs themselves and, as a temporary program, it incentivizes HFAs to transition back to market sources of capital as quickly as possible. “This initiative is critical to helping working families maintain access to affordable rental housing and homeownership in tough economic times,” said Treasury Secretary Timothy Geithner . “Through the years, many low and moderate income Americans have been well served by state and local HFAs, but the housing downturn has hit these organizations too. Through this initiative, the administration aims to help HFAs jumpstart new lending to borrowers who might not otherwise be served and to better support the financing costs of their current programs — key components in stabilizing the housing market overall.” “Housing Finance Agencies are critical partners to helping American families through this tough economic time,” HUD Secretary Shaun Donovan said. “Today’s announcement makes clear this administration’s commitment to providing responsible homeownership opportunities, affordable rental homes and getting our housing market back on track.” The Department of the Treasury and HUD, together with the FHFA, Fannie Mae and Freddie Mac, developed this initiative to maintain the viability of HFA lending programs and infrastructure. The key parts of the new initiative are: New Issue Bond Program (NIBP). The NIBP will provide temporary financing for HFAs to issue new mortgage revenue bonds. Using authority under HERA, the Treasury will purchase securities of Fannie Mae and Freddie Mac backed by these new mortgage revenue bonds. The program can support several hundred thousand new mortgages to first-time homebuyers this coming year, as well as refinancing opportunities to put at-risk but responsible and performing borrowers into more sustainable mortgages. The new bond issuance will also support development of tens of thousands of new rental housing units for working families. Temporary Credit and Liquidity Program (TCLP). Fannie Mae and Freddie Mac will provide replacement credit and liquidity facilities available to HFAs that will help reduce the costs of maintaining existing financing for the HFAs. The agreements will serve to help relieve financial strains experienced by HFAs and enable them to continue their important work. Treasury will backstop the GSE replacement credit and liquidity facilities for the HFAs by purchasing an interest in them using HERA authority. HFAs will pay a fee to have access to both programs under the HFA Initiative. These fees have been designed to cover expected costs to the Treasury Department and the taxpayer. The fee for the TCLP will also increase over time to encourage HFAs to find private alternatives as quickly as possible. The HFA initiative has also been designed to include other features that minimize risk to the taxpayer, such as requiring HFAs that issue new bonds under this program to also prove their ability to issue bonds to private investors. “FHFA supports this initiative and the important role Fannie Mae and Freddie Mac will play in implementing it,” said Federal Housing Finance Agency (FHFA) Acting Director Edward J. DeMarco . “The HFA program has been structured to be on commercially reasonable terms for the enterprises, to be carried out by the enterprises in a safe and sound manner, and to support market liquidity, stability, and affordable housing. I wish to thank FHFA, HUD, enterprise and Treasury staff for their hard work and leadership in developing this program.” In favor of the administration’s efforts, California Gov. Arnold Schwarzenegger said housing agencies in many states, including California , have been forced to suspend lending programs due to the turmoil in the financial markets and this new initiative should help re-start programs that provide more housing opportunities. “This plan will breathe life into new lending and provide great opportunities for first-time homebuyers in California , all at a time when we are seeing the highest level of affordability in the state in two decades,” Schwarzenegger said. “I applaud President Obama and his team for understanding the important role state housing finance agencies play in affordable housing for low and moderate income Americans.” The initiative is designed to be temporary in nature and will be available for only a short window to help bridge the transition period as the HFAs resume their activities after experiencing a number of challenges in the course of the housing downturn. Each HFA that desires to participate will be asked to develop a program participation request in consultation with Treasury, Fannie Mae and Freddie Mac, indicating its desired level of participation in either the new bond or liquidity program. Pricing under the program will reflect both the cost of any financing required by the Treasury as well as a fee designed to cover any risk posed by the HFA. While there is risk that losses could exceed estimates, the fee schedule the Treasury has adopted is designed to cover net losses under most stressed conditions and thus would minimize risk to the taxpayer. Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 22 Oct 2009 00:00:00 EST 881D4C2465F04A54A92605541351B8FC http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=88BBE17BC38B44F184E4901C254DCC00 While the House Financial Services Committee was full of activity this week marking up several bills that would overhaul the U.S. financial regulatory structure, many trade groups had their own agendas on what they want to see done with certain pieces of legislation, specifically HR 3126 , which would create a new Consumer Financial Protection Agency (CFPA). NAMB’s requests On Oct. 15, the National Association of Mortgage Brokers (NAMB) sent a letter to all members of the House Financial Services Committee urging them to vote for three amendments to be included in HR 3126. These amendments address RESPA, the Home Valuation Code of Conduct (HVCC) and equal treatment among industry participants. The amendment on RESPA, which may be offered by Rep. Judy Biggert , R-Ill., would require the Department of Housing and Urban Development (HUD) to provide for a more gradual implementation period for the new Good Faith Estimate and HUD-1 Settlement Statement forms, which are slated to go into effect Jan. 1, 2010. “HUD issued their regulation without regard to conflicts with the Federal Reserve Boards’ Truth in Lending Act (TILA) rules,” said NAMB President Jim Pair . “This amendment would require HUD and the Federal Reserve to coordinate their regulatory efforts to ensure comparable RESPA and TILA disclosures.” Pair noted in the letter that there are too many unresolved issues to allow the industry to be fully RESPA-compliant by Jan. 1. “This, in turn, will cause very inconsistent implementation and confusion for consumers seeking to purchase a home. If offered, the Biggert amendment would require HUD to postpone the implementation date of its RESPA reform rule for a reasonable amount of time and take several steps to achieve effective implementation,” Pair said. During the markup session of HR 3126, Donald Manzullo , D-Ill., voiced his concerns about RESPA in general and said that when he started as a real estate lawyer, he was able to close a loan in 20 minutes. Because of RESPA and all its requirements, it now takes two hours. NAMB also wants to see an amendment that would require the HVCC to undergo federal rulemaking. This amendment is being offered by Reps. Travis Childers, D-Miss., Brad Miller , D-N.C., Manzullo, and Michele Bachmann , R-Minn. “The HVCC is an agreement between the New York Attorney General, Freddie Mac and Fannie Mae and an administrative agency of the federal government, the FHFA, that has dramatically damaged the home mortgage process across the nation,” Pair said. “This ‘regulation’ did not go through the Administrative Procedures Act or the Regulatory Flexibility Act as required of rules issued by administrative agencies of the federal government.” The amendment would repeal the HVCC and call on the regulators who have their own appraisal independence rules to work together on one set of standards to oversee the industry. Lastly, NAMB is urging an amendment offered by Rep. Gary Miller , R-Calif., that would require even-handed treatment between types of companies offering mortgage or other products. “H.R. 3126 imposes duties on covered persons and their agents and employees to ensure fair dealing with consumers in financial transactions. Such rules may establish duties regarding compensation practices and specifically prohibits the CFPA from capping the amount of compensation paid to any person,” Pair noted and added that NAMB has concerns about the CFPA’s broad powers in interpreting this section. “The amendment clarifies that the CFPA, in rulemaking, does not pick winners and losers that are offering the same mortgage product to consumers. The amendment ensures that there is no disparate treatment among industry participants whether they are federally chartered or state chartered, big or small. If the CFPA’s mission is to truly create uniformity of all products and services and protect consumers regardless of where they shop, providing for exemptions is contrary to such a goal,” he said. MBA’s requests On Oct. 13, the Mortgage Bankers Association (MBA) sent a letter to House Financial Services Committee Chairman Barney Frank , D-Mass., and Ranking Member Spencer Bachus , R-Ala., outlining the association’s concerns with HR 3126. Chief among these concerns is that the MBA believes the bill fails to empower the CFPA to establish uniform national standards that will regulate all lenders and protect all borrowers consistently regardless of where they live.   “While one of the primary purposes of the legislation — the consolidation of oftentimes disparate consumer protection functions among many federal agencies — is a good one, the overall approach taken in HR 3126 is likely to worsen consumer protection and weaken the regulation of mortgage lenders,” said MBA President and Chief Executive Officer John A. Courson . Courson is referring to the portion of the bill that would encourage states to enact laws above and beyond the laws enforced by the CFPA. In so doing, Courson said state laws would not only perpetuate, but in fact worsen, the current patchwork of federal and state financial regulation that has lessened competition and unnecessarily increased costs to consumers while failing to adequately protect them. Courson recommends that the states serve in the capacity of jointly developing national standards and to enforce the standards as full partners with federal officials. The MBA is also concerned that HR 3126 does not properly address the RESPA and Truth in Lending Act disclosure rules and the importance of providing homebuyers with accurate and timely mortgage disclosures. “The mortgage industry and consumers face years of major, but still uncoordinated reforms under RESPA, the Truth in Lending Act (TILA) and potentially under new CFPA requirements,” Courson said. “While MBA supports the bill’s effort to develop a single combined RESPA/TILA disclosure, the bill does not address the separate, ongoing efforts of HUD and the Federal Reserve to separately reform mortgage disclosures. Nor does it require collaboration between the current regulators, as did HR 1728 , the Mortgage Reform and Anti-Predatory Lending Act, which passed the Financial Services Committee and the House earlier this year.” Like Pair, Courson is encouraging Congress to provide the industry with a delay in implementing the new RESPA rule. Another key shortcoming of HR 3126, according to the MBA is that it establishes the CFPA as a separate agency within the government, rather than consolidating consumer protection functions within a new or existing federal financial regulator responsible for safety and soundness. The MBA said this will fail to achieve an appropriate balance of these two oftentimes competing considerations. “Financial regulators have a critical role: balancing different objectives such as supporting and maintaining the integrity of competitive markets; guarding against systemic risk; and protecting depositors, borrowers and investors. A regulator armed with appropriate statutory guidance, subject to congressional oversight and seeking input from all interested parties will achieve a balance among competing objectives. On the other hand, a regulator singularly focused on any one of these objectives risks being myopic to other important concerns,” Courson opined. He added that the reach and powers of the proposed CFPA are also overly broad, and because the CFPA would have such a wide range of responsibilities, there is danger that mortgage lending would not receive sufficient priority. "A better regulatory model would assign a single federal prudential regulator (or possibly a council of such regulators), with enhanced consumer protection capabilities, responsibility for the regulation of state-regulated mortgage brokers and non-depository mortgage bankers,” Courson said. Small banks exempt According to a Dow Jones report, the House Financial Service Committee passed an amendment, sponsored by Miller, which would exempt the vast majority of banks from scrutiny by the CFPA. The report said banks with less than $10 billion of assets and credit unions with less than $1.5 billion of assets would, in most cases, escape examination and enforcement under the new amendment. They would still be required to follow the agency’s rules, but their existing bank regulator would examine them for compliance. This means that the new CFPA would enforce consumer protection for about 110 banks and 82 credit unions nationwide. These institutions, however, represent more than three-quarters of the banking industry’s assets and deposits. Frank said the amendment was passed because for the most part the smaller banks were not the cause of the economic crisis. He said this amendment should take pressure off of the smaller banks since they would not need to add to their staffs to handle separate examinations by the new CFPA. HR 3126 is likely to be voted on by the House committee next week. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 16 Oct 2009 00:00:00 EST 88BBE17BC38B44F184E4901C254DCC00 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=5966D49B7A7D459AA6DAD057405F6FD9 Without going as far as proposing an additional federal stimulus plan, the White House indicated that the extension of some programs, including the $8,000 first-time homebuyer tax credit, is being considered. White House spokesman Robert Gibbs said the Obama administration is evaluating the tax credit’s impact on new home sales and will make a recommendation to the president on how to move forward, according to the Associated Press. The tax credit is due to expire on Nov. 30, and title companies, real estate agents and lenders are clambering to meet the deadline. Administration officials have told allies in Congress that the tax credit extension is on the table, a Senate aide told Bloomberg. The National Association of Home Builders (NAHB) commended the White House for recognizing the success of the $8,000 tax credit and said that extending the program past its expiration date will help to bolster the economy. “The tax credit has clearly had a positive effect on housing demand and in the job market,” said NAHB Chairman Joe Robson , a home builder from Tulsa, Okla. “We stand ready to work with President Obama and Congress to extend and enhance the tax credit to help reduce foreclosures and excess housing inventories, to stabilize home values and to push housing and the economy on a glide path to recovery.” NAHB estimates conservatively that approximately 200,000 additional home sales are attributable to the tax credit and that it has resulted in a net increase of 187,000 jobs. Extending the credit through Nov. 30, 2010 , and making it available to all purchasers of a principal residence would result in an additional 383,000 home sales and generate 347,000 new jobs in the coming year. Gibbs said that there has been quite a bit of success with the homebuyer tax credit and that Obama is considering extending the tax credit in an effort to strengthen the economy and create jobs. “Housing is the best opportunity to put this country back to work. Prompt congressional action on the tax credit is a crucial first step to shoring up the fragile housing recovery and leading the economy to higher ground,” Robson said. The National Association of Realtors (NAR), too, has been lobbying for the extension by calling upon its 1.2 million members to urge Congress to extend it into 2010. NAR reported that the credit has brought 1.2 million new buyers into the market, 350,000 of whom would not have purchased a home without it. “Now is the time for Congress to keep this recovery going by extending the tax credit through 2010 and making it available to more homebuyers. We have all seen how the credit has been a spur to bring homebuyers into the market, and have seen the beginnings of a real recovery in the housing market. Housing has always led this nation out of economic downturns, and can do so again,” said NAR President Charles McMillan , a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, in a Sept. 14 statement. Realtors will be writing to their senators and representatives to tell them of the successes with the tax credit thus far and to press them to extend and expand it now. McMillan added that the market has improved, but it has not yet fully corrected itself. “The credit needs to be available for an additional period of time in order to sustain the progress that’s been made so we can continue to see our markets fully recover. Uncertainty about the future of the credit will dampen consumer demand. The only way we can assure that the progress we’ve made can continue is to extend the credit and to do that now,” he said. Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Wed, 07 Oct 2009 00:00:00 EST 5966D49B7A7D459AA6DAD057405F6FD9 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=B2DE77B757BC4E98B4E2382DD85F0771 During the latest in a series of hearings regarding HR 3126, two panels of witnesses, consisting of members of the banking and financial services industry and consumer advocates, shared their sometimes opposing views on the creation of a Consumer Financial Protection Agency (CFPA) with the House Financial Services Committee, the House committee charged with marking up the bill. Rep. Barney Frank , D-Mass., chairman of the committee, began the hearing by citing what, in his view, is the utter failure of the federal bank regulators to act to protect consumers over the last several years and the need to restructure the financial regulatory system. He made clear his intention to have the bill marked up by early November. Rep. Al Green , D-Texas, also voiced his support for the CFPA, saying this was “the right time” to create such an agency.   Rep. Spencer Bachus , R-Ala., ranking member of the committee, on the other hand, voiced his concern that a new government agency could prove to be a massive bureaucracy that would lead to more government spending, less innovation and less consumer protection. Rep. Scott Garret , R-N.J., said that despite changes made to the bill last week by Frank, the bill still separates consumer protection from safety and soundness and creates another regulator with no balance to the agency’s authority. With that, the witnesses were asked to talk about subjects that had begun to polarize members of the committee: preemption of state law, the separation of safety and soundness from consumer protection and the broad authority of the new agency. Preemption a sticking point Similar to a hearing last week, in which several bank regulators were asked to testify, the idea of federal preemption was a sticking point for many witnesses during the hearing. As written, the CFPA would be responsible for establishing a floor for consumer protection regulations and encourage states to establish stricter laws and regulations as they see necessary. Some say that this is a good thing, and will establish strong consumer protection laws while others think that without a uniform standard, consumers will end up eating the cost for excessive regulations.   In his testimony, Michael Calhoun , president and chief operating office of the Center for Responsible Lending, said that, in his opinion, preemption was part of the problem and that HR 3126’s current preemption provisions should not be weakened. He did point out three areas where the CFPA would have authority to preempt state law: The CFPA’s rules would preempt inconsistent state laws and would define inconsistency in a manner similar to existing federal consumer protection laws; HR 3126 restores the state of “charter-preemption” back to approximately 2003, “before the bank supervisory agencies became even more aggressive about pushing the preemption envelope;” and HR 3126 would make “long overdue amendments to the 1982 Alternative Mortgage Transaction Parity Act.” Janis Bowdler , deputy director, Wealth Building Project, National Council of La Raza, said that the fact that rules issued by the CFPA will not preempt stronger laws elsewhere will ensure that no borrowers lose protection as a result of CFPA action. On the other hand, Andrew Pincus , partner of Mayer Brown LLP, speaking on behalf of the U.S. Chamber of Commerce said that by establishing a floor to consumer protection regulations, the CFPA would create inconsistencies, duplications and conflicting mandates between federal and state agencies. “The bill rolls back 150 years of banking law by subjecting national banks for the first time to a labyrinth of state consumer protection mandates,” Pincus said. “And if that were not problematic enough, the bill gives states independent power to interpret and enforce the federal standards.” Edward Yingling , president and CEO of the American Bankers Association, cautioned that not preempting state laws under the CFPA would create a patchwork of state and local laws that would confuse consumers and increase the cost of financial services. He gave the example of the establishment of simple one-page disclosures. He said that this goal would be hampered by the addition of “page after page of disclaimers and disclosures about all the differing state and local laws applicable.” We clearly have national markets for consumer financial products and services, and we need to be able to apply national standards,” Yingling said. In response to those concerned about the regulatory floor provided in HR 3126, Frank said that those in favor of preemption “have some burden to show us that there were problems before” 2004. He said that before 2004, conflicting rules were fixed on a case by case basis as would be the case under the authority of the CFPA.   Safety and soundness separation Michael S. Menzies , president and CEO of Easton Bank and Trust Company, speaking on behalf of the Independent Community Bankers of America (ICBA), cautioned that safety and soundness should not be separated from consumer protection. “For community banks, safety and soundness and consumer protection are not mutually exclusive functions,” Menzies said. “The legislation creating the CFPA regrettably splits the safety and soundness and consumer protection functions, going so far as to place this new agency as the ultimate arbiter of any dispute between a prudential regulator and itself.” “Separating the regulation of financial products from regulatory expertise regarding the safety and soundness of financial institutions threatens consumers as well as the stability of the entire financial system,” Pincus said. “The vast majority of consumer protection issues also implicate safety and soundness concerns. Frequently, the issues are two sides of the same coin: pricing a product to reflect its cost and risk may promote safety and soundness but also may implicate consumer protection concerns. Pincus said that while the revised bill attempts to address this issue by creating a dispute resolution process, it is not clear whether that process could be effective.   Still too broad? A debate waged among witnesses and members of the committee over whether the authority given to the new agency was too broad, not broad enough or necessary to achieve its goals. Bowdler urged the committee to retain the strong supervision and consumer protection rule-writing ability given to the CFPA in HR 3126. Menzies, on the other hand, felt that rule-writing authority for banks should be shared between the CFPA and prudential regulators. “If the CFPA is not equally interested in the safety and soundness of the lender, it is likely to promulgate unnecessarily burdensome or contrary rules to those issued by the prudential regulator,” he said. He was also concerned that Frank’s new draft creates an autonomous director, while establishing an advisory board with virtually no authority. Menzies said that this approach lacks any form of substantive checks and balances.   Yingling said the broad powers of the CFPA would create uncertainty in the markets. “The broad powers and the vague legal terms used (such as abusive and fair dealing) will create great uncertainty in the markets, as no one will know what the new rules of the rode are for many years. This will undoubtedly cause firms to cut back on the extension of credit and to avoid testing new products and services in the marketplace for fear they will run afoul of future legal standards,” he said. Alternatives Shortly after Bachus called for consideration of alternatives to combating abusive practices without creating a new government bureaucracy, David John , senior research fellow, Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation, suggested the committee consider establishing a council of regulators charged with promoting equal standards of consumer protection using agencies’ existing powers. “Critics of the current regulatory system justify the need for a CFPA by citing instances where different agencies applied different regulatory standards to similar products, and pointing to unregulated entities or products that took advantage of consumers,” John said. “But these problems could just as easily be solved by a coordinating council as by creating a massive new regulator. The council would be managed and staffed by the agencies with an oversight panel of outside experts to monitor its activities and ensure that coverage is universal.” He said that the council would be charged with ensuring that state and federal regulators have uniform regulatory standards that apply to all types of financial institutions, while leaving the day-to-day enforcement to regulators that understand the specific types of financial institutions. He also cautioned that the proposed CFPA could make matters worse for consumers by “causing chaos while it rearranges the existing regulators into a cumbersome, unresponsive bureaucracy.” Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 01 Oct 2009 00:00:00 EST B2DE77B757BC4E98B4E2382DD85F0771 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=2E1E56647DC745E0BAF861A965CD91BC “Time is the enemy of reform.” Spoken by U.S. Treasury Secretary Timothy Geithner , these words rang through the halls of Congress on Wednesday, Sept. 23, when Geithner put pressure on the House Financial Services Committee to avoid delay in pushing the Consumer Financial Protection Agency bill through. Geithner was the first of many who will be testifying over the next two weeks on the Obama administration’s efforts to overhaul the financial regulatory system. Geithner testified solo in the Sept. 23 hearing, titled, “The Administration’s Proposals for Financial Regulatory Reform,” but was later followed by testimony from several federal regulators who also voiced their position the same day. Calling this a very time consuming matter for the committee, in the hearing Rep. Barney Frank , D-Mass., cautioned that the bill is complex and diligence would be needed when the time comes to mark it up. “If this bill would come to the floor in one piece, we would need at least three days of debate,” Frank said, who is also sponsoring the bill. He added that he foresees possibly two full days of markups on portions of the bill alone. Hearing participants discussed HR 3126 , which would create a Consumer Financial Protection Agency that would have the authority to regulate and enforce all consumer financial protection laws, including RESPA, the Truth in Lending Act, the Home Ownership and Equity Protection Act, the Community Reinvestment Act, the Equal Credit Opportunity Act and numerous others. Rep. Luis Gutierrez , D-Ill., agreed that much attentiveness will be needed during the bill’s debate and markup and that the existence of a CFPA would be beneficial. “Over a decade ago, the fed was given the power to prevent predatory lending practices that were a direct cause of the current crisis. It took them 12 years to come up with laws to prevent this. Why did it take them so long? Because they were addressing other areas, Gutierrez said. “I think we can agree that something has to be done.” Gutierrez also posed the question: “I do appreciate the administration offering legislation, but I think it’s our responsibility to come up with our language. Is there a need to be able to deal with these issues deliberately and maybe move into 2010 before deciding on some of this?” There is concern that a new government agency will make the same mistakes other existing agencies have made with rules and enforcement and putting another government agency on top of what is already out there will result in chaos. Geithner countered this position. “We are not creating another government bureaucracy on top of the system we have. We are proposing to take the authority scattered over a number of agencies into one authority,” he said. One of the goals of the entire federal financial regulatory reform is to diminish the problem of what has become commonly known as “too big to fail” institutions, according to Frank. Geithner agrees and said that his goal at the hearing was to focus on the two key challenges that are the center of the debate over regulatory reform: one of which is how “to address the challenge of firms whose failure, absent reform, could threaten the stability of the financial system” (“too big to fail” firms) and the other of which is how “to strike a balance between protecting the stability of the system and America families’ finances while still fostering innovation, growth and prosperity.” “Consumers shouldn’t be restricted from having the option of a simple 30-year fixed mortgage loan,” Geithner said. “We are open to stronger standards without narrowing or restricting competition. There should be a balance of choice.” The “plain vanilla” standard loans have been controversial since the Treasury submitted proposed language of the bill back in July. Some believe that if the government mandates all banks to offer certain loans, this would stifle competition and innovation and put some smaller banks at a disadvantage. Geithner ensures that the CFPA would not do this and would work hard to maintain a balance. He added that the ultimate test to diminish “too big to fail” firms and offer better regulation on consumer protection standards is: “What is going to work?” “We need to have strong minimum national standards for protection. If you have this particular source of threat to the systems, we are going to hold you to stricter guidelines.” Rep. Frank Lucas , R-Okla., said he has heard first-hand the fears of smaller banks being at a disadvantage with the CFPA’s potential effect. "A fear out there in the countryside is that the biggest institutions in this country will have the ability to meet these standards… Smaller institutions will have costs they can not handle like the bigger banks can. Potentially, they would be driven to fewer people to do business with and lean on bigger banks for support. This would drive more business to the biggest banks and give them a bigger advantage over everyone else. This counters what we’re trying to do,” Lucas said. In response, Geithner assured Lucas that a new agency can take all the consumer protection authority from the existing agencies that currently house the laws without increasing costs. “Combined authority can be done with less distraction. I think we can achieve what is important to you and those community banks,” he said. Another topic of controversy was who the CFPA should apply to. In a memo sent by Frank to various leaders in Washington on Tuesday, there was a proposal to leave some institutions out of the bill language (see CFPA proposal pared back after barrage of protest ). Those include: Accountants and other businesses that perform tax preparation services; Real estate brokers and agents; Lawyers; Auto dealers; Telecom, cable and other communications providers; Consumer reporting agencies; Providers of IRAs, 401(k) plans, 529 plans and pension plans; and Service providers that provide strictly ministerial and support services to financial institutions. In a heated discussion between Rep. Jeb Hensarling , R-Texas, and Geithner, Hensarling questioned Geithner multiple times on whether or not companies such as Wal-Mart, Target, Macy’s, rental car companies, etc. should be subject to regulation by the CFPA? Geithner’s response was yes, and if they weren’t included then we would be allowing “institutions that are essentially doing what banks do to compete with banks with no adult supervision, no constraints, and free to engage in unfair deceptive practices.” Geithner furthered that all institutions offering credit should be included in the common standard of rules for banks, written and enforced by the CFPA. Frank said in his memo that when it comes to the Consumer Financial Protection Agency he too wants depositories and non-banks to be treated equally. Rep. Randy Neugebauer , R-Texas, had yet a different concern and said the following to Geithner regarding those pushing back on the idea of a CFPA. “We have a number of people in regulatory positions that are supposed to be smart and know what they’re doing. They’re telling you an agency would be very disruptive at this time. You think that they are looking after their turf, that’s a very serious charge,” Neugebauer said. In reply, Geithner said that they are indeed simply protecting their turf. “They’re defending things they are comfortable with, that they have lived with," Geithner noted. “Did [the current structure] do what it was designed to do? We had a chance to work on it over decades and it did not do what it was supposed to do.” When asked about Frank’s recent memo that stated significant changes to the bill, Geithner said at first glance nothing seemed troublesome about it. In a separate hearing held later in the day, several regulators said while they supported the idea of a consumer protection agency, they had concerns about the potential form the CFPA would take. The key issues presented by Sheila Bair , chairwoman of the FDIC, John Dugan , Comptroller of the Currency, John Bowman , acting director of the Office of Thrift Supervision, and Joseph A. Smith Jr. , North Carolina Commissioner of Banks on behalf of the Conference of State Bank Supervisors were: the need to make the CFPA the sole rule-making body for insured depository institutions and non-bank providers of credit; the need for the CFPA to target enforcement efforts to non-banks; and the authority of states to create rules that go above and beyond those established by the CFPA. They all agreed that while sole rule-making authority should be handed over to the CFPA to avoid a continued patchwork of regulations, the target of the CFPA’s enforcement efforts should be on the non-banking sector, leaving current regulators in charge of the banking industry. They disagreed however, on whether states should be allowed to write and enforce consumer protection standards above what the CFPA would enforce. Full text of Geithner’s submitted testimony Comments or questions? Contact Kelly McCarel at kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 24 Sep 2009 00:00:00 EST 2E1E56647DC745E0BAF861A965CD91BC http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=571D47280F3B48458DC5358CD5B24B32 The industry may see a bill emerge soon that would enact a new power in the government to oversee consumer financial protection from all angles. To get the ball rolling, on Tuesday, Sept. 15, House Financial Services Committee Chairman Barney Frank , D-Mass., announced a tentative line up of numerous hearings to discuss President Obama ’s plan to overhaul the nation’s financial regulatory structure, which includes the new proposed bill to enact the Consumer Financial Protection Agency (CFPA). The following is Frank’s agenda for the hearings, which includes a hearing to specifically address the controversial CFPA, which would bring under one roof, RESPA, the Truth in Lending Act (TILA) and other consumer protection statutes. The CFPA, as proposed in HR 3126 , would strip the Department of Housing and Urban Development (HUD) of its power to enforce and write rules around RESPA. Hearing schedule: September Wednesday, Sept. 23 at 9:30 a.m. ET — Secretary Timothy Geithner Thursday, Sept. 24 at 10 a.m. ET — Expert’s Perspectives on Systemic Risk and Resolution Issues Friday, Sept. 25 at 9 a.m. ET — Oversight and Audit Issues at the Federal Reserve System Wednesday, Sept. 30 at 10 a.m. ET — Consumer Financial Protection Agency             Wednesday, Sept. 30 at 2 p.m. ET — Credit Rating Agencies (Capital Markets Subcommittee Hearing) October Thursday, Oct. 1 at 10 a.m. ET — Financial regulators Friday, Oct. 2 at 10 a.m. ET — Capital Market Issues Tuesday, Oct. 6 at 10 a.m. ET — Capital Market Issues Wednesday, Oct. 7 at 10 a.m. ET — Derivatives Thursday, Oct. 8 at 10 a.m. ET — Systemic/Prudential Banking Reform Issues Friday, Oct. 9 at 10 a.m. ET — Systemic/Prudential Banking Reform Issues According to Frank, who is also the bill’s sponsor, the committee’s tentative schedule is for the final round of hearings on Obama’s plan, more hearings may be scheduled and HR 3126 is expected to be marked up when the hearings have concluded. Cosponsors of the bill include: Reps. Maxine Waters , D-Calif.; Carolyn Maloney , D-N.Y.; Luis Gutierrez , D-Ill.; Mel Watt , D-N.C.; Gary Ackerman , D-N.Y.;  Brad Sherman , D-Calif.; Michael Capuano , D-Mass.;  Brad Miller , D-N.C.;  Al Green , D-Texas; Keith Ellison , D-Minn.; Jackie Speier , D-Calif.; and Alan Grayson , D-Fla. Frank’s announcement followed one day after President Obama made a speech in the Federal Hall in New York to those on Wall Street, encouraging them to get on board with his reform efforts. “I have urged leaders in Congress to pass regulatory reform this year and both Congressman Frank and Senator Dodd , who are leading this effort, have made it clear that that’s what they intend to do,” Obama said. There has been significant opposition to creating the CFPA. According to an article in The Wall Street Journal, the U.S. Chamber of Commerce is launching an advertising campaign of at least $2 million aimed at defeating the bill. The Wall Street Journal reported that the first ads running in Washington-area newspapers feature a picture of a butcher with the line: “Virtually every business that extends credit to American consumers would be affected — even the local butcher and the credit he extends to his customers.” One section of the legislation says the agency would have jurisdiction over “any person who engages directly or indirectly” in offering a financial product to consumers. In the scheduled hearings, Congress intends to discuss the implications of phrases in the legislation such as this one, to determine their true affect in the financial markets. According to the bill’s language, the CFPA’s objectives would be to ensure that: Consumers have, understand and use the information they need to make responsible decisions about consumer financial products or services; Consumers are protected from abuse, unfairness, deception and discrimination; Markets for consumer financial products or services operate fairly and efficiently with ample room for sustainable growth and innovation; and Traditionally underserved consumers and communities have access to financial services. Essentially, the CFPA would serve as a watchdog, overseeing consumer loans, including mortgage loans, and would ensure that financial institutions comply with all relevant laws. It would consolidate regulatory power over mortgages and credit cards and other transactions that now are overseen by multiple agencies, including HUD, the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of Currency. Obama has indicated that the new agency is necessary to limit confusing language in mortgage forms and documents, prohibit loans not suited for borrowers and to enforce new credit card regulations. Many have expressed that this kind of agency or oversight structure is long overdue, while others feel the government is interfering too much and taking consumer protection too far. In an online readers’ poll conducted by RESPA News in July, results indicated that 39 percent of respondents agree with the idea that the CFPA is needed to oversee all regulations related to consumer protection, with 16.5 percent saying having one agency would help line up RESPA and TILA disclosures and 22.5 percent saying that the CFPA would greatly reduce cross-agency redundancy. However, a majority of the respondents (61 percent) said no, we don’t need the CFPA, with 6 percent saying the current system works fine and 55 percent saying having one agency responsible for so many regulatory issues will result in an ineffective behemoth. While much of Congress’ focus will continue to be on healthcare reform in the coming months, financial regulatory reform is advancing with its own spotlight. Stay tuned to RESPA News: We will be following the hearings and providing coverage on the CFPA bill as it moves through the House and Senate, with updates on how it will affect RESPA and HUD. Comments or questions? Contact Kelly McCarel at kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 18 Sep 2009 00:00:00 EST 571D47280F3B48458DC5358CD5B24B32 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=D9A4D45C7D7F4E51BA7ABEC8F32D109D The Making Home Affordable Program, implemented in March by the Obama administration was intended to help three to four million homeowners, but statistics reveal that after six months into the program only 15 percent of the eligible 2.7 million homeowners have received help, according to a statement by the House Financial Services Subcommittee on Housing and Community Opportunity. Led by chairwoman Rep. Maxine Waters , D-Calif., the Subcommittee on Housing and Community Opportunity held a hearing on Sept. 9 to discuss the program’s progress, the possible outcomes for homeowners and the challenges to utilizing the program. Waters said from the hearing the subcommittee hoped to gain valuable insight about the role of servicers in helping American homeowners. According to David Stevens , assistant secretary for Housing and Federal Housing Administration commissioner, the Making Home Affordable Program has “achieved clear success in a relative short time period and there are some indications that the housing market is stabilizing with home price declines slowing.” In fact, Stevens, who testified at the hearing, said the program is projected to meet the goal of modifying mortgage loans for more than a half million homeowners by Nov. 1. "Since the launch of the program in March, 48 servicers — representing more than 85 percent of the market — have signed contracts with the administration. In the monthly progress report released today and detailing program activity through August, these servicers have collectively extended more than 571,000 loan modification offers and approximately 360,000 have entered the 90-day trial period which is required before the modification can become permanent, providing long-term assistance to homeowners,” Stevens noted in his testimony. The Making Home Affordable program is made up of two key components: the Home Affordable Refinance Program (HARP), which expands access to refinancing for families whose homes have lost value and whose mortgage payments can be reduced at a lower interest rate; and the Home Affordable Modification Program ( HAMP ), which provides incentives to investors, lenders, services and homeowners to encourage mortgage modifications ( HAMP is providing up to $75 billion, including $50 billion from the Troubled Assets Relief Program). Stevens said he expects the Making Home Affordable Program to ramp up in the coming months. Although Stevens’ report featured the program’s success rate, he did acknowledge the subcommittee’s concern that many homeowners facing foreclosure are running into difficulties when attempting to modify their mortgages. Stevens said the issues here are that some borrowers wanting to modify their mortgages may have difficulty in contacting their servicers or obtaining information about their loans. Others, who have made contact, have found it difficult to move their applications through the modification process, due to for instance, lost application materials, changing personnel and delays in response time. To address these problems, HUD and the U.S. Treasury wrote letters and met with top executives of servicers in July, calling on them to devote more resources to the program. According to HUD, servicers in attendance committed to significantly increasing the rate at which they are performing loan modifications. “No family should ever lose their home because the servicer of their mortgage took too long to tell them whether they qualified for assistance or made a mistake during the review of a homeowner’s application that denied them assistance,” Stevens commented. Michael Barr , assistant secretary for Financial Institutions at the U.S. Treasury and a witness at the hearing, said the administration is requiring that servicers “add more staff than previously planned, expand call center capacities, provide a process for borrowers to escalate servicer performance and decisions, bolster training of representatives, enhance on-line offering and send additional mailing to potentially eligible borrowers. Other measures have been taken by the Government Sponsored Enterprises ( GSE ) regarding saving potential loans that may qualify for the program from falling through the cracks. According to Stevens, Freddie Mac has been charged with reviewing a sample of declined applications to make sure that eligible homeowners are not being denied. Stevens also pointed to steps taken to enhance the program to make it easier for servicers and homeowners to take advantage of it. The changes to the program since its commencement have also been in response to the changing nature and magnitude of the foreclosure crisis and include: The HARP program, which was extended to individuals with up to 125 percent loan-to-value ratio; The Second Liens Program, released in April, which is expected to help provide a more comprehensive affordability solution to borrowers by addressing their total mortgage debt (guidelines to implement the program were released in August); The Foreclosure Alternatives Program, which provides incentives for servicers and borrowers to pursue short sales and deeds in lieu of foreclosure; and The Home Price Decline Protection Incentives, which provides additional incentive payments to lenders and investors for modifications on properties located in areas where home prices have recently declined. Barr assured the subcommittee that additional steps are being taken to expedite the implementation of these supplemental programs. According to Barr, since the announcement of the Making Home Affordable Program, the GSEs have refinanced more than 2.7 million loans. Mary Coffin , executive vice president of Wells Fargo Home Mortgage Servicing, told the subcommittee that her company has hired and trained an additional 4,600 retention employees, which brings the company total to a staff of 12,000 to handle the increase in borrower assistance requests. She reported that as of Sept. 3, Wells Fargo has qualified more than 304,000 customers for trial and completed modifications for this year and has offered 78,000 customers a trial modification, in which the company received the first payment for about 44,000 of the modifications. “In addition, we have improved the ways we obtain from borrowers the extensive documentation the government requires for its programs, and we continue to work to ensure all documents are processed in a timely manner,” Coffin said. Others testifying at the hearing included: Mark Calabria , director, Financial Regulation Studies, Cato Institute; Alys Cohen , staff attorney, National Consumer Law Center; Jack Schakett, mortgage executive, Credit Loss Mitigation Strategies, Bank of America; Molly Sheehan , senior vice president, Chase Home Lending, JPMorgan Chase; and Paul Willen , senior economist and policy advisor, Federal Reserve Bank of Boston. Click here for the full text of the testimonials: David Stevens Michael Barr Mary Coffin Mark Calabria Alys Cohen Jack Schakett Molly Sheehan Paul Willen Comments or questions? Contact Kelly McCarel at kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 10 Sep 2009 00:00:00 EST D9A4D45C7D7F4E51BA7ABEC8F32D109D http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=8155AFC92FC743F39A527ABE6170B51E On Aug. 13, the National Association of Realtors (NAR) wrote to the Department of Housing and Urban Development (HUD) to request a meeting to discuss administrative brokerage commission fees and home warranty products as they relate to RESPA. NAR specifically addressed the letter to David Stevens , assistant secretary for Housing and Federal Housing commissioner at HUD, asking him for guidance from HUD officials on these two issues, which NAR believes are causing confusion for consumers, real estate brokers and real estate agents. The first issue concerns administrative fees and their proper structure and use under Section 8 of RESPA. “Conflicting federal court interpretations of Regulation X and HUD policy statements have caused misunderstanding in the marketplace, creating unnecessary uncertainty about compliance,” the letter stated. Section 8 of RESPA prohibits a person from giving or accepting any thing of value for referrals of settlement service business related to a federally related mortgage loan. It also prohibits a person from giving or accepting any part of a charge for services that are not performed. These are also known as kickbacks, fee-splitting and unearned fees.  The second issue concerns RESPA-compliant compensation of real estate brokers and agents by home warranty companies in the marketing and sale of home warranty products. “This issue arose in February 2008 when HUD issued an unofficial staff interpretation on marketing and administrative services agreements relating to home warranty products. Unfortunately, this unofficial HUD staff opinion continues to represent HUD’s most recent statement on the issue despite it being based on incomplete information and analysis,” NAR noted. According to NAR, the result of this interpretation has been misunderstandings between consumers and real estate brokers/agents, unfounded allegations and unnecessary legal expenses, all for the lack of appropriate guidance. NAR met with HUD officials and other various parties in April 2008 to discuss these two issues. Following the meeting, several parties in attendance submitted relevant documentation in support of industry analysis of the issues, including detailed descriptions of general industry practices. “Nevertheless, HUD has remained silent during the past 16 months, contributing to additional confusion in the courts, amongst industry participants and consumers. As a result, NAR believes it would be beneficial to hold another meeting with HUD to review the current status of these two issues and to seek a common understanding,” NAR's stated in the letter. Comments or questions? Contact Kelly McCarel at kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 04 Sep 2009 00:00:00 EST 8155AFC92FC743F39A527ABE6170B51E http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=36D1595211FD46C2ACD6B57C0FC926F9 On Aug. 25, President Barack Obama announced the nomination of Ben Bernanke for a second term as chairman of the Federal Reserve. Since then, mixed reviews from lawmakers and analysts have made headlines. What is the reaction?   The reaction is mixed, according to an Associated Press report, which stated that analysts, lawmakers and the financial industry generally reacted positively to the news, while some criticized Obama’s decision. In a Yahoo! News poll, which asked how you would rate Bernanke’s performance to date, 46 percent of respondents gave him an F, 31 percent gave him a C or D and 22 percent gave an A or B. In Obama’s speech on the re-appointment, he reasoned his choice with the following statement: “Ben Bernanke has led the Fed through one of the worst financial crises that this nation and the world has ever faced. As an expert on the causes of the Great Depression, I’m sure Ben never imagined that he would be part of a team responsible for preventing another. But because of his background, his temperament, his courage and his creativity, that’s exactly what he has helped to achieve. And that is why I am re-appointing him to another term as chairman of the Federal Reserve.” In response to the appointment, Bernanke assured his continued commitment. "I would like to express my gratitude to President Obama for the confidence he has shown in me with this nomination and for his unwavering support for a strong and independent Federal Reserve. We have been bold or deliberate as circumstances demanded, but our objective remains constant: to restore a more stable economic and financial environment in which opportunity can again flourish, and in which Americans’ hard work and creativity can receive their proper rewards,” Bernanke said. “I commit today to you and to the American people that…I will work to the utmost of my abilities — with my colleagues at the Federal Reserve and alongside the Congress and the administration — to help provide a solid foundation for growth and prosperity in an environment of price stability.” Strong support came from Rep. Barney Frank , chair of the House Financial Services Committee, while support from Sen. Christopher Dodd , D-Conn., chair of the Senate Banking Committee, came with some reservations. “While I have had serious differences with the Federal Reserve over the past few years, I think reappointing Chairman Bernanke is probably the right choice,” Dodd said. “Chairman Bernanke was too slow to act during the early stages of the foreclosure crisis, but he ultimately demonstrated effective leadership and his reappointment sends the right signal to the markets.” Dodd added that Bernanke can expect a thorough and comprehensive confirmation hearing. “I still have serious concerns about the Federal Reserve’s failure to protect consumers and I strongly believe these responsibilities should go to an independent consumer financial protection agency,” Dodd said. “I expect many serious questions will be raised about the role of the Federal Reserve moving forward and what authorities it should and should not have.” Frank views Bernanke’s response to the economic crisis as “wise” and “appropriate.” “He has acted to provide needed liquidity to the economy and has demonstrated that he is fully ready to reverse course when economic conditions dictate. President Obama’s decision to reappoint him now is one more example of his providing leadership the country and the world needs, as well as addressing the economic situation he inherited. By nominating Chairman Bernanke he is giving an example of the right kind of bipartisanship,” Frank commented. Obama also gave Bernanke credit for the tough decisions he’s had to make. “Ben approached a financial system on the verge of collapse with calm and wisdom; with bold action and out-of-the-box thinking that has helped put the brakes on our economic freefall,” Obama said. “Almost none of the decisions that he or any of us made have been easy. The actions we’ve taken to stabilize our financial system, to repair our credit markets, restructure our auto industry, and pass a recovery package have all been steps of necessity, not choice.” Sen. Richard Shelby , R-Ala., shared Dodd’s concerns. “Consideration of Chairman Bernanke’s nomination to serve a second term raises several important issues. The Banking Committee should carefully examine the impact of the Fed’s failures as a bank regulator, how such failures contributed to the financial crisis, and whether Chairman Bernanke’s performance as the chief regulator merits his reconfirmation,” Shelby said. Shelby also criticized Bernanke for making “ad hoc decisions” that have impacted the financial markets during the crisis. “I remain convinced that a thoughtful, more deliberative approach would have led to a better result than the panicked response the regulators chose. We must determine whether Chairman Bernanke has the strategic vision to chart the necessary course going forward and the resolve to stick to it, especially in light of today’s announcement that the national debt is projected to exceed 23 trillion dollars.” The Associated Press reported that Christopher Whalen , managing director of California-based Institutional Risk Analytics, believes that Bernanke is slowly earning his credibility back on Wall Street and it makes sense to keep him on. In addition, Whalen commented that he doesn’t think there were any alternatives to Bernanke. Bradley Sabel , partner with New York-based Shearman & Sterling LLP and former bank examiner with the Federal Reserve Bank of New York , told the Associated Press that given this type of appointment you have to look at the big picture. “He took some very, very radical steps by having the Fed use its emergency lending powers for the first time in 70 years with Bear Stearns. He just decided it had to be done. Is everyone going to agree with everything he’s in favor of? No, but you’ve got to look at the big picture, the things that are most important. In the big picture things — the economy, the plans they’ve got in place — he’s done a great job,” Sable said. Simon Johnson , former chief economist with the International Monetary Fund and now a professor at the Massachusetts Institute of Technology’s Sloan School of Management told the Associated Press that he doesn’t have a better candidate in mind, but he’s worried that Bernanke has the same two big weaknesses that Greenspan had: keeping interest rates too low and being super-pro-finance. Comments or questions? Contact Kelly McCarel at kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 27 Aug 2009 00:00:00 EST 36D1595211FD46C2ACD6B57C0FC926F9 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=722E356E283B4369B8C55A0EBDD00AC3 After reports that Joseph Murin was stepping down Aug. 14 from his position as president and CEO of the Government National Mortgage Association (Ginnie Mae), on Aug. 18 Murin announced his partnership with a former Federal Housing Administration (FHA) commissioner to form a new venture. Murin, who served for 13 months at the helm of Ginnie Mae, and Brian Montgomery , former commissioner of the FHA, announced the formation of The Collingwood Group LLC. The firm will provide business advisory services to boards of directors and senior executives of companies in the financial services industry. “There has never been a time more important for the financial services industry to work hand-in-hand with the federal government to help restore stability and liquidity to the markets,” Murin said. “We will advise our clients on how they operate strategically in this environment, as markets continue to shift and the regulatory landscape inevitably changes.” Gina M. Screen , a spokesperson for Ginnie Mae, told The Title Report , a sister publication of RESPA News , that a replacement for Murin has not yet been named but that Acting Executive Vice President Thomas R. Weakland is overseeing the day-to-day activities of the agency. Rumors of Murin’s departure from Ginnie Mae surfaced when people close to him told various news outlets of his plan to leave the government agency for a private sector job. The agency has not yet released a formal statement regarding the vacancy. Murin had been with Ginnie Mae, which is part of the Department of Housing and Urban Development and sells securities made up of loans backed by the FHA and the Department of Veterans Affairs, since July 31, 2008 . In addition to announcing the launch of their new company, Murin and Montgomery also reported the immediate merger with Capital Financial Solutions LLC ( CFS ), a consulting firm co-founded by Brian O'Reilly and Tim Rood . Established in 2007, CFS has provided services to companies in the financial services industry, including those requiring strategic business development, business and risk management, and business and technology systems design and development services. “Our purpose is to help new clients and existing CFS clients to continue to grow their business and to effectively navigate the business and public policy environment in some of the most challenging economic conditions the nation has ever known,” said Montgomery . “With the immediate addition of the Capital Financial Solutions team, we are able to enhance our new firm’s depth and range of services for clients, particularly in the areas of strategic business development, and in business and technology planning and design,” Murin said. O'Reilly and Rood will serve as managing directors and members of the management committee in The Collingwood Group. “Tim Rood and I are proud to join forces with Joe Murin and Brian Montgomery to launch The Collingwood Group,” O'Reilly said. “Our long-term clients know that under the CFS name we have been committed to help them capitalize on new market opportunities, improve their operating capabilities and risk posture, and help them achieve distinct competitive advantages in a unique market environment. We intend to expand our ability to accomplish these objectives for all our clients through this new endeavor.” “Through this merger, we will expand services available to existing CFS clients, particularly in the areas of fraud risk management, risk management analytics, mortgage fulfillment services, REO management and disposition, and loan modification management,” Montgomery said. Murin added, “The opportunity to deliver a unique range of capabilities to new clients and existing CFS clients made the decision to merge with Capital Financial Solutions a simple one.” The Collingwood Group will be engaged in the areas of domestic and international secondary and capital market activities; risk and loss management; mortgage servicing; all elements of property management and disposition; and business and technology planning and development. According to Murin, the firm will focus on serving clients’ business development needs in the federal government arena. “Americans are looking to Congress and the administration to provide strong leadership and innovative solutions to the financial crisis,” Murin said. “To be a successful enterprise in the financial services industry will require the ability to work collaboratively with policymakers.” Montgomery said while the financial services industry faces complex challenges, the new firm’s approach will be simple. “We call it The Collingwood Model and it boils down to three things: Bring integrity and talent to the table; find opportunities for clients to grow and become more competitive; create value for clients and the people they serve. That’s how we look at our mission,” he said. Murin oversaw exceptional growth at Ginnie Mae over the last 13 months, most recently reporting the issuing of more than $43 billion in mortgage-backed securities in June. And for the first six months of 2009, the agency provided nearly $207 billion of liquidity to the secondary market, doubling from the nearly $107 billion issued over the first six months of 2008. Prior to taking the lead at Ginnie Mae, Murin served as chief executive officer of Lender Services Inc. He also served as chief executive officer for Basis100, a Toronto-based publicly traded technology company. Earlier he served as president of Century Mortgage Co. Montgomery was assistant secretary for Housing-Federal Housing Commissioner from 2005 to 2009. He served as acting HUD Secretary in early 2009. He joined HUD from the executive office of the president, where he served as deputy assistant to the president and cabinet secretary. The Collingwood Group is based in Washington , D.C. More information can be found at: www.collingwoodllc.com . Thu, 20 Aug 2009 00:00:00 EST 722E356E283B4369B8C55A0EBDD00AC3 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=BA50EA71086F4AE1B1A76469CB4F286F Members of the House Financial Services Committee are using a report released by the U.S. Government Accountability Office (GAO) to reinforce their position on the necessity to create a new government power that would combine all consumer financial protection laws under one agency, including RESPA and the Truth in Lending Act. The report reveals significant holes in the current U.S. financial regulatory structure and committee members say this is just one of the many reasons to create President Barack Obama ’s proposed Consumer Financial Protection Agency (CFPA).   In its findings, which were laid out in a 102-page report, the GAO found that “federal enforcement agencies and depository institution regulators face challenges in consistently, efficiently, and effectively overseeing and enforcing fair lending laws due in part to data limitations and the fragmented U.S. financial regulatory structure.” To view the full report, click here . For report highlights, click here .   On Aug. 12, Reps. Al Green , D-Texas, Maxine Waters , D-Calif., Luis V. Gutierrez , D-Ill., and the committee’s chairman Barney Frank , D-Mass. issued a statement saying that the report is critical of federal regulators’ ability to effectively and efficiently enforce the nation’s fair lending laws.   “The information in this report is just one of many examples of the need for improved protection for all consumers of financial products,” Green said. “Inadequate enforcement of consumer protection laws hurts all consumers, regardless of color, creed, sex or economic status. It is time to work together and create a consumer financial protection agency that will finally give adequate attention to safeguarding consumers from abusive products."   Key findings of the GAO report include:   Data available to detect potential fair lending violations have limitations, which may affect federal efforts to enforce fair lending laws; and Although depository institution regulators’ fair lending initial activities to assess evidence of potential fair lending violations generally have been more comprehensive than those of the enforcement agencies, the differences in the various oversight programs raise questions about the consistency and effectiveness of their efforts and highlight challenges associated with a fragmented regulatory system. The report was requested by Frank along with 15 other democratic Financial Services Committee members who asked the GAO in April 2008 to review the effectiveness of federal oversight of the country’s fair lending laws. The House Financial Services Committee views the report as constructive to the committee and Congress as it considers current legislation to revamp and update the nation’s financial regulatory system. The committee noted that it is already considering a number of GAO’s recommendations to enhance the data available to detect potential fair lending violations as part of HR 3126 — a bill that would create the CFPA — including amending the Equal Credit Opportunity Act to require collection of race and ethnicity information and some loan data for small business loans.    “As the chairwoman of the Subcommittee on Housing and Community Opportunity, I am concerned about the role that mortgage lenders played in steering homeowners into predatory loans,” Waters said. “The GAO report issued reveals many shortcomings in the current U.S. financial regulatory structure, including the failure of the Home Mortgage Disclosure Act to require certain lenders to collect and report data on the credit risks of borrowers, information most helpful in identifying lenders most likely to engage in discriminatory practices. This report highlights the need for the proposed Consumer Financial Protection Agency, which would close these regulatory gaps and protect consumers from predatory loans.”   Gutierrez, chair of the Subcommittee on Financial Institutions and Consumer Credit, said the report’s findings came as no surprise to him.   “The weaknesses of our current system in identifying and ending discriminatory lending practices is something that my constituents and Americans across the country have lived with for too long,” Gutierrez commented. “Recent consumer studies have indicated what we have known to be true at the community level — African American and Latino borrowers are significantly more likely to receive a subprime loan or to be targeted by predatory lenders.”   Industry members opposing the new law are also beefing up their arguments, taking advantage of Congress’ August recess to formulate plans to present their stance. The House and Senate will reconvene to a full agenda on Sept. 8, and in the meantime, the American Land Title Association (ALTA) is asking its members to make efforts to express the industry’s view on the proposed CFPA.   “The proposal has run into stiff opposition from industry stakeholders and now is the time to attend town hall meetings, set up individual visits with your members of Congress over recess and let your legislators hear from the title industry that the proposed CFPA needs significant modification before it hits the president’s desk,” said ALTA CEO Kurt Pfotenhauer in the association’s Aug. 10 advocacy update.   The Mortgage Bankers Association (MBA), too, is asking members of its lobbying group to take advantage of local politicians being back in their respective towns for the break.   “As members of Congress head home for the summer recess, the tendency is to think of this period as down time inside the Beltway,” said Douglas McCree , CMB , president and CEO of First Housing in Tampa, Fla., and chairman of the MBA’s grassroots advocacy network, the Mortgage Action Alliance ( MAA ). “In reality, with all these town halls and district meetings going on it turns out to be one of the busiest times of the year for Alliance members.”   The MBA’s concern is that by establishing a new consumer protection regulator, while also maintaining authority at existing regulators, this could actually weaken consumer protections by dispersing regulatory power and removing consumer protection from the mainstream of the regulators’ focus.   Comments or questions? Contact Kelly McCarel at kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 13 Aug 2009 00:00:00 EST BA50EA71086F4AE1B1A76469CB4F286F http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=722582C7A48A457B92974E37A65F5287 The Director of the Federal Housing and Finance Agency (FHFA), James B. Lockhart , has released a statement announcing his departure from the FHFA. The statement does not give a reason for his stepping down, but does reveal that his replacement will be Edward J. DeMarco , the current chief operating officer and senior deputy director for Housing Mission and Goals at the FHFA. DeMarco will be the acting director until further notice. Lockhart made the announcement just days after the FHFA celebrated its one-year anniversary. Created to implement the Housing and Economic Recovery Act of 2008 (HERA), the agency took conservatorship of the two mortgage giants and government-sponsored entities (GSEs), Fannie Mae and Freddie Mac in Sept. 2008. This year, the FHFA was instrumental in creating the Home Valuation Code of Conduct (HVCC) as part of an agreement with the New York Attorney General Andrew Cuomo .  In a speech made to the National Press Club in Washington , D.C. , on July 30, Lockhart detailed the agency’s achievements and laid out the challenges that remained ahead. He was critical of the GSE ’s capital requirements, “ By statute, the Enterprises could leverage mortgage credit risk as much as 200 to one and market risk could be leveraged almost 50 to one. We knew this was absolute folly.” He agreed that conservatorship was the only option left on the table, “I am confident that if we had not taken the conservatorship action, the Enterprises would have had to pull back dramatically from the market, which would have accelerated the downward spiral and caused a far greater financial crisis,” he said. In his proposal for the future of the GSEs, Lockhart offered three options. The first was nationalization, which he was opposed to saying that, “It is often difficult in a political environment to calculate or charge an actuarially fair price, avoid mission creep, and keep federal risks from increasing.” The second option would be to revamp the GSEs, creating new companies that were based on a public utility model. “A cooperative ownership similar to that of the Federal Home Loan Banks has also been suggested,” he said, but cautioned, “Extreme care would have to be taken to prevent the inherent conflict always present in the GSE model — the tension between private profit and public purpose.” The final option is to establish private sector firms that could supply liquidity to the mortgage markets “with or without government catastrophic reinsurance.” Lockhart did not say which option he preferred, but did suggest that, “Private firms could offer the benefits of greater competition such as improved operational efficiency and increased benefits to consumers.” However, these options will now be explored by a different director of the FHFA. In the statement announcing his departure released this morning, Lockhart said, “This has been one of the most challenging and rewarding assignments of my career and I am very pleased with the work we have been able to accomplish through a very difficult period. As the housing market is starting to stabilize and the housing GSEs are strongly supporting the mortgage markets and other financial institutions, it is time for me to move on to the next chapter.” He noted that one of his goals when taking control of the Office of Federal Housing Enterprise Oversight (OFHEO) in 2006, was to achieve passage of much-needed GSE reform legislation to create a much stronger regulator for Fannie Mae, Freddie Mac and the Federal Home Loan Banks. "This goal was accomplished on July 30, 2008 , and FHFA just celebrated its one-year anniversary,” Lockhart said. “As the regulator and conservator of Fannie Mae and Freddie Mac and the regulator of the Federal Home Loan Banks, FHFA has been central to addressing the housing market crisis. The Home Affordable Modification and Refinance Programs are building upon the Streamlined Modification Program we launched last fall and many other steps have been taken that have helped to stabilize the housing market.” Lockhart has served in positions at Social Security, OFHEO and the FHFA under both President George W. Bush and President Barack Obama over the past seven-and-a-half years. In the same statement, Lockhart praised DeMarco and welcomed him to his new position as acting director of the FHFA. “ Ed has done an outstanding job as deputy director of OFHEO and in the past year as chief operating officer and senior deputy director for Housing Mission and Goals at FHFA,” Lockhart said. “Ed played an integral role in getting the new agency up and running in record time. His extensive knowledge of both the supervisory and administrative matters ahead makes him well-suited to lead the agency at this time.” An official from the FHFA declined to comment on the reason for Lockhart’s departure but confirmed that he would be stepping down at the end of the month. Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 07 Aug 2009 00:00:00 EST 722582C7A48A457B92974E37A65F5287 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=5CA55550EB274CE0AA663AFFE69ECFD1 Hearings following the announcement of the new Consumer Financial Protection Agency (CFPA) continue in Congress and are becoming rather interesting as many have come forward voicing their concerns or praising various components of HR 3126 , the bill that would enact the new government power. Under the new legislation, the agency would be the sole-rulemaking authority for consumer financial protection statutes and would have supervisory and enforcement authority over all providers of consumer credit. Comptroller of the Currency John Dugan has made waves about the focus of the CFPA, saying that it should concentrate on the non-bank institutions and leave the implementation of rules for banks to the already existing federal banking agencies that have established regulatory and enforcement regimes. Dugan said the CFPA should keep the soundness and safety standards of national banks side by side with consumer protection, while at the same time increasing oversight on non-bank financial providers, such as mortgage brokers and loan originators that are not depository institutions. “We believe that an independent agency like the CFPA could appropriately strengthen consumer protections, but we have serious concerns with the CFPA as proposed,” Dugan stated in his testimony at the July 24 House Services Financial Committee’s hearing on the regulators’ perspectives on the new administration’s financial regulatory reform proposal announced June 17. Dugan supported his recommendation with his position that recently, federally regulated depository institutions made only 6 percent of higher-priced mortgages provided to lower-income borrowers or in areas that are the focus of Consumer Reinvestment Act evaluations. Moreover, Dugan said the OCC’s experience with the limited portion of subprime loans made by national banks is that they are performing better than non-bank subprime loans. “This belies any suggestion that the banking system and national banks, in particular, were any sort of haven for abusive lending practices,” Dugan commented. “Some have suggested that the CRA caused the subprime lending crisis. That is simply not true. As the administration’s proposal expressly recognizes, and as I have testified before, far fewer problem mortgages were made by institutions subject to CRA — that is, federally regulated depository institutions.” Dugan also believes that the CFPA should make rules with input from the federal banking agencies and that the rules be truly uniform, meaning not allowing states to draft their own laws above and beyond the CFPA’s standards, which is what HR 3126 would allow. “Because the proposal authorizes states to adopt different rules, there could be 50 different standards that apply to providers of a particular product or service, including national banks,” Dugan noted and warned that the differences would unnecessarily raise the cost of compliance, and therefore the cost of consumer products and services. His reasoning was that this divided approach to rulemaking could give rise to significant uncertainty about which sets of standards apply to institutions conducting a multi-state business, generating major legal and compliance costs, and major impediments to interstate product delivery. “This issue is very real,” Dugan said. “There are a number of areas in which complying with different standards set by individual states would require a bank to determine which state’s law governs — the law of the state where a person providing a product or service is located, the law of the home state of the bank employing that person, or the law of the state where the customer is located. It is far from clear how a bank could do this based on objective analysis, and any conflicts could result in penalties and litigation in multiple jurisdictions.” For example, Dugan said today, the maximum interest rate permitted is derived from a bank’s home state, but under the flexibility of HR 3126, states could claim that the maximum interest rate should be the rate of the state in which the customer resides, or the rate of the location where the loan is made. Another suggestion of Dugan’s is to have all of the banking agencies represented on the CFPA board, instead of just one banking supervisor, as it is drafted now. Dugan summarized that the CFPA falls short in two ways: In terms of rule writing, it is making the mistake of not have nationwide uniform rules; and It does not provide any specific direction for how the CFPA would supervise and enforce framework to address fundamental compliance problems in the “shadow banking system,” namely the non-bank sector. In addition, Dugan said the CFPA proposal underestimates the volume of work it will have to produce as the sole rulemaking and enforcement authority for consumer protection. “Last year, the OCC helped almost 100,000 consumers who had questions or complaints only about their banks. The CFPA is guaranteed to receive far more, given the vastly broader scope of its jurisdiction,” Dugan said. Dugan said his concern is that Obama’s proposal would give the CFPA board consumer protection authority — over mortgage brokers; mortgage originators, payday lenders, money service transmitters; check cashers; real estate appraisers; title, credit and mortgage insurance companies; credit reporting agencies; stored value providers; financial data processing, transmission and storage firms; debt collection firms; investment advisors not subject to SEC regulation; and financial advisors and credit counseling and tax preparation services, among others —   but it would contain no framework or detail for examining these providers or requiring reports from them or even knowing who they are. “No functions are specified for the CFPA to monitor or examine even the largest of these nonblank firms, much less to supervise and examine them as depository institutions are when engaged in the same activities,” Dugan pointed out. “No provision is made for registration with the CFPA so that the CFPA could at least know the number and size of firms for which it has supervisory, examination and enforcement responsibilities. Nor is any means specified for the CFPA to learn this information so that it may equitably assess the costs of its operations — and lacking that, there is a very real concern that assessments will be concentrated on already regulated banks, for which size and operational information is already available.” Sheila Bair , chair, Federal Deposit Insurance Corporation, agrees. “The administration proposal does not address the means by which the CFPA will be able to garner the resources or infrastructure to supervise products and services offered by non-banks,” Bair stated in her testimony. “Simply moving the examination and supervision functions from the financial institution regulators to the CFPA will not address the lack of supervision of non-bank entities, because the financial institution examiners are already fully engaged with their banking sector institutions. Further, spreading the available resources over both non-banking and banking institutions would only serve to diminish the CFPA’s effectiveness overall.” Bair also agrees with Dugan that the CFPA should have sole rule-writing authority over consumer financial products and services, but the federal banking regulators should be required to examine for and enforce the standards. Bair suggested this change be made with added language that if the bank regulators should fail to perform this role properly, then the CFPA should act as backup to address any situation where it determines that a banking agency is providing insufficient supervision. U.S. Treasury Timothy Geithner said there is good reason for the CFPA to oversee consumer protection implementation and enforcement among banking firms. The reason behind this particular language of HR 3126 is that the banking agencies have had higher priorities in the past than consumer protection. “The agencies’ primary focus is the safety and soundness of the institutions they oversee,” stated Geithner in his testimony. “As a matter of mission and internal organization, they are focused on the effect of a bank’s products and practices on the bank itself, rather than the effect on consumers. That is why the CFPA would have as its sole mission examining how a product or practice affects consumers.” According to Geithner, the problem is that the Federal Reserve has substantial power to write rules but has little authority to enforce them outside of bank holding companies, while the Office of the Comptroller of the Currency has little authority to write rules, but wide power to enforce them. “As concerns about fairness and transparency emerged, each agency looked to the other to act and, in the end, not enough was done,” Geithner said and added that it took the federal banking agencies until June 2007 to reach final consensus on supervisory guidance imposing just general standards on subprime mortgages, and by then it was too late. “Still, despite that reality, there are some who suggest we are trying to do too much too soon, and that we should wait until the crisis has definitively receded. Others say we do not need comprehensive change or that it will destroy innovation. And with respect to consumer protection in financial services, there are even those who contend we should leave things as they are,” Geithner said. Comments or questions? Contact Kelly McCarel at kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 31 Jul 2009 00:00:00 EST 5CA55550EB274CE0AA663AFFE69ECFD1 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=C313E209D1424E9FB00F1FDCB2EBA3B2 The chief executive officer of the American Land Title Association (ALTA) announced that the group held meetings in July with the Treasury Department and with key House Financial Services Committee staff to explore administration and congressional openness to modifying President Barack Obama ’s legislation to create a new Consumer Financial Protection Agency (CFPA). The focus was on how the creation of the agency affects the title insurance industry. In the meantime, the CFPA — which was one of the first major parts of Obama’s financial reform plan to be debated in Congress as lawmakers begin to consider proposals to regulate systemic risk, derivatives and executive compensation policies — continues to come under fire by a myriad of insurance, financial and other business institutions. On July 21, news agencies reported that House Financial Services Committee chairman Barney Frank , D-Mass., said the committee is delaying consideration of the CFPA until September, though the original intent had been to approve it by August. The House is scheduled to adjourn on July 31 and return the week of Sept. 7. Introduced by Frank on July 8 as HR 3126 , the legislation would essentially give the CFPA jurisdiction over four credit-related insurance products: title insurance, credit insurance, mortgage insurance and mortgage guarantee insurance. Joining Frank as cosponsors of the bill were: Reps. Maxine Waters , D-Calif.; Carolyn Maloney , D-N.Y.; Luis Gutierrez, D-Ill.; Mel Watt , D-N.C.; Gary Ackerman , D-N.Y.;   Brad Sherman , D-CA; Michael Capuano , D-Mass.;   Brad Miller , D-N.C.;   Al Green , D-Texas; Keith Ellison , D-Minn.; Jackie Speier , D-Calif.; and Alan Grayson , D-Fla. CEO Kurt Pfotenhauer said in ALTA’s regular advocacy update that the group’s concern over the proposal is that powers proposed to be given to the new agency are so broad they effectively nationalize the regulation of title insurance. The association’s proposal is to limit federal oversight of the industry to existing authority as spelled out under RESPA and the Truth in Lending Act. Pfotenhauer said the door was not slammed in the face of ALTA’s proposal, so language is being written. ALTA is also participating with other trade organizations in organizing opposition to what it finds the most troublesome provisions of the bill. An insurance coalition joined ALTA in signing a letter opposing any inclusion of insurance in the legislation, and ALTA expects a letter organized by the U.S. Chamber of Commerce to be sent as well. The association also is looking to partner with real estate trade organizations on the issue. Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 23 Jul 2009 00:00:00 EST C313E209D1424E9FB00F1FDCB2EBA3B2 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=E6FCC3497E9048B4A1DB9729B8D3E81F The banking industry is troubled over several aspects of President Obama’s new financial regulatory reform plans and HR 3126 , a bill that, if passed, would enact the administration’s proposed Consumer Financial Protection Agency (CFPA), a new government entity that some are referring to as a “super” power and not necessary. Bankers were provided the opportunity to voice their concerns on July 15 when several high-profile representatives from the banking industry convened in Washington for the House Financial Services Committee hearing to testify on the matter, with the majority saying that they agree with the spirit of the reform, but feel that the administration is not moving in the right direction regarding the details, is blaming banks for the current crisis and is drafting heavy regulation and oversight that will hinder consumers’ choices and stifle competition. Those present at the hearing were: Hon. Steve Bartlett , president and CEO of the Financial Services Roundtable; John Courson , president and CEO of the Mortgage Bankers Association (MBA); Chris Stinebert , president and CEO of the American Financial Services Association; Steven Zeisel , vice president and senior counsel of the Consumer Bankers Association ( CBA ); Todd Zywicki , professor, George Mason University Foundation Professor of Law and senior scholar, Mercatus Center at George Mason University; Denise Leonard , vice president, government affairs of the National Association of Mortgage Brokers (NAMB); Edward Yingling , president and CEO of the American Bankers Association (ABA); and Michael Menzies , president and CEO of the Easton Bank and Trust Company on behalf of Independent Community Bankers of America. Of the many problem areas, three seemed to generate some heated discussion: The banking industry wants consistent uniform standards nationwide and the idea that states can add to the CFPA’s regulatory platform would cause confusion; Bankers believe the “plain vanilla” product offering concept will remove product development and   innovation from banks and limit consumer choices; and Separating consumer protection from safety and soundness would not be in the best interest of the banking community. Federal regulation as the ceiling Many testifying at the hearing said they agree with providing uniform standards, but allowing states to preempt any consumer protection regulation could cause major confusion and would compound the problem of separate laws that we already have today. “A top concern for MBA is that CFPA’s rules would serve as a ‘floor,’ not a ‘ceiling’ for future state legislation,” Courson said. “States would be encouraged to enact additional laws and rules — exacerbating the patchwork of laws that provide uneven protection and increased cost to consumers.” Zeisel agreed. “If the Act were adopted, it is reasonable to assume many states will rush to enact laws pertaining to banks’ activities,” he said. “This could result in dozens of differing requirements pertaining to minimum payments, fee limits, underwriting prescriptions and the like. It is not easy to develop a nationwide lending program if there are up to 50 state law variables for every term in the agreement.” The majority of those testifying agreed that states having this power would contradict the idea that uniform nationwide standards are needed. Simple may not be better According to Zeisel, consumers have benefited from having the choice of selecting between various product offerings, including “plain vanilla” offerings and more complex offerings. With the CFPA’s new “plain vanilla” requirement, Zeisel said it is not clear “whether banks will be able to offer the variety of products they offer today or may develop tomorrow.” To explain this, Zeisel referred to a problem he sees with the language of the proposal regarding what is meant by the CFPA determining the risks of a product. “It is not clear to CBA what it means to describe the risks of a product, or how such a description might need to change if a feature on the product changes, or how to present the product so the consumer understands the long-term risks of a product,” Zeisel noted. “These uncertainties may lead to requests for the CFPA to pre-approve new product features, marketing campaigns and product promotions… However, this would be practically impossible, since there are thousands of financial institutions (not just banks) in the U.S. , each with a slightly different product mix and marketing plan.” Zeisel said this kind of oversight could lead to many financial institutions, especially smaller ones, deciding to offer only the government-designed product offerings to avoid liability under federal and state law. “Fewer products being offered mean fewer choices for consumers and increased cost due to reduced competition,” he said. Stinebert agreed and said, in the last 30 years, financial innovation has been the fuel of the economy. “With its vast, unfettered authority, the proposed regulator has the potential to roll back the clocks 30 years, when consumers had only standard, ‘plain vanilla’ borrowing options. Financial services reform should take us forward not backward,” Stinebert said. He suggested “a better approach,” which would be to “continue to improve and clarify the current effort to ensure strong underwriting by ensuring the ability to repay a loan by prospective consumers.” “Strengthening underwriting is a more effective approach than attempting to proscribe specific products for consumers,” Stinebert added. Courson said he is concerned that this type of oversight would reduce the ability of some borrowers to qualify for a loan. “By requiring the regulator to identify particular products as ‘plain vanilla’ and further requiring that such products must be offered first, industry participants would face significant expense, as well as legal and regulatory compliance risks if they were to introduce any product innovations or improvements,” Courson said. “The impact would be to limit the available product menu.” Separate functions A major concern for the Financial Services Roundtable is the idea that consumer protection and safety and soundness will be separated if the CFPA is enacted. Bartlett said these two areas coincide and should be regulated under one entity. “Consumers are protected when they deal with a firm that is in a stable strong position to provide competitive products and services,” he said. “Sound mortgage underwriting standards, for example, protect both the interests of consumers and the solvency of lenders. These functions should not be separated.” Bartlett also noted that standards that ensure that only qualified borrowers obtain a loan help ensure that a lender gets repaid and remains solvent to serve other consumers in the future, and this function should not be separated from consumer protection. He blames the harm to consumers in the current financial crisis on “gaps and lapses” in regulation, including a lack of regulation of certain types of mortgage originators; inappropriate underwriting standards for mortgage lenders; insufficient capital standards; and insufficient liquidity requirements. Courson agreed that separating consumer protection regulation from prudential financial supervision is not a good idea and “may fail to achieve an appropriate balance of the competing considerations” between the financial supervision and consumer protection. Overall, the MBA’s position on financial regulatory reform is to combine some of the new administration’s proposals with that of the MBA’s Mortgage Improvement and Regulation Act. Disclosures Many agreed that uniform disclosures are a must in the overall reform but a couple witnesses questioned the approach. According to Courson, the MBA is concerned that while the bill suggests that the Department of Housing and Urban Development and Federal Reserve Board work together to achieve a single combined RESPA and Truth in Lending disclosure, the bill does not require such collaboration. “The result is that consumers will not be given the improved disclosure they deserve,” Courson said. “In the meantime, HUD and the Board will proceed with piecemeal reform…at considerable cost to consumers and the industry.” Leonard said NAMB, although supportive of the CFPA’s model to combine disclosures required under RESPA and TILA, insists that a moratorium on HUD and the FED ’s current rules for mortgage reforms be imposed immediately. “NAMB strongly encourages this committee to consider imposing a moratorium on the implementation of any new regulations or disclosure forms…for at least one year after the designated transfer date,” Leonard said. “This will help avoid consumer confusion and minimize the increased costs and unnecessary administrative burden borne by industry participants if multiple significant changes are made to mandatory disclosure forms over a short period of time.” Full text of witness testimonies: Steve Bartlett John Courson (MBA) Denise Leonard (NAMB) Michael Menzies Chris Stinebert Edward Yingling (ABA) Steven Zeisel Todd Zywicki Comments or questions? Contact Kelly McCarel at kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks.   Thu, 16 Jul 2009 00:00:00 EST E6FCC3497E9048B4A1DB9729B8D3E81F http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=643E2FAB110F4770942E98BBB4BC303B One week after the Treasury Department released proposed language for a bill creating the Consumer Financial Protection Agency (CFPA), House Financial Services Committee Chairman Barney Frank , D-Mass., formally introduced  HR 3126 , a bill that would establish the new agency and provide it with a range of rulemaking, information-gathering, supervisory, and enforcement tools to better protect consumers who purchase financial products from banks and non-bank financial institutions.  “I am pleased to introduce this bill which addresses an issue at the heart of the financial crisis. Recent reports about the lack of mortgage modifications and increases in various fees only reinforce the need for this bill, which is already very clear,” Frank said. “I intend to mark this up by the end of July, and we have already begun to hold hearings on this subject and have had a great deal of consultation among members. I am confident that we will produce a bill that will provide greater consumer protections while in no way burdening the legitimate activities of responsible banking.” Joining Frank as cosponsors of the bill were: Reps. Maxine Waters , D-Calif.; Carolyn Maloney , D-N.Y.; Luis Gutierrez, D-Ill.; Mel Watt , D-N.C.; Gary Ackerman , D-N.Y.;   Brad Sherman , D-CA; Michael Capuano , D-Mass.;   Brad Miller , D-N.C.;   Al Green , D-Texas; Keith Ellison , D-Minn.; Jackie Speier , D-Calif.; and Alan Grayson , D-Fla. The bill introduces the Obama administration’s proposal to create the CFPA with certain limited exceptions. Unlike the administration’s draft, the bill preserves the current federal banking regulators’ role to enforce the Community Reinvestment Act ( CRA ).  In addition, the Administration’s proposal presupposes the creation of the National Bank Supervisory (NBS), a new prudential regulator that would merge the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS). While this is consistent with the administration’s goals for regulatory restructuring, these considerations will be done at a later date. Accordingly, the introduced bill makes references to the OCC and OTS, instead of the NBS. Agency makeup The bill would establish the CFPA “as an independent agency in the executive branch to regulate the provision of consumer financial products or services.” The CFPA would have a board comprised of five members, four of which would be appointed by the president, and one of which would be the “head of the agency responsible for chartering and regulating national banks.” The CFPA would have support from appointed officers, including a secretary, general counsel, inspector general and other personnel. The agency would also have specific functional units, including a research department, community affairs department and consumer complaints department. In addition, it would work with a consumer advisory board that would advise and consult with the CFPA regarding consumer laws, trends and emerging practices in the consumer financial products or services industry. According to the bill’s language, the CFPA’s objectives would be to ensure that: Consumers have, understand and use the information they need to make responsible decisions about consumer financial products or services; Consumers are protected from abuse, unfairness, deception and discrimination; Markets for consumer financial products or services operate fairly and efficiently with ample room for sustainable growth and innovation; and Traditionally underserved consumers and communities have access to financial services. Transfer of functions Under the proposed legislation, no later than 60 days after the enactment of the bill, the Secretary of the CFPA would transfer all consumer protection functions of the Federal Reserve Board, the Comptroller of the Currency (OCC), the director of the Office of Thrift Supervision (OTC), the Federal Deposit Insurance Corporation (FDIC), the Federal Trade Commission (FTC) and the National Credit Union Administration (NCUA). The bill defines consumer financial protection functions as “research, rulemaking, issuance of orders or guidance, supervision, examination and enforcement activities, powers and duties relating to the provision of consumer financial products or services, including the authority to assess and collect fees for those purposes.” Concern has cropped up regarding whether the transfer of this authority would be a good idea. Rep. John Dingell , D-Mich., voiced his opposition at an Energy and Commerce subcommittee hearing, saying the CFPA would trigger a reassignment of the FTC’s regulatory authority. A Wall Street Journal article on the proposed agency stated that several of the consumer financial protection functions that would be given to the new agency are currently performed by the FTC. Dingell said he would be looking into whether usurping the FTC’s authority would be in consumers’ best interest. Rulemaking authority The bill gives the agency broad authority to write rules about consumer financial services or products and expand its authority over “any person who engages directly or indirectly in a financial activity, in connection with the provision of a consumer financial product or service or any person who, in connection with the provision of a consumer financial product or service, provides a material service to, or processes a transaction on behalf of, a person who engages in financial activity.” That definition includes companies providing settlement services and title insurance. The American Land Title Association (ALTA) has announced that it has reached out to other industries that would be regulated by the new agency to possibly form a coalition of organizations concerned about the prospect of the government being given the authority to set limits on the fees charged to consumers as part of the purchase of a home. Entities ALTA plans to reach out to include: real estate appraisers, pest inspectors, surveyors and title service providers. Standard products The new agency would also be given the authority to establish standard financial products or services. These products and services are one ones that: Are or can be readily offered by covered persons that offer or seek to offer alternative consumer financial products or services; Are transparent to consumers in their terms and features; Pose lower risks to consumers; Facilitate comparisons with and assessment of the benefits and costs of alternative consumer financial products or services; and Contain the features or terms defined by the agency for the product or service. The agency would have the authority to prescribe regulations or issue guidance regarding the offer of a standard consumer financial product or service at or before the time an alternative financial product or service is offered. The CFPA could not require a covered person to offer a standard consumer financial product or service at or before the time an alternative consumer financial product or services is offered, unless the agency prescribes regulations, after notice and comment, regarding the features or terms of the product or service. Disclosures In general, under the proposed legislation, the agency would have the authority to prescribe regulations to ensure the appropriate and effective disclosure or communication to consumers of the costs, benefits and risks associated with any consumer financial product or service. The bill specifically states that within one year of the designated transfer date, the agency would propose for public comment regulations and model disclosures that combine the disclosures required under TILA and RESPA “into a single, integrated disclosure for mortgage loan transactions covered by those laws, unless the agency determines that any proposal issued by the Federal Reserve Board and the Department of Housing and Urban Development carries out the same purpose. Disclosures were a topic of heated discussion during the House Committee’s first hearing on the president’s proposal last month. During the hearing, Edward Yingling , speaking on behalf of the American Bankers Association, said that disclosures should be improved. He pointed out that current disclosures are driven by lawyers and the need to cover the legal complexities that are involved and to protect against the threat of litigation and that bias needs to be overcome. “Simple disclosures, perhaps in combination with the larger ones required for legal purposes, should be made in ways that most benefit consumers,” Yingling said. “Concepts gleaned from behavioral science relating to how consumers really react should be included in disclosure design.” He did voice concern, however, over the fact that the president’s proposal goes beyond simplifying disclosures, to require that all bank communication with consumers be “reasonable,” a term “so vague that no banker would know what to do with it.” The bill includes a provision with similar language, requiring a covered person would be to provide to a consumer with disclosures and communications that: Balance communication of the benefits of the product or service with communication of significant risk and costs; Prominently disclose the significant risks and costs, in reasonable proportion to the disclosure of the benefits; Communicate significant risks and costs in a clear, concise and timely manner designed to promote a consumer’s awareness and understanding of the risks and costs, as well as to use the information to make financial decisions; and comply with standards prescribed by the agency. The agency will establish standards and procedures for approval of pilot disclosures to be provided in connection with the provision of a consumer financial product or service.   What about the consumer protection acts? Under the proposed legislation, CFPA would essentially have sole rule-making and enforcement authority over RESPA, TILA, the Home Ownership and Equity Protection Act, the Community Reinvestment Act, the Equal Credit Opportunity Act, the Consumer Leasing Act, the Home Mortgage Disclosure Act, the Fair Debt Collection Practices Act, the Electronic Fund Transfer Act, the Fair Credit Billing Act, the Fair Credit Reporting Act and the Fair and Accurate Credit Transactions Act, the Gramm-Leach-Bliley Act, the Omnibus Appropriations Act as amended by the Credit Card Accountability Act, the Responsibility and Disclosure Act, the Secure and Fair Enforcement for Mortgage Licensing Act and the Truth in Savings Act. The proposed language would amend the RESPA statute to strike the word “Secretary” and replace it with “Agency” to reflect the changeover from the U.S. Department of Housing and Urban Development’s (HUD) oversight of the statute to the CFPA’s. This would mean HUD would no longer be responsible for issuing rules pertaining to RESPA or enforcing them. Full text of HR 3126 Related articles: Treasury proposes bill language for new federal agency Obama proposes new agency to oversee RESPA, TILA Thu, 09 Jul 2009 00:00:00 EST 643E2FAB110F4770942E98BBB4BC303B http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=D429690602DB435C830155D982D9834E One week after President Barack Obama announced his plan for sweeping financial regulatory reform, the House Financial Services Committee held the first in a series of hearings on the several aspects of the proposal. This hearing, “Regulatory Restructuring: Enhancing Consumer Financial Products Regulation,” focused on one of the most ambitious aspects of the President’s proposal, the creation of the Consumer Financial Protection Agency. Committee Chairman Barney Frank , D-Mass., said that he was pleased that the president had proposed a consumer protection agency in his proposal, because consumer protection seemed to have been forgotten about in the current regulatory structure. He also said he plans to mark up legislation establishing the CFPA in July. During the hearing, the committee heard testimony from members of the insurance industry and the banking industry, state regulators and consumer advocacy organizations. Speaking out Members of different sectors of the insurance industry, as well as state insurance regulators were at the hearing to speak out about the CFPA as well as the president’s proposal to have an insurance regulator within the Department of the Treasury. The proposed insurance regulator, the Office of National Insurance (ONI), would be responsible for monitoring all aspects of the insurance industry. It would be charged with gathering information and being responsible for identifying the emergence of any problems or gaps in regulation that could contribute to a future crisis. While members of the insurance industry and its state regulators did not object to the creation of the ONI, they thought insurance products should be exempted from being regulated by the CFPA. “As a state regulator, it is not for me to decide whether a separate agency is necessary for other financial sectors, or whether empowering existing regulators with a consumer protection mandate is the best course of action for those different products,” said Ralph Tyler , Maryland Commissioner of Insurance, on behalf of the National Association of Insurance Commissioners. “What Congress should not do, in our view, is to empower that agency to wade into insurance, an area where strong consumer protections have long been a fundamental tenet of supervision and embedded in our regulatory and legal systems.” Gary Hughes , executive vice president and general counsel for the American Council of Life Insurers, noted that the ONI would be the more appropriate federal agency to coordinate with state functional insurance regulators regarding any issues related to consumer protection. “And in any event, unless and until a federal regulatory body is invested with the authority to act as a functional solvency regulator, the role of any federal body should be advisory only,” Hughes said. Cliff Wilson , speaking on behalf of the National Association of Insurance and Financial Advisors, echoed that sentiment, noting that there is no insurance expertise or regulatory infrastructure within the federal government to support a CFPA. He said that if the federal government assumes insurance product regulatory reform, “it should be part of a comprehensive insurance regulatory reform effort that brings the required insurance expertise to Washington, addresses regulatory overlap with the states, and has the authority to address the full panoply of regulatory issues that arise in connection with the oversight of this critical sector of the economy.” Disclosure, disclosure, disclosure While there was much debate about aspects of the proposed agency, most of the witnesses in attendance did agree on one thing: the need for simplified consumer disclosures. As part of his proposal, Obama is calling for the CFPA to have sole rule-making authority for consumer financial protection statutes as well as the ability to fill gaps through rule-making. These statutes include: RESPA, TILA, the Home Ownership and Equity Protection Act, the Community Reinvestment Act, the Equal Credit Opportunity Act, the Home Mortgage Disclosure Act and the Fair Debt Collection Practices Act. Rep. Bill Delahunt , D-Mass., who spoke as a witness at the hearing, said that he believes that the bill is the first step in getting safe credit in America .   He said that consumers shouldn’t have to understand the complicated nuances of sophisticated financial instruments. “Like with other products that are crucial to a healthy life, like food and medicine, consumers shouldn’t have to worry whether they are being fooled or tricked into buying a subpar product,” Delahunt said. Elizabeth Warren , Leo Gottlieb Professor of Law at Harvard University and Chari of the Congressional Oversight Panel, also emphasized the need for better disclosures, especially in the mortgage market. She said that a survey conducted by the Federal Reserve found that homeowners with adjustable rate mortgages were poorly informed about the terms of their mortgages. She also noted that the Department of Housing and Urban Development (HUD) has concluded that buying a home is “complicated, confusing and costly.” Edward Yingling , speaking on behalf of the American Bankers Association (AB), said that disclosures should be improved. He pointed out that current disclosures are driven by lawyers and the need to cover the legal complexities that are involved and to protect against the threat of litigation, and that bias needs to be overcome. “Simple disclosures, perhaps in combination with the larger ones required for legal purposes, should be made in ways that most benefit consumers,” Yingling said. “Concepts gleaned from behavioral science relating to how consumers really react should be included in disclosure design.” He did voice concern, however, over the fact that the president’s proposal goes beyond simplifying disclosures, to require that all bank communication with consumers be “reasonable,” a term “so vague that no banker would know what to do with it.” While many witnesses and members of the committee believed that enhanced disclosure would be important in protecting consumers, Ellen Seidman , senior fellow at the New America Foundation, said that disclosures tend to be least helpful where they are needed most, when products and features are complex. “The one page disclosure is grate for simple mortgage products, but where there are multiple difficult-to-understand concepts in a single mortgage — indexes and margins, caps on rate increases and on payments, per adjustment and amortization and many different fees — the likelihood is low that any disclosure will enable those for whom these issues really make a difference to understand them,” Seidman said. More from the ABA Yingling is not supportive of the proposed CFPA and said that the banking industry fully supports effective consumer protection, but that creating a new consumer regulatory agency is not the solution to the current economic problems. “There is no shortage of laws designed to protect consumers,” said Yingling. “Making improvements under the existing regulatory structures — particularly aimed at filling the gaps of regulation and supervision of non-bank financial providers — is likely to be quicker and more successful than a separate consumer regulator,” he said. Yingling stressed that regulation aimed at ensuring bank safety and soundness and regulation designed to protect consumers are essentially two sides of the same coin and that an integrated and comprehensive approach to both is preferable. As an example, he pointed to regulations requiring holds on customer deposits, which protect both banks and consumers from fraud and also balance the complex operational issues involved in clearing checks. He said that separating consumer protection from safety and soundness will lead to conflicts, duplication and inconsistent rules.  This would place banks in an untenable position if, for example, the consumer regulator disagrees with the safety and soundness regulator. He noted that the Federal Reserve, Office of Thrift Supervision and Federal Trade Commission all have authority under the Unfair and Deceptive Acts and Practices Act (UDAP), but said that this authority has not been widely used. Yingling suggested that use of this authority would address many of the current issues raised. The House promises to pass the CFPA portion of Obama’s proposal by the end of July. Comments or questions? Contact Kelly McCarel at kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 26 Jun 2009 00:00:00 EST D429690602DB435C830155D982D9834E http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=8929F3FD1A1A4C9AB65CE42D58472E60 Frank Pellegrini testified on behalf of the American Land Title Association (ALTA) before the House Financial Services Subcommittee on Oversight and Investigations Thursday, June 18, telling committee members that the title industry fulfills a critical role in preventing fraud in real estate deals because of the unique vantage point agents have as closers “from which to observe, identify and thwart instances of fraud,” and recommending fundamental changes in the closing process that would assist title agents in strengthening their role in fighting fraud. “We are the independent third party to the transaction whose only interest is to the integrity of the transaction and the protection of our customers,” Pellegrini said. “Through training and experience, we hone our ability to spot improper transactions every day.”   The subcommittee hearing focused on strengthening oversight and preventing fraud in FHA and other Department of Housing and Urban Development (HUD) programs and included testimony from Kenneth M. Donohue Sr ., inspector general, HUD; Kevin Nunnink, chairman, IRR-Residential and chairman, Integra Realty Resources; David Kittle , chairman, Mortgage Bankers Association; Marc Savitt , president, National Association of Mortgage Brokers; and David Berenbaum , executive vice president, National Community Reinvestment Coalition. While much of Pellegrini’s oral testimony focused on steps agents take to thwart fraud at the closing table, ALTA’s written testimony honed in on additional “common-sense” steps that Congress should take to make it easier for agents to spot fraud. “One simple step which Congress can take is to protect a Borrower Right of Inspection by requiring that borrowers be given their closing documents prior to closing to prevent confusion when borrowers are presented with myriad complex forms and are pressured to sign documents that may be incorrect or against their best interests,” he said.   “Unfortunately, consumers often do not see their loan documents until they arrive at the closing and are asked to sign them. Congress should consider requiring that borrowers receive their key closing documents in advance of closing — a consumer protection measure which is strongly supported by HUD.” He explained that under RESPA, consumers currently have the right to request and review closing documents 24 hours before the closing, but said very few borrowers take advantage of this option, nor is there a corresponding requirement that the documents be complete. “In many cases documentation is still being faxed to the closing agent while the borrower is seated at the closing table,” Pellegrini said. “A Borrower Right of Inspection would remedy the plight that borrowers face at settlement and strengthen the remedial disclosure provision of RESPA by giving borrowers 24 hours to review the following closing documents which, with the exception of extenuating circumstances, would be complete and finalized by the lender and settlement agent: the HUD-1 Settlement Statement, the promissory note, mortgage or deed of trust, and the final Truth-in Lending Act disclosure.” The inability to provide borrowers with documents prior to closing has long been a contentious issue between settlement services providers and lender clients, as it forces the closing agent to cobble paperwork together at the last moment, and often causes confusion for the borrower if the final documents do not correspond with their understanding of the terms. “The consumer benefit conferred by the proposal is enormous: borrowers would be able to review the key documents, ask questions, obtain third party counseling and renegotiate terms during this one to two business days before the scheduled settlement,” Pellegrini said. “This would facilitate their understanding of the closing process and help to ensure that they do not enter to an unsuitable loan transaction that leads to non-performance down the road. It would also help prevent mortgage fraud by providing the settlement services provider and the borrower more time to review the documents on which fraud is perpetrated.” Emphasizing the importance of preventing fraud before it happens, Pellegrini noted that ALTA works with the Property Records Industry Association, HUD and law enforcement agencies to actively detect and counteract fraud within the industry. He said that ALTA’s educational subsidiary, the Land Title Institute Inc., has developed a presentation entitled “Ethics in the Title Industry” which will soon become an online course to educate Title Industry professionals about the dangers of mortgage fraud. The course will include specific steps that individuals and companies can take to combat fraud. In addition, the association is developing a mortgage fraud resource center for its Web site as a clearinghouse for the title industry regarding common fraud schemes. The site will include information from the many organizations that combat mortgage fraud including state governments, BITS , MBA, PRIA , MISMO and the FBI. Pellegrini told committee members that ALTA is an “ideal gateway” to stakeholders who can assist other organizations working to detect and prevent mortgage fraud. “Let me conclude by saying that the title industry is well positioned and eager to serve as a resource to combat mortgage fraud,” he said. To read the written testimonials for this hearing, including Frank Pellegrini’s, click here . Comments or questions? Contact Kelly McCarel at kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 18 Jun 2009 00:00:00 EST 8929F3FD1A1A4C9AB65CE42D58472E60 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=46A1D1FE63EA419EAED9F8EFAB5E2440 Amid some confusion and rumors, the Department of Housing and Urban Development (HUD) reconfirmed its plans to make the first time homebuyer tax credit available to some buyers at the time of purchase. The monetization of the tax credit was announced on May 12 during the National Association of Realtors midyear meeting in Washington , D.C, where HUD Secretary Shaun Donovan said the department was working on final details about the plan. Not much else was released, and the next week, The Arizona Republic reported that federal officials decided not to implement the plan. In response, HUD Spokesman Lemar Wooley told the Seattle Post Intelligencer that the rumor was untrue and that HUD plans to continue with the program. Officials are waiting for the details to be finalized, he added. The first-time homebuyer tax credit gives as much as $8,000 to homebuyers who have not owned a home in the last three years. The new plan, Donovan announced, would allow those with federally insured mortgages, such as those under the Federal Housing Administration (FHA) program, to take out a short-term bridge loan to cover the downpayment. This way, borrowers wouldn’t have to wait until they claim the credit on their tax forms to receive the incentive. The tax credit is available for those who close on a house by Dec. 1. If the homebuyer moves out of the house within three years of buying it, the tax credit must be paid back. Tax credit possibilities It’s possible that the $8,000 tax credit could be extended in some way and bring even more first-time homebuyers to the market. Three separate bills were introduced in the House of Representatives to extend the deadline or eligible recipients of the credit, each proposing different terms. One piece of proposed legislation even offers help to those who refinance their loans. HR 2562 would extend the first-time homebuyer tax credit for one year for members of the U.S. armed services serving overseas in 2009. Introduced by Rep. Ron Kind , D-Wis., the bill stipulates that the service members have to serve three months or more to be eligible. For those who are, the deadline for buying a house to qualify for the credit would be extended to Dec. 1, 2010 . HR 2606 proposes to extend the first-time homebuyer tax credit to include homes bought up until Jan. 1, 2011 . Rep. Eddie Bernice Johnson , D-Texas, introduced the bill, which also seeks to eliminate the requirement for repayment of the $7,500 tax credit given for homebuyers who bought in 2008. HR 2619 would extend the tax credit to all buyers, not just first-timers. Introduced by Rep. Kenny Merchant , R-Texas, the bill would extend the eligibility to those who close on a home before July 1, 2010 . In addition, it calls for a credit of as much as $3,000 for costs associated to refinancing loans. The bills were introduced about a week before HUD released the details involving monetization of the tax credit to be used for closing costs on FHA-insured loans. The bills have each been referred to the House Ways and Means Committee. The National Association of Realtors said the bill introductions are a positive step, but so far the association hasn’t endorsed any specific bill. Comments or questions? Contact Kelly McCarel at kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 12 Jun 2009 00:00:00 EST 46A1D1FE63EA419EAED9F8EFAB5E2440 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=132375C938084227A01485FDF90A45F3 During a hearing of the House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises (GSEs), James B. Lockhart III, director of the Federal Housing Finance Agency (FHFA), testified regarding the current condition of Fannie Mae and Freddie Mac and the future of the GSEs. Lockhart started by assuring the subcommittee that the GSEs were playing a vital role in helping to stabilize housing then delved into a discussion about the possible futures of the GSEs and the secondary mortgage market. “The Enterprises and the Federal Home Loan Banks (FHLBanks) are playing a vital role in helping to stabilize housing and the economy today,” he said. “Fannie Mae’s and Freddie Mac’s participation and leading role in the Making Home Affordable Program is extremely important in helping to stabilize the mortgage market and their own books, which encompass 56 percent of single-family mortgages in this county. As markets and the enterprises stabilize, there will be a need to address the complex issues I have outlined in this testimony. It is important to get the restructuring right for the U.S. economy and all present and future American homeowners and renters.” Principles to build on Before laying out the possible futures he saw for the secondary market, he outlined several principles to guide the evaluations of the options. First, Lockhart said that the enterprises or any successors should have a well-defined and internally consistent mission and their activities should be well-tailored to achieving that mission. He pointed out that the GSEs’ current mission, to “promote the stability and liquidity of the secondary mortgage market and support financing for housing that is affordable,” raises several questions, such as, how should the enterprises, or successor institutions, promote market stability and liquidity and how much risk should they bear to promote affordable mortgage lending? The second principle Lockhart said needed to be considered in evaluating possible options is that there should be a clear demarcation of the respective roles of the federal government and the private sector in the secondary mortgage market, and any federal risk-bearing should be provided explicitly and at an actuarial cost. “The old hybrid model of private, for-profit ownership underwritten by an implicit government guarantee allowed the enterprises to become so leveraged that they posed a large systemic risk to the U.S. economy,” Lockhart said. He added that now, Congress and the administration need to think about which roles are best played by the federal government and which roles are best played by the private sector. He also said that any organization that provides credit guarantees or mortgage insurance must be based on sound insurance principles. In looking toward how these enterprises should be regulated, he said that any regulatory and governance structure that is set up needs to ensure risk-taking is prudent. Lockhart also said that housing finance should be subject to supervision that seeks to contain both the riskiness of individual institutions and the systemic risks associated with housing finance. “Our recent experiences have driven home how important safe and sound practices in housing finance are to the stability of the financial system and the U.S. economy,” Lockhart said. “Going forward, we should seek to monitor, understand and prevent or contain the buildup of excessive risk caused by imprudent practices related to housing finance.” Possible ownership structures Lockhart then outlined the three possible ownership structures of the GSEs or successor institutions: government agency, GSE or fully private firms. To create a government agency, Lockhart said, would be equivalent to nationalizing the GSEs. He said he was opposed to nationalizing the GSEs because he felt government insurance programs are particularly high risk and “rife with moral hazard.” He also pointed out that the FHA model is currently being tested. The second alternative would be to keep the enterprises as GSEs, building upon the structural changes provided for in the Housing and Economic Recovery Act (HERA). There are several ways that structure could look: the GSEs could continue with Treasury net worth protection or government reinsurance for catastrophic risk; or the GSEs could establish a cooperative ownership model similar to that of the FHLBanks. The third option Lockhart proposed was to establish purely private-sector firms to supply liquidity to mortgage markets, with or without government catastrophic insurance or reinsurance. He pointed out that even with this structure, the country’s financial system will continue to require a vibrant secondary mortgage market that includes the functions currently performed by the enterprises. Regulatory oversight In terms of the future regulatory environment, Lockhart said he supported a shift to broaden supervisory policies to include the monitoring of systemic risk and the development of regulatory policies that focus on systemic stability. He also told the subcommittee that the FHFA is working on a new approach to mission regulation that is more sensitive to market conditions and better promotes sustainable mortgage options for low- and moderate-income households. “We believe that the enterprises’ approach to meeting the HUD-designated housing goals was ultimately destabilizing,” Lockhart said. “In this context, we urge Congress to consider how best to provide subsidies for lending to targeted borrowers. We believe that the approach taken to funding the FHLBanks’ affordable housing mission, which is essentially a flat tax that finances direct subsidies to targeted borrowers and developments, is more consistent with safety and soundness than is the percent-of-business approach taken with Fannie Mae and Freddie Mac.” Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 04 Jun 2009 00:00:00 EST 132375C938084227A01485FDF90A45F3 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=7B50754D9DEB4FDAAC781F1F7ACA0794 As part of the Obama administration’s effort to create jobs and ease pressures on the housing market, the U.S. Department of the Treasury announced on May 22 that more than $330 million in American Recovery and Reinvestment Act (Recovery Act) funding will be provided to spur the development of affordable housing units in Kansas, Michigan, Ohio, Wisconsin, and Puerto Rico. The Department of Housing and Urban Development (HUD) also announced it is committing $83 million for housing development in Ohio . “In order for the Recovery Act to work as the president and Congress intended, it is essential that funds get out and contribute to job creation as quickly and efficiently as possible,” HUD Secretary Shaun Donovan said. “This announcement illustrates the commitment these agencies, and the administration as a whole, have to ensuring that Recovery Act funds work to jumpstart the economy and housing market.” HUD reported that the labor and housing crises in this country are deeply inter-connected. Since their peak level at the beginning of 2006, housing starts have fallen 80 percent. According to HUD, houses currently under construction are at a 12-year low, down 60 percent from the peak in the first quarter of 2006. “This collapse has led to severe job losses in the residential building and specialty trades sector related to housing, with employment down by nearly one-third — a loss of close to 1 million jobs,” HUD said, noting that such losses not only indicate significant problems in the residential construction sector, but also suggest that the need for affordable housing has obviously risen during the recession. In response, the Treasury Department and HUD have launched two innovative programs that will provide more than $5 billion from the Recovery Act to put people to work building quality, affordable housing for individuals and families affected by the current crisis. The Treasury Department will work with state housing agencies to provide $3 billion in funding to jump start the development or renovation of qualified affordable housing for families across the country. Under this program, after meeting certain eligibility requirements, state housing agencies will receive funding to construct affordable housing developments. The first round of recipients to receive this funding are: Wisconsin ( $115 million), Puerto Rico ($99 million), Michigan ( $78 million), Kansas ( $23 million) and Ohio ($21 million). “The construction and development created by this initiative will help the private sector to create much needed jobs and increase the availability of affordable housing for families around the country,” Treasury Secretary Tim Geithner said. In addition, HUD said it will be awarding $2.25 billion in grants to state housing credit agencies under the Tax Credit Assistance Program program to complete construction of qualified housing developments. This program will ultimately provide affordable housing to at least 35,000 low-income households. Today, HUD announced its first award, providing $83 million to kick-start stalled multifamily developments in Ohio . Submissions from the remaining states, Puerto Rico , and the District of Columbia are due to HUD no later than June 3. The following are examples of specific projects the Treasury funds will support: In Osawatomie , Kan. , the funds will complete construction on an elderly low-income housing project. Earlier this year, developers had to halt construction with three-fourths of the building completed because, as the economy contracted, they could not attract additional investors. The Kansas Housing Resources Corp. anticipates that jobs will be created for plumbers, landscapers, electricians, general contractors and painters. In addition, 24 Osawatomie families will have affordable housing. In Detroit , Mich. , the Michigan State Housing Development Authority expects to fund Across the Park Apartments, a $13 million preservation effort that will restore and modernize a federally assisted development in Detroit . Plans include renovating 200 housing units, including energy efficiency upgrades. The project is expected to create construction jobs and full-time property management jobs. In Canton , Ohio , the housing award fund will allow for construction of Gateway House II, a new 40-unit permanent housing project. The property is currently occupied by a vacant three-story vinyl sided tenement building, which is slated for demolition. The property has ample space around it for parking, green space and recreational activities. The project will provide jobs for contractors, electricians, plumbers, painters, roofers and landscapers. In addition, once complete, the developments will make permanent jobs in property management and maintenance. The Recovery Act was signed into law on Feb. 17. Comments or questions? Contact Kelly McCarel at kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 29 May 2009 00:00:00 EST 7B50754D9DEB4FDAAC781F1F7ACA0794 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=7C1D46B7644B43E2A4F1934D5A02D774 On May 20, President Barack Obama signed into law the Helping Families Save Their Homes Act of 2009. The law expands the reach of the administration’s Making Home Affordable Programs, improves the Federal Housing Administration’s (FHA) Hope for Homeowners program and streamlines how the U.S. Department of Housing and Urban Development (HUD) supports thousands of homeless support programs across America. “This is another critical step forward in this administration’s effort to strengthen our nation’s housing market and help millions of American homeowners stay in their homes,” HUD Secretary Shaun Donovan said. According to a White House report, by reducing foreclosures around the country, the average homeowner could see their house price bolstered by as much as $6,000 as a result of this plan, and as many as 9 million homeowners could get help making their mortgages affordable and avoid preventable foreclosures. The bill is also designed to make help easier to access and take advantage of, help get credit flowing again, establish protections for renters living in foreclosed homes and establish the right of a homeowner to know who owns their mortgage. It also provides $2.2 billion to address homelessness. Moments prior to signing the bill, Obama made the following statement: “Last summer, Congress passed the HOPE for Homeowners Act to help families who found themselves ‘underwater’ as a result of declining home values — families who owed more on their mortgages than their homes are worth. But too many administrative and technical hurdles made it very difficult to navigate, and most borrowers didn’t even bother to try. “This bill removes those hurdles, getting folks into sustainable and affordable mortgages and more importantly, keeping them in their homes. And it expands the reach of our existing housing plan for homeowners with FHA or USDA rural housing loans, providing them with new opportunities to modify or refinance their mortgages to more affordable levels.” Donovan commented on how the bill will improve the FHA’s Hope for Homeowners Program, noting that it will make it a more flexible and attractive option for homeowners and lenders. “By reducing the cost of this program and easing the eligibility requirements, we believe Hope for Homeowners is better able to help struggling families,” he said. “The law also permits FHA lenders to offer families more substantial loan modifications, similar to those currently provided under the Making Home Affordable program. Donovan added that with this law, the FHA will have more authority to keep “bad actors” out of the FHA programs and provide additional enforcement tools to police those lenders who employ false or misleading marketing tactics. John Courson , president and CEO of the Mortgage Bankers Association (MBA), was pleased with the new law. “The Helping Families Save Their Home Act, among other things, will make vital changes to the Hope for Homeowners program for which MBA has long been advocating,” Courson said. "The bill also serves to implement modest but important servicer liability protections to ensure a more efficient process for assisting troubled borrowers.” Obama noted that a plan is only as effective as the number of people who take advantage of it and is urging Americans who think they might benefit from refinancing to visit MakingHomeAffordable.gov to determine their eligibility. Obama also signed into law, on May 20, the Fraud Enforcement and Recovery Act, designed to give the federal government more tools to crack down on mortgage fraud. According to a White House report, the law expands the Department of Justice’s (DOJ) ability to prosecute at virtually every step of the process “from predatory lending on Main Street to the manipulation on Wall Street.” It also creates a bipartisan Financial Crisis Inquiry Commission to investigate sour financial practices that have compounded the housing crisis. Courson said he shares Obama’s concerns about the rapid rise in mortgage fraud scams and believes increased enforcement and better communication is key in addressing this growing problem. “This bill includes $245 million for law enforcement to crack down on financial fraud, including foreclosure rescue fraud, which is imperative in protecting vulnerable consumers as well as protecting the integrity of our housing finance system,” Courson commented. Before signing the bill, president Obama made the following statement: “Last year, the Treasury Department received 62,000 reports of mortgage fraud — more than 5,000 each month. The number of criminal mortgage fraud investigations opened by the FBI has more than doubled over the past three years. And yet, the federal government’s ability to investigate and prosecute these frauds is severely hindered by outdated laws and a lack of resources. “And that’s why this bill nearly doubles the FBI’s mortgage and financial fraud program, allowing it to better target fraud in hard-hit areas. That’s why it provides the resources necessary for other law enforcement and federal agencies, from the Department of Justice (DOJ) to the Securities and Exchange Commission to the Secret Service, to pursue these criminals, bring them to justice, and protect hardworking Americans affected most by these crimes.  It’s also why it expands DOJ’s authority to prosecute fraud that takes place in many of the private institutions not covered under current federal bank fraud criminal statutes — institutions where more than half of all subprime mortgages came from as recently as four years ago.” Each bill was passed by overwhelmingly bipartisan majorities. The White House has prepared a fact sheet for further information on the bills. “I know my administration will be judged by various markers. But there’s only one measure of progress that matters to me, and that’s the progress that the American people see in their own lives, day to day, because right now, despite progress, too many Americans are hurting,” Obama commented and added that the two laws, together with the credit card reforms he hopes to sign this week, represent fundamental change. "I think it’s important for people to understand the significance of this week. This has been one of the most productive Congressional work periods in some time,” he said. Questions or comments? Contact Kelly McCarel at kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 21 May 2009 00:00:00 EST 7C1D46B7644B43E2A4F1934D5A02D774 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=63C9CB2CF93E4EB8AF79AA15DDCF982A The long-awaited answer from the U.S. Department of Housing and Urban Development (HUD) on whether or not it will withdraw the RESPA final rule, issued under the Bush administration in November 2008, came to an end this week, when HUD Secretary Shaun Donovan announced HUD is moving forward with it, minus the “required use” provision. Donovan spoke of HUD’s position on the rule to attendees at the National Association of Realtors’ (NAR) Real Estate Summit in Washington , D.C. on May 12, saying that HUD will implement the new RESPA rules as part of broader reforms to the mortgage process that includes ensuring that RESPA and the Truth in Lending Act (TILA) are coordinated. Lining the new RESPA rule with TILA has been a topic of large concern among many in the industry, especially bankers, who feel they are being overly burdened with new regulations. An amendment has been included in HR 1728, the Mortgage Reform and Anti-Predatory Lending Act, urging HUD to withdraw the rule. The bill has been passed by the House and now sits in the Senate for consideration. Given Donovan’s recent announcement supporting the final rule and his message to NAR, however, it is not likely HUD will consider this amendment if HR 1728 is passed. “…we are committed to implementing the mortgage reforms under RESPA that are scheduled to take full effect on January 1, 2010 ,” said Donovan. “This administration believes in providing consumers with clear and transparent information when they make the biggest purchase of their lives.” Donovan told NAR members the reasoning behind his support of the rule is that many families have been vulnerable to aggressive and misleading marketing of risky loan products and foreclosure rescue scams that are not in their best interest. He claims the updated RESPA rules will help consumers shop for the lowest cost mortgage, avoid costly and potentially harmful loan offers and save an average of $700 per loan transaction. Donovan noted that President Obama is committed to providing the funds necessary for helping consumers shop effectively and safely for homes and mortgages. He also recognized the current confusion that exists in understanding how to implement and how to use the new Good Faith Estimate and HUD-1 forms and promised clarity from HUD. “HUD is committed to working with you to answer your questions and make the implementation of the new RESPA rules as clear as possible,” he said. Donovan also spoke to NAR members about the required use provision of the RESPA final rule. He agreed with the opposition that the way the provision was drafted was confusing and flawed, and neither protected consumers nor provided needed guidance to industry participants. “Therefore, after an evaluation of more than 1,200 public comments, HUD is withdrawing the new ‘required use’ definition and announcing our intent to propose revised language relating to this narrow provision of the final RESPA rule,” he said. Donovan noted that the existing required use provision will remain in place. He also alluded to his belief that there are ways to make our current system simpler and more transparent that can benefit consumers, financial institutions and the real estate industry. “Obviously, as we look forward into the future, we must examine all of the factors in the housing industry that led us into this crisis in the first place — RESPA included,” he said. In addition to RESPA, Donovan presented attendees with an update on President Barack Obama’s housing plan, Making Home Affordable, the first-time homebuyers’ tax credit and its potential impact of stimulating 160,000 home sales nationwide and the recent Federal Housing Administration’s announcement to allow access to the tax credit in order for homebuyers to use it as a downpayment. He also talked of the viability of the FHA and its desperate need for change and said HUD views FHA reform as a key to changing the way that HUD does business. “In this budget year and into the future, we will work with Congress to make sure that FHA has the right program mix and pricing structure, is actuarially sound, and has the organizational infrastructure to continue to expand homeownership opportunities to those families traditionally not well served by the private market place,” Donovan said. “FHA’s market share — which was at just 1.9 percent in the fourth quarter of 2006 and reached 23.7 percent in the fourth quarter of 2008 — means that we must continue to ensure that FHA can play its critically important countercyclical role, serving as a backstop to the private mortgage market.” Donovan said HUD is looking to the realty community to help boost consumer confidence while the Obama administration works aggressively to improve housing. “As realtors, you play a unique role in your communities as counselors to American families looking to buy or sell their homes. You have your fingers on the pulse of the national real estate market, and you have the ability to spread important information to your clients about Making Home Affordable, mortgage and foreclosure counseling, and the positive trends in the market that we’re starting to see.” The theme of the week-long summit, which concludes May 16, is “Advancing the U.S. Economy.” Donovan said the theme is very much in line with the Obama administration’s philosophy. Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 14 May 2009 00:00:00 EST 63C9CB2CF93E4EB8AF79AA15DDCF982A http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=8A8F340DA2A94D8D81575394EBE0A985 In a press conference on May 7, Shaun Donovan , secretary for the U.S. Department of Housing and Urban Development (HUD), told reporters that the goal of developing this year’s budget was to cut or consolidate HUD programs that don’t work and invest in programs that do work. “The HUD budget will put in place systemic reform and policy innovation, and harness private sector capital and talent as well as new kinds of partnership and collaboration to respond to the nation’s housing crisis, address new national priorities and change the way HUD does business,” said Donovan. The proposed budget has been increased from last year to allow it to effectively respond to the housing crisis through new efforts to strengthen the Federal Housing Administration (FHA), curb mortgage abuse and predatory practices, and increase counseling for homeowners at risk of foreclosure. Donovan noted HUD will not be asking taxpayers to support FHA’s single family program in the 2010 budget, and the budget is set up to help HUD shape new markets and methods in the production and preservation of affordable housing, the “greening” of residential housing, the regeneration of high poverty neighborhoods and the promotion of sustainable growth. The $46.344 billion budget represents a 10.8 percent increase over HUD’s fiscal year 2009 budget of $41.833 billion. In the proposed budget, HUD is requesting $37 million for an agency-wide initiative to combat mortgage fraud and predatory practices. Within this $37 million, HUD is requesting $4 million be allocated to hiring additional staff to address abusive and fraudulent mortgage practices and increase enforcement of mortgage and home purchase settlement requirements. Under this initiative, staff would be added to strengthen RESPA enforcement, among other efforts. The National Association of Realtors (NAR) was pleased with the budget increase. “The extra funding will allow HUD and its agency, FHA, to fulfill its mission of increasing homeownership, supporting innovative and sustainable community development and increasing access to affordable housing,” NAR said. NAR President Charles McMillan noted that the FHA is the “workhorse of the administration’s housing and economic recovery efforts” and the FHA continues to fund its programs by the mortgage insurance premiums it collects. “At a time when many financial institutions are requiring assistance from the federal government, FHA continues to play a significant role in the recovery of the U.S. economy at no actuarial expense to the American taxpayer,” McMillan added. “It does not rely on taxpayer dollars and does not add risk to our nation’s financial infrastructure.” Highlights from HUD's fiscal year 2010 budget include: FHA’s single family program will generate sufficient revenues from new insurance premiums without requiring any taxpayer assistance. Meanwhile investments in FHA will help cut fraud and abuse. The budget will make targeted investments to help rebuild the economy through reinvigorating housing construction for low- and moderate-income families by infusing the Affordable Housing Trust with $1 billion in capital. A new $250 million Choice Neighborhoods Initiative will build on the lessons of HOPE VI and revitalize high poverty neighborhoods through transformative investments in distressed public and assisted housing and closer linkages with school reform and early childhood interventions. To address those families struggling during the economic crisis, the budget will provide targeted increased funding for Section 8 tenant based rental vouchers, enabling HUD to assist more families than ever before. The budget couples a $550 million increase in funding for the Community Development Block Grant program, updating a formula that is more than 30 years old. The budget also makes targeted investments in energy innovation. A new Transformation Initiative will generate programmatic savings through rigorous evaluation and technology investments. “We went line by line, to see where we could cut spending in order to invest in effective programs that contribute to our nation’s long term economic growth and recovery,” said Secretary Donovan. “This budget addresses the nation’s current housing crisis by finding savings and making targeted investments to help grow the economy and keep people in their homes. I look forward to the consideration and approval of this budget in Congress.” Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 08 May 2009 00:00:00 EST 8A8F340DA2A94D8D81575394EBE0A985 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=34FF74ED5D344ED68C2593C01D3D3AF7 Secretary Shaun Donovan , of the U.S. Department of Housing and Urban Development, made an appearance Wednesday at the Mortgage Bankers Association’s National Policy Conference in Washington, D.C., addressing attendees in a positive nature regarding HUD’s action plans to improve the housing situation. John Courson , president and CEO of the Mortgage Bankers Association, met with Donovan earlier in the week to discuss the challenges facing the mortgage industry and how HUD and the MBA can work together to stabilize the market and work toward a firmer economy. Donovan addressed a number of initiatives, including the Obama administration’s recovery package and its Making Home Affordable program, HUD’s immediate actions to improve the housing situation and the agency’s vision for the Federal Housing Administration (FHA). “While we are without a doubt in a crisis, I know that together we can be partners in finding and implementing solutions that will help American families struggling to stay in their homes and thereby help you,” Donovan said. Donovan’s view of FHA The MBA, as well as others, have been concerned about the viability of the FHA. Acknowledging this, Donovan offered some insight into its role. “No part of HUD is more central and important to our national effort to promote affordable homeownership than the Federal Housing Administration, and I am committed to making FHA as responsive to market demands as it was when it was founded,” Donovan commented. The FHA serves as a backstop to the private mortgage market, and according to Donovan, will continue to make mortgage credit available to borrowers, even during hard times when private mortgage providers withdraw from the market. “During difficult times, it is critically important to have an entity like FHA play this role — offering families access to near-prime rate financing,” he said. He expressed that now more than ever, because of the collapse of global credit markets, the FHA, Fannie Mae and Freddie Mac must continue to work with strong and well-managed private sector entities to expand access to mortgage credit in the market. “In particular, FHA’s role has grown substantially from 3 percent of lending activity by dollar volume in 2006 to approximately 30 percent of all mortgages originated today,” noted Donovan. “At HUD, we must continue efforts to identify both the existing strengths and weaknesses of FHA, to work with Congress to make sure that FHA has the right program mix and pricing structure, is actuarially sound and has the organizational infrastructure to continue to expand homeownership opportunities to those families traditionally not well served by the private market place.” With the FHA’s role so important, Donovan said he is supportive of President Barack Obama’s decision to nominate David Stevens , president and CEO of Long & Foster Cos., for assistant secretary for Housing and Federal Housing Commissioner at HUD. Stevens’s nomination is pending due to Congress investigating a class action lawsuit brought against his company. “I believe that Dave is one of the best in the mortgage business with experience ranging from mortgage originations, to secondary markets, to managing a national real estate firm,” Donovan commented. “Dave brings a hands-on systems approach to mortgage origination, and is anxious to see first-hand the status of FHA’s systems and programs and to quickly put in place process and technology improvements in all facets of FHA’s operations. Donovan also envisions Stevens becoming an important partner with the MBA in driving energy efficiency and achieving savings that will make it possible for average American families to weatherize their homes. Making Home Affordable According to Donovan, Making Home Affordable will help 7 to 9 million homeowners stay in their homes. It targets working homeowners who have made every possible effort to stay current on their mortgage payments. “Making Home Affordable helps American homeowners in three ways. First, we are protecting housing opportunities for all Americans by taking action administration-wide to reduce interest rates, which are now at historic lows. Second, we will assist 4 to 5 million homeowners who can’t otherwise take advantage of today’s historically low mortgage interest rates. Lastly, we have committed up to $75 billion to help an additional 3 to 4 million homeowners who are at risk of foreclosure modify their unaffordable mortgages into affordable ones,” Donovan said. He shared some results of the plan since it was put into place. According to Donovan, rates on 30-year mortgages have dropped to an all-time low of 4.78 percent and refinancing applications are up to 88 percent. Fannie Mae refinanced $77 billion in mortgages in March, nearly twice the February amount, and their highest volume in one month since 2003. In addition, Donovan said over 500,000 borrowers have accessed Fannie Mae online to learn about refinancing and Fannie Mae is now processing applications to complete refinancing for eligible borrowers. He added that the Making Home Affordable Web site has received an impressive 11.2 million page views. Donovan also spoke of the Second Lien Program, just announced this week by the U.S. Treasury and HUD.   According to Donovan, up to 50 percent of at-risk mortgages have second liens, and many properties in foreclosure have more than one lien. “Under the Second Lien Program, when a Home Affordable Modification is initiated on a first lien, servicers participating in the Second Lien Program will automatically reduce payments on the associated second lien according to a pre-set protocol,” Donovan explained. “Alternatively, servicers will have the option to extinguish the second lien in return for a lump sum payment under a pre-set formula determined by Treasury.” On another note, Donovan recognized the fundamental disagreements HUD holds with the MBA regarding bankruptcy reform, another part of Obama’s plan to address the housing crisis. With this in mind, Donovan alluded to the notion that although disagreements exist, there are clearly areas that HUD and the MBA do agree on and he looks forward to furthering discourse on all areas relating to the housing crisis and Obama’s response to it. Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 01 May 2009 00:00:00 EST 34FF74ED5D344ED68C2593C01D3D3AF7 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=2B45012A4BF547269C5FC510390CE9F3 The House Committee on Financial Services convened on April 23 for a hearing that involved a multitude of witness testimony over H.R. 1728 , the Mortgage Reform and Anti-Predatory Lending Act of 2009. In his opening remarks, Rep. Paul E. Kanjorski , D-Pa., said at this point, he looks to the witnesses to offer suggestions on perfecting the bill rather than hearing more complaints about it. The Mortgage Bankers Association (MBA) did just that with its Mortgage Improvement and Regulation Act (MIRA). David G. Kittle , chairman of the MBA said although they “applaud the comprehensive nature of H.R. 1728 and believe legislation in this area is needed,” the association has several concerns. Kittle pointed to MIRA as an alternative and better approach (see MBA proposes mortgage lending legislation ). Kittle believes MIRA solves the issue of “establishing a national standard for mortgage lending that replaces the uneven patchwork of state mortgage lending laws, by preempting state laws, while still providing a pivotal role for state regulators.” Furthermore, Kittle urged the committee to redefine the term “qualified mortgages” to provide more flexible standards that will still protect borrowers, and to clarify the prohibitions against steering. He also warned the committee that the overall mortgage process should be made more understandable for consumers. “H.R. 1728 does little to achieve this result,” said Kittle. “The bill should call upon the Department of Housing and Urban Development to withdraw its RESPA rule and join with the Federal Reserve to truly simplify the mortgage disclosures.” Kittle offered the MBA’s solution of noting that the association has already “worked with industry experts to develop forms that would satisfy RESPA and TILA requirements.” “These forms, which we would be happy to share with the committee, can serve as a basis for a new, much more comprehensive effort,” said Kittle. Others testifying included regulators, consumer group leaders and a number of representatives from industry-related trade associations. The bill has been referred to as the Miller-Watt-Frank bill, after its sponsors, Reps. Brad Miller , D-N.C., Mel Watt , D-N.C., and Barney Frank , D-Mass., and was introduced in an attempt to curb predatory lending practices. "This bill represents an important step toward preventing the predatory and questionable practices that took hold of the mortgage lending industry in the past several years and undoubtedly contributed to our current housing crisis,” Watt said. “Mortgage lending reform is a vital piece of the Congressional effort to prevent a future financial services disaster of this scale.” The bill would update RESPA to create new safeguards for borrowers, including detailing when the servicer can impose force-placed hazard insurance, mandating swifter responses to consumer written inquiries, increasing penalties for abuses and requiring the prompt crediting of payments. The bill would also ban yield spread premiums and other compensation that could cause mortgage originators to steer applicants toward more costly mortgages from all mortgage loans. The total direct and indirect compensation given to mortgage originators from all permitted sources would not be able to vary with the terms of the mortgage loan. Stay tuned to RESPA News for more on this bill and what other associations are saying about it. Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 24 Apr 2009 00:00:00 EST 2B45012A4BF547269C5FC510390CE9F3 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=0936982BD0F643FA8F379229D574E6B5 On April 10, President Barack Obama announced his intent to add another key staff member to the U.S. Department of Housing and Urban Development (HUD). If approved, Sandra Henriquez , chief of public housing for Boston , Mass. , will become assistant secretary for HUD’s Public and Indian Housing Office. Henriquez assumed her duties as the administrator and CEO of the Boston Housing Authority in April 1996. She is the chief of public housing for Boston , which is a Cabinet position within the administration of Mayor Thomas M. Menino . She previously served at the Boston Housing Authority in various capacities from 1977 to 1983. She returned to public housing after 10 years as a Principal of Maloney Properties Inc., a full service real estate property management firm specializing in the delivery of services to resident-controlled and nonprofit sponsored housing. Prior to her time with Maloney Properties, she served as the director of housing management and tenant services for the Commonwealth of Massachusetts ’ Department of Housing and Community Development. Henriquez is a director of the Council of Large Public Housing Authorities. She is the immediate past chair of the YWCA Boston board of directors, served as a trustee for nine years, and is now an honorary trustee of the New England Baptist Hospital . Henriquez also sits on the buildings and grounds committee and participates in the compensation committee. In addition, she serves as director of the Massachusetts-based Citizens Housing and Planning Association. The Rental Housing Association of the Greater Boston Real Estate Board honored her in 2000 with the Excellence in Public Service Award. In 1997, she received the Abigail Adams Award from the Massachusetts Women’s Political Caucus and was recognized by Banker & Tradesman as a “Leader Making A Difference.” Henriquez was also named Executive Director of the Year in 2002 by the National Organization of African Americans in Housing. In addition to Henriquez, Obama also tapped the following individuals for key administration posts: Larry EchoHawk , assistant secretary for Indian Affairs, Department of the Interior; Thomas McClellan , deputy director, Office of National Drug Control Policy; and John Porcari , deputy secretary, Department of Transportation. “Our success in rebuilding America and laying the groundwork for a safer, more prosperous future depends in no small part on the talent, expertise and dedication of public servants like these men and women,” said Obama. “I am confident that each of them will meet and exceed the high standard that the American people expect and deserve.” Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 16 Apr 2009 00:00:00 EST 0936982BD0F643FA8F379229D574E6B5 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=E8A83E5B734B468C9F105C2E0A006EE7 As homeowners and communities throughout the country continue to face devastating consequences from the down economy and housing market, the Obama administration recently announced a new coordinated effort across federal and state government and the private sector to target mortgage loan modification fraud and foreclosure rescue scams. The new effort, announced April 6, aligns responses from federal law enforcement agencies, state investigators and prosecutors, civil enforcement authorities and the private sector to protect homeowners seeking assistance under Obama’s Making Home Affordable program from criminal actors looking to perpetrate predatory schemes. The Department of Housing and Urban Development (HUD), U.S. Department of the Treasury, U.S. Department of Justice (DOJ), Federal Trade Commission (FTC) and the Attorney General of Illinois discussed new initiatives to coordinate information and resources across agencies to maximize targeting and efficiency in fraud investigations, alert financial institutions to emerging schemes, step up enforcement actions and educate consumers to help those in financial trouble avoid becoming the victims of a loan modification or foreclosure rescue scam. The Making Home Affordable program, launched earlier this year, is designed to help eligible homeowners refinance or modify their mortgages to lower their monthly payments and make their mortgages affordable now and in the future — an opportunity for relief that unfortunately also brings greater opportunity for criminal actors to prey upon consumers seeking assistance, according to HUD. Bolstering new outreach efforts to protect homeowners against fraud, HUD Secretary Shaun Donovan announced that HUD would begin distributing literature to all of its housing partners — HUD field offices and staff, housing authorities, state and local agencies, and non-profit organizations — warning consumers nationwide about loan modification fraud. “We have families on the edge of foreclosure that are being offered things that are too good to be true, and we will take every measure we can to educate and protect consumers and homeowners, bring these scams to light, and work to prevent con artists from exploiting the housing crisis,” said Donovan. “There are legitimate people, places, and agencies that American families can turn to when they are facing foreclosure, starting with www.MakingHomeAffordable.gov and the Homeowner’s HOPE Hotline at (888) 995-HOPE for free foreclosure counseling assistance.” The FTC recently surveyed online and print advertising for mortgage foreclosure rescue operations nationwide and identified approximately 71 companies running suspicious ads. The Treasury’s Financial Crimes Enforcement Network (FinCEN) also conducted recent studies on mortgage fraud and found that between July 2002 and June 2008, depository institutions filed nearly 180,000 mortgage fraud suspicious activity reports, with those involved in mortgage fraud often involved in other types of crime as well. “The administration’s Making Home Affordable program is a critical piece of our efforts to stabilize the financial system and ensure that it works with our efforts to grow the economy,” said Treasury Secretary Tim Geithner . “American homeowners desperately need the relief this program offers, but the very last thing they need is to be taken advantage of as they try to hold on to their homes. This administration is deeply committed not just to providing at-risk homeowners with assistance but also to cracking down on anyone who seeks to defraud them.” According to attorney Herman Thordsen of Santa Ana , Calif. , federal officials are currently investigating 2,100 companies they believe are taking advantage of home owners in foreclosure. Headlines we have seen this week include: “In Illionois, two Chicago companies sued for false promises on loan modifications in addition to 24 others,” and “Twenty-four individuals in San Diego, Calif. indicted for mortgage fraud, over 220 properties costing $100 million plus.” On the state level, more than 150 enforcement actions have been brought against mortgage rescue companies. “Struggling homeowners need to know that free help is available,” said Lisa Madigan , Illinois attorney general. “The 24 lawsuits I have filed prove foreclosure rescue operators don’t help. They don’t call your lender, they don’t modify your loan, and they don’t represent you in court if you’re in foreclosure. All they do is take your money.” As part of the multi-agency effort, Attorney General Eric Holder outlined ways in which the DOJ has been cracking down on mortgage fraud schemes, including several successful convictions of scam artists in recent months. “For millions of Americans, the dream of home ownership has become a nightmare because of the unscrupulous actions of individuals and companies who exploit the misfortune of others,” Holder said. “The Department of Justice’s message is simple: If you discriminate against borrowers or prey on vulnerable homeowners with fraudulent mortgage schemes, we will find you, and we will punish you.” On the civil enforcement side, the FTC has filed five new cases to halt the illegal practices of individuals and companies offering loan modification or foreclosure scams — including one company that spent $9 million dollars on TV and radio ads in less than one year. Under the new campaign, several private sector national loan servicers, including Chase Home Finance, Suntrust Mortgage, GMAC Mortgage and American Home Mortgage Servicing, are distributing FTC consumer alerts that provide consumers with tips for avoiding mortgage relief scams and direct them to free, legitimate counseling services for at-risk homeowners. The servicers will distribute the materials in monthly statements, in correspondence to delinquent borrowers, in counseling sessions, and on their Web sites. “By combining our powers, state and federal authorities are sending a clear message to these mortgage rescue scammers: It is not a question of if we’ll come after you; it is only a question of when,” said Madigan. Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 10 Apr 2009 00:00:00 EST E8A83E5B734B468C9F105C2E0A006EE7 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=43617A8878284132BBB2F0A41828B709 Shaun Donovan , secretary, Department of Housing and Urban Development, told a Senate appropriations subcommittee on April 2 that the Federal Housing Administration (FHA) needs additional resources to ensure FHA can continue to meet the needs of underserved borrowers during the current mortgage crisis. Donovan emphasized that every effort is being made to reduce risk and confront fraud in FHA’s single-family mortgage insurance programs. “For FHA to realize its full potential to respond to the current mortgage crisis, it will require additional resources and development of new and innovative reform initiatives,” said Donovan. “The recent mortgage market meltdown has provided ample evidence that we must work to rethink each and every aspect of the nation’s housing finance system.” In addition to the agency’s normal lender monitoring procedures, Donovan said FHA plans to increase unannounced on-site inspections of lenders to further reduce the risk of fraud. In FHA’s mortgagee letter, lenders are reminded that HUD expects a strict adherence to FHA’s underwriting standards to ensure lenders: Implement and maintain a comprehensive quality control plan, Review all loans with early payment defaults, Do not engage in false or misrepresentative advertising, Fully document the stability and amount of the borrower’s income and Do not charge excessive and unallowable fees to the borrower. Donovan asked Congress to appropriate additional funds next year to allow FHA to hire more staff to handle the tremendous surge in loan activity. According to Dow Jones Newswires , Donovan said this year, HUD received $12.7 million in additional funds for the FHA and is using the money to hire an extra 200 people. FHA’s role has grown substantially from 3 percent of lending activity in 2006 to approximately 30 percent of all mortgages originated today. Donovan said while FHA is currently handling this increased loan volume and managing the accompanying risk, he cautioned about the challenges facing the mortgage insurance fund. “Like many federal domestic agencies, FHA has suffered under the penny-wise and pound foolish priorities of the previous administration,” Donovan said. “FHA was stagnant, limiting its ability to maintain adequate staffing levels and invest in state-of-the art technology. Repeated budget stalemates and resulting uncertainty of future funding levels undermined the ability to implement long-term organizational improvements." The National Association of Realtors (NAR) also spoke at the hearing in favor of ramping up resources for the FHA. “We believe that FHA has done a good job stepping up to today’s market challenges. However, along with the dramatic growth in market share, comes greater responsibility and the need for increased infrastructure and staff,” said Lennox Scott , a member of NAR’s Real Estate Services Advisory Board and chairman and CEO of John L. Scott Real Estate in Bellevue, Wash. In his testimony, Scott shared NAR’s belief in the importance of FHA and concern for the safety and soundness of its programs due to its dramatic growth over a short period of time. Scott suggested a number of FHA improvements for maintaining safe and affordable FHA loan products. These improvements include investment in staff and technology improvements; increased oversight and risk management; technical correction to help implement FHA programs; and monetizing the $8,000 first-time home buyer tax credit to allow buyers to apply it toward downpayment requirements. “FHA is now a principal source of financing for millions of America ’s families, and without it, the economic crisis would be significantly prolonged,” said Scott. “This is why it is so important to invest in FHA improvements and advancements.” Other witnesses at the hearing included: Hon. Kenneth M. Donohue, Sr. , inspector general at HUD, and Mia Vermillion , senior loan consultant of Guild Mortgage in Lakewood , Wash. Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 02 Apr 2009 00:00:00 EST 43617A8878284132BBB2F0A41828B709 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=AA290FDF8E8F401E8DF06C626216DA12 Treasury Secretary Timothy Geithner unveiled a plan on Monday to get toxic assets off of banks’ balance sheets, the Public-Private Investment Program. He said it is expected to generate $500 billion in purchasing power to buy up these toxic assets. To do this, the Treasury will use $75 to $100 billion in TARP capital as well as capital from private investors to buy these assets from the banks. The Federal Reserve and the Federal Deposit Insurance Corp. will provide the financing for the deals. Under the plan, the government and private investors will invest together to buy up between $500 billion and $1 trillion worth of real estate-related loans and securities from banks. The hope is that instead of hoarding cash in case those assets continue to lose value, the banks instead will be able to resume lending money once the toxic assets are off their books. The government and private investors will hold the assets for the long term and stand to either make or lose money depending on how the economy does. "The goal of this program is to restart the market for legacy securities, allowing banks and other financial institutions to free up capital and stimulate the extension of new credit," the Treasury said in a news release. Private-sector participants will compete to establish a price for these assets. Geithner said he expects a broad array of investors to participate in the program. The process for purchasing these assets would start with the banks identifying assets they wish to sell. The FDIC will then conduct an analysis to determine the amount of funding it is willing to guarantee. Leverage will not exceed a 6-to-1 debt-to-equity ratio. Assets eligible for purchase will be determined by the participating banks, their primary regulators, the FDIC and Treasury. Financial institutions of all sizes will be eligible to sell assets. The FDIC will then conduct an auction for these pools of loans. The highest bidder will have access to the Public-Private Investment Program to fund 50 percent of the equity requirement of their purchase. IF the seller accepts the purchase price, the buyer would receive financing by issuing debt guaranteed by the FDIC. The FDIC-guaranteed debt would be collateralized by the purchased assets and the FDIC would receive a fee in return for its guarantee. After the sale is complete, the private fund managers will control and manage the assets until final liquidation. In a statement released by President Obama on Monday, he said that this program is one more element that will be critical to getting credit flowing again. He pointed out that it was not going to happen overnight, but that working with the Federal Reserve, the FDIC and other relevant institutions, “we’re also going to be in a position to design the regulatory authorities that are necessary to prevent this kind of systemic crisis from happening again.” Sen. Christopher Dodd , D-Conn., chairman of the Senate Committee on Banking, Housing and Urban Affairs also showed his support for the program. “In order to turn this economy around and help families in Connecticut and across the nation get back on their feet, we must end the rising number of foreclosures, unfreeze our credit markets and stabilize the banking sector,” Dodd said.  “The Obama Administration has already recognized that the root cause of our problem is the housing crisis, and is working with Congress to help American families keep their homes.  The initiative announced today, designed to relieve banks of troubled assets to renew the flow of credit to families and small businesses, is an important step forward.  I look forward to working with the President on this effort to get the economy back on track.” Wall Street also showed its approval for the program. According to a report in The New York Times , on Monday the Dow Jones industrial average ended up nearly 500 points. Others were more skeptical about how this program would actually play out. An article in the Wall Street Journal agreed that this was not the worst idea the government has had, but that a Resolution Trust Corp. may have been a simpler, more transparent way to get these assets off the books. The article pointed out several obstacles the Treasury would have to overcome in order for the plan to be successful. Treasury will, first off, have to attract private investors who will have to accept the government as a partner in this venture. What will happen, the article pointed out, if these purchases pay off in significant profits? Will Congress decide to take that money back from them? The Wall Street Journal also pointed out that banks may not sell enough toxic assets to make a difference. It stated that bigger banks might be willing to do this, but it would be harder to convince weaker banks, who may worry that taking losses on these assets will weaken them further. Paul Krugman , OP-ED columnist for The New York Times , was less optimistic in a column he wrote earlier this week. He said that the Obama administration, like the Bush administration, is looking for an easy way out instead of guaranteeing debts and taking temporary control of insolvent banks. He said the program is an indirect way of subsidizing bad assets. Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks.   Thu, 26 Mar 2009 00:00:00 EST AA290FDF8E8F401E8DF06C626216DA12 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=38A5B771ECBD4118AC345E9E887802D5 Two agency leaders joined forces in front of the U.S. House of Representatives Appropriations Subcommittee on Transportation and Housing in a hearing on March 18 to lay out their integration plans intended to decrease housing and transportation costs for American families, as well as support efforts in “green” building that could inch the nation closer toward President Barack Obama’s energy independence goal. Shaun Donovan , secretary, U.S. Department of Housing and Urban Development (HUD), and Ray LaHood , secretary, U.S. Department of Transportation (DOT) announced their new partnership to help American families gain better access to affordable housing, more transportation options and lower transportation costs. According to HUD, the average working American family spends nearly 60 percent of its budget on housing and transportation costs. The united mission between Donovan and LaHood has been established to find ways to cut these costs by focusing their efforts on creating affordable and sustainable communities. “This partnership will help expand every American family’s choices for affordable housing and transportation,” said Donovan. “HUD’s central mission — ensuring that every American has access to decent, affordable housing — can be achieved only in context of the housing, transportation and energy costs and choices that American families experience each day.” HUD and DOT are aiming to provide: more choices for affordable housing near employment opportunities; more transportation options to lower transportation costs, shorten travel times and improve the environment; and safe, livable, healthy communities. Why integrate? According to Donovan, the problem lies with fewer families finding housing near their work, as affordable housing remains disproportionately located in urban and older suburban areas. Donovan said “businesses located in those areas must find workers who can commute,” thereby incurring higher transportation and energy costs. Donovan’s initial focus coming in as the new head of HUD seemed to weigh heavily on Obama’s Housing Affordability and Stability Plan, created to address the nation’s economic fallout concerning foreclosures. With that underway, Donovan said the attention now must shift toward related matters — providing solutions to home and work localities. “Over the last few years, many homeowners and renters have traded relatively high housing costs for high transportation costs in their search of affordable housing,” said Donovan. “Affordable housing was only affordable when gas prices were low and the broader economy was strong. With gas prices spiking over $4 per gallon last summer, and the economic crisis following in these past few months, combined housing and transportation costs were no longer sustainable and won’t be sustainable in future cycles of gas price spikes.” According to HUD records, the average American household now spends 34 percent of their annual budget on housing and 18 percent on transportation. For low-income working families, the impact is even more serious — with transportation representing almost a third of their costs. “The extremes can be eye-opening,” Donovan commented. “The average Houston-area household spends over $11,000 per year on transportation. For these families, the expense of transportation poses a particular burden, inhibiting wealth creation, hindering home ownership and pushing family budgets closer to the brink.” Donovan added that in some metropolitan areas, working families are spending more on transportation than on housing. “The recent housing downturn has shown that auto-dependent houses are more vulnerable to price devaluation, as homes in distant neighborhoods declined in value more than regional averages, while some centrally-located homes held or increased their value,” Donovan noted to the committee. “While housing costs in distant suburban locations may be lower, transportation costs are higher, and the combination of housing and transportation costs now averages 57 percent of income for working families in metropolitan areas.” Donovan voiced concern regarding the “mismatch between good housing choices and good transportation choices” in the metropolitan regions, which he referred to as the engines of America ’s growth. “ America ’s new economic geography and spatial landscape have clearly made HUD’s mission more challenging,” said Donovan. “A recent Brookings Institution report shows that the top 100 metropolitan areas alone house two-thirds of the U.S. population and generate three-fourths of our gross domestic product. These metropolitan regions look markedly different from the ones that existed in the mid-1960s, when HUD was created. The populations of these areas and employment opportunities available in them are now widely dispersed, with only 22 percent of the jobs in the top metropolitan areas located within three miles of the central business district.” Donovan said data collection studies have shown the significant cost savings associated with living near transit. One particular study, conducted on four neighborhoods in Minneapolis-St. Paul, found that “the average two-person household spent 40 percent of its income on housing and transportation, while a similar household in a centrally-located neighborhood with access to mass transit only spent 34 percent of their income on the same costs.” This difference, Donovan noted, resulted in a savings of $3,000 annually. HUD has a mission Donovan gave the committee some insight as to the integration plans of HUD and DOT, but said he could not relay specifics of the plan at this time. A HUD/DOT task force will be formed to carry out goals set by the integration plans, he said. One goal will be to have every major metropolitan area in the country conduct integrated housing, transportation and land use planning and investment over the next four years. To facilitate integrated planning, HUD and DOT will make planning grants available to metropolitan areas and create mechanisms to ensure those plans are carried through to localities. The task force will also develop federal housing affordability measures that include housing and transportation costs and other costs that affect location choices. According to a statement from HUD, federal definitions of housing affordability don’t recognize the strain of soaring transportation costs on homeowners and renters who live in areas isolated from work opportunities and transportation choices. Therefore, the task force will redefine affordability to reflect those interdependent costs. In addition, the task force will research, evaluate and recommend measures that indicate the livability of communities, neighborhoods and metropolitan areas and share information between HUD and DOT to facilitate better-informed decisions and coordinate investments. Donovan said the task force will also engage the two agencies in joint research, data collection and outreach efforts with stakeholders to develop information platforms and analytic tools to track housing and transportation options and expenditures, establish standardized and efficient performance measures and identify best practices. Going ‘green’ In addition to the location of affordable housing, Donovan also noted the importance of the construction as it relates to energy efficiencies. "Transportation accounts for about one-third of our country’s carbon dioxide emissions. Providing affordable housing choices that shorten travel distances to work is cost-effective for working families and beneficial to long-term goals to reduce greenhouse gas emissions,” said Donovan. “Longer travel from home to work and lack of access to public transit increases congestion, which increases both costs and damage to the environment. The coordination of resources to plan sustainable communities that give Americans choices for affordable housing and choices for affordable transportation is a fundamentally green practice.” Donovan said HUD has a responsibility to work toward Obama’s energy independence goal. According to HUD, the residential sector accounts for 21 percent of U.S. energy consumption and is responsible for 18 percent of carbon emissions. HUD currently spends an estimated $6 billion a year on utilities in public and assisted housing. Last year, the agency reported $33 million in energy savings, but Donovan insisted it can do more. “I have pledged for our agency to engage in more substantial practices in energy efficiency and renewable energy,” he said. The hearing was titled, “Livable Communities, Transit Oriented Development, and Incorporating Green Building Practices into Federal Housing and Transportation.” Full text of Secretary Donovan’s testimony Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 20 Mar 2009 00:00:00 EST 38A5B771ECBD4118AC345E9E887802D5 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=AE4B84EAE110422486F195DB93E2C112 With all the controversial legislation and regulations we’ve seen in the past couple of years, as well as the downward spiral market changes, one might ask, isn’t it time trade associations, consumer groups and regulators get on the same page so we can move forward to start solving issues? While the finger pointing will likely linger concerning who caused this crisis, industry groups and Congress agreed on one thing this week: the desperate need for mortgage lending reform. A subcommittee of the House Financial Services convened on March 11 to discuss the current state of the U.S. mortgage system with an eye toward comprehensive mortgage reform legislation. Among the regulatory agencies and consumer groups present were representatives from the National Association of Mortgage Brokers (NAMB), the Mortgage Bankers Association (MBA), the National Association of Home Builders (NAHB) and the National Association of Realtors (NAR). The subcommittee, officially titled, the Subcommittee on Financial Institutions and Consumer Credit, called the hearing in hopes of soliciting from industry and consumer groups recommended changes to the “Mortgage Reform and Anti-Predatory Lending Act of 2007” (H.R. 3915). This bill was passed by the House on Nov. 15, 2007 , but was not supported by the Bush Administration nor was it taken up by the Senate. However, the subcommittee said they are planning to use it as a starting point for this year’s mortgage reform bill. The bill included provisions to establish national standards for mortgage loans and mortgage loan originators, and addressed certain aspects of high-cost mortgage lending, as well as disclosures covered under RESPA. “I am disappointed that the White House and Senate did not share our sense of urgency in 2007 when the House first passed historic mortgage reform legislation,” said Rep. Luis Gutierrez , D-Ill., chair of the subcommittee. “But I am confident that new leadership in the White House will help us move this year’s version of mortgage lending reform quickly through both chambers and make sure that, as a nation, we never find ourselves in this situation again.” NAMB came prepared Marc Savitt , president of the National Association of Mortgage Brokers, took this testimonial opportunity to lay out a number of issues his organization has had with recent reform measures that have been implemented. Savitt indicated that NAMB shared many of the concerns addressed in H.R. 3915, but couldn’t support it entirely. In his 18-page report, Savitt indicated problems with the implementation of the S.A.F.E. Mortgage Licensing Act of 2008. This Act requires all loan originators to submit fingerprints to a government agency for background checks and requires them to meet minimum, education and testing standards. “Although the SAFE Act represents much needed changes for loan originator licensing standards, there continues to be a problem with the implementation of the SAFE Act by state regulators particularly as it relates to current state loan originator licenses,” commented Savitt. He asked Congress for a 24-month extension of the July 31, 2009 , implementation deadline to allow time for Congress time to step in to help facilitate states’ transition into the new nationwide licensing and registration regime. Savitt also urged the subcommittee to direct HUD to promptly issue regulations relating to the SAFE Act and provide clarification on the states’ ability to interpret ambiguous provisions in the Act. In addition to the SAFE Act issue, Savitt also recommended that a “federal standard of care” be created for all loan originators whether they are lenders or brokers, and listed nearly 20 points the standard of care should either consist of or prohibit loan originators from. “Historically, mortgage brokers and mortgage lenders could be readily distinguished,” said Savitt. “Brokers did not lend money, and lenders did not serve as portals for competing providers of funds. However, in recent years, the lines between distribution channels have blurred, as the “originate to distribute” model of mortgage financing (where lenders promptly repackage and sell the loans they originate) has become commonplace.” Savitt continued his testimony with a warning to not ban yield spread premiums, noting that by doing this, it would “eliminate choices for consumers and effectively destroy the small business mortgage broker industry that has helped many consumers achieve and retain homeownership.” Also presented was NAMB’s position on the Home Ownership Equity Protection Act (HOEPA) amendments, designed to offer new consumer protections to higher-priced mortgages. This rule takes effect Oct. 1 of this year, and Savitt said although NAMB strongly supports reviewing and analyzing consumer protection efforts, he feels it is “imperative that the market be given an opportunity to adjust to the changes already effected by the Federal Reserve Board’s HOEPA rules.” “We are concerned that any additional restrictions which may be placed on the availability of mortgage credit could harm consumers and potentially exacerbate the current market problems we are experiencing,” Savitt said. Savitt also raised his concern to the subcommittee on HUD’s final RESPA rule and the new GFE form. “Despite HUD’s clear commitment to protecting consumers from unnecessarily high settlement costs and the agency’s laudable goals in prescribing a new universal mortgage disclosure form, the final RESPA rules issued in 2008 falls short of what was envisioned in H.R. 3915 and what is needed in the mortgage marketplace,” Savitt said. Savitt urged Congress to direct HUD to promulgate a new rule and GFE disclosure form and demanded that HUD work with other federal agencies to come up with “a truly universal mortgage disclosure form that compliments and may be used together with other disclosures, i.e. , Truth in Lending Act (TILA).” MBA calls for total lending overhaul The Mortgage Bankers Association was represented by David G. Kittle , chair of the MBA and executive vice president at Vision Mortgage Capital LLC. Kittle said the MBA is currently working on a reform proposal regarding the oversight of the mortgage industry and laid out to the committee the principles upon which the proposal is being built. “We believe that, while the mortgage industry is not the sole cause of today’s difficulties, our industry must be central to solutions that restore faith in the market and protect future borrowers,” said Kittle in his statement. “We know that these proposals will constrain some in our industry, but they will also help our members and their customers in the long-run.” Kittle agreed with the subcommittee to use H.R. 3915 as a basis, and added reference to the Federal Reserve’s HOEPA rules as well. Kittle indicated in his statement that the MBA’s lending reform proposal would be forthcoming soon and that it would be a comprehensive approach that would apply across the country and affect lenders of all sizes and structures. “That reform should take into account not only the many problems exposed since the end of 2007, but also the many legal and regulatory changes that have occurred since then,” said Kittle and acknowledged the Federal Reserve’s July 2008 rules intended to provide greater protections for subprime borrowers with new requirements for underwriting, escrows and prepayment penalties. The rules take effect Oct. 1 of this year. “MBA believes that the Board’s rules, coupled with other important requirements, should serve as the basis for a uniform national standard to protect consumers,” said Kittle and emphasized the association’s message that mortgage lending reform proposals “should be considered in a comprehensive, not piecemeal, manner.” Kittle shared with the subcommittee the principles embodied in the MBA’s mortgage lending proposal, a reform recommendation they intend to release shortly. In brief, the principles include: Addressing the mortgage reform proposal in a comprehensive manner; Giving special attention to mortgage lending, just as attention has been given to consumer protection, systemic risk and safety; A rigorous new regulatory standard should protect consumers regardless of where they live; A new standard should build on recent work, such as H.R. 3915, RESPA, the Truth in Lending Act and other proposals defining originator responsibilities; New abuses and concerns should be addressed; Standards must be defined clearly to facilitate the flow of affordable capital into the mortgage market; Regulated entities should pay the costs to assure sufficient funding; All players in the mortgage industry should be subject to consistent federal regulation including licensing, education requirements net worth and bonding requirements, as well as regular review and examination; TILA and RESPA disclosure changes have not been compatible and must be to ensure that consumers have optimal information to understand loan transactions; and Regulatory reform should also assure better resources for counseling, financial literacy and fighting mortgage fraud. Homebuilders’ position The National Association of Home Builders, represented by Joe Robson , chair of the organization and a builder from Tulsa , Okla. , told Congress that the housing sector is still being significantly affected by the upheaval in the financial and mortgage markets that started in 2007, and there is deep concern that these financial dislocations will increase the depth and length of the housing downturn. Robson said NAHB is in support of efforts to ensure that mortgage lending occurs in a safe and sound manner and that abuses in lending practices are properly addressed. "However, it is imperative that any steps taken in this effort do not inadvertently or unnecessarily disrupt the mortgage lending process or consumer financing options, or increase the costs or reduce the availability of mortgage credit," Robson said. NAHB urged Congress to implement a clear national framework for mortgage origination standards to replace the current patchwork of state and local laws, which NAHB said often lead to unnecessary restrictions on mortgage credit. NAHB also shared with Congress principles relative to the organization’s recently adopted policy on mortgage lending. Robson said that NAHB supports efforts to improve consumer education on financing and owning a home, and is also supportive of the use of alternative dispute resolution techniques, including binding arbitration, as the most rapid, fair and cost-effective means to resolving disputes. NAR’s voice The National Association of Realtors also voiced their support of any litigation created to protect consumers from unfair lending practices and said they are important allies in these efforts. Charles McMillan , NAR president and a Realtor for more than 20 years, said “abusive lending erodes confidence in the nation’s housing system, strips equity from homeowners and damages local and national economies.” The focus of McMillan’s testimony was appraisal independence. “Realtors believe that a strong and independent appraisal industry is vital to restoring faith in the mortgage origination process,” said McMillan. With a record of supporting legislation that intends to properly balance oversight and consumer protection, McMillan said NAR has endorsed legislation that would strengthen the independence of the appraisal process by ensuring appraisers serve as an unbiased arbiter of a property’s value. McMillan noted that NAR recommends lenders be required to inform each borrower of how property value was determined and provide them with a copy of each appraisal at no additional cost. McMillan also called for stronger penalties against anyone who improperly influences the appraisal process, federal support for better state enforcement, and enhanced education and qualifications for appraisers. “The irresponsible and abusive lending that occurred during the past few years has taken a toll on our communities and our nation. Now is the time to correct these problems to ensure we do not face the same circumstances in the future,” McMillan said. “Realtors are proud to encourage responsible lending and we stand ready to work with Congress to ensure that the nightmare of foreclosures does not overshadow the American Dream of homeownership.” Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 13 Mar 2009 00:00:00 EST AE4B84EAE110422486F195DB93E2C112 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=FBDDCE9940AF4EEC8CF8B0F9EC896C43 Office staff at the U.S. Department of Housing and Urban Development (HUD) will see a new face in their building if another nomination of Obama’s is confirmed. Peter Kovar , chief of staff for Rep. Barney Frank , D-Mass., is being nominated as assistant secretary for Congressional and intergovernmental affairs at HUD. Along with Kovar, President Barack Obama announced his plans to nominate several others for key administrative positions, including: Brian Kennedy , nominee for assistant secretary for Congressional and intergovernmental affairs, Department of Labor; Dana Gresham , nominee for assistant secretary for governmental affairs, Department of Transportation; and Sherburne “Shere” Abbott , nominee for associate director of environment, Office of Science and Technology Policy. “These individuals have not only shown talent and expertise in their respective fields, but have also proven their commitment to public service,” Obama said. “I know that they will serve their fellow Americans well during these challenging times.” Kovar worked on the first reelection campaign of Congressman Frank in 1982, and subsequently joined Frank’s Washington office as a junior staffer. He later worked for Sen. John Kerry , D-Mass., when he was first elected, and then returned to Frank’s office as a legislative assistant. He has served as Frank’s chief of staff since 1991. Having worked on Capitol Hill for more than 25 years, Kovar has worked on virtually every issue that has come before Congress. He has specialized at various points in his career on such diverse issues as immigration policy, Medicare reimbursement regulations, environmental protection, marine fisheries, transportation projects, government ethics, and economic development in Massachusetts and the communities Frank represents. He has also played a key role for the last six years in coordinating the interaction between Frank’s Congressional office and the work of the House Financial Services Committee, which has jurisdiction over federal housing policy. As chief of staff, in addition to overall supervision of Frank’s Washington office, Kovar has played a central role in developing and implementing much of Frank’s legislative agenda, as well as coordinating response and outreach to constituents. He has also been a key adviser on media and political matters. Kovar graduated from the University of Rochester with a Bachelor of Arts degree in history. Kennedy has spent many years on Capitol Hill working on labor and employment issues.  He is currently general counsel to Chairman George Miller of the House Education and Labor Committee. His House experience also includes his time as labor coordinator and chief labor counsel to the Committee on Education and the Workforce. Gresham served as chief of staff for Rep. Artur Davis from 2003 to November 2008. He was the lead staffer for Davis ’ participation with the Congressional Black Caucus and helped guide overall legislative and political direction for the New Democrat Coalition. Gresham was the primary policy and political advisor to Congressman Davis on the Ways and Means Committee in the House of Representatives. Abbott is a faculty member of the College of Liberal Arts at the University of Texas at Austin and serves as the director of the Center for Science and Practice of Sustainability in the office of the executive vice president and provost. Previously, she served as chief international officer of the American Association for the Advancement of Science, the largest general science organization in the world, where she was responsible for the International Office, and where she established and directed the Center for Science, Innovation and Sustainable Development. Prior to this appointment, she consulted on environmental science and sustainable development for private foundations, the World Bank, the Brookings Institution and other non-governmental organizations. Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 05 Mar 2009 00:00:00 EST FBDDCE9940AF4EEC8CF8B0F9EC896C43 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=78322C4BDAE647F4BEA9CFEC3F96DEAD In last week’s column, I focused on the announcement of the Homeowner Affordability and Stability Plan as part of President Barack Obama’s American Recovery and Reinvestment Act. This week, I’m taking this topic a step further after having listened to the testimony of Shaun Donovan , secretary of the Department of Housing and Urban Development (HUD), in front of the U.S. Senate Committee on Banking, Housing and Urban Affairs. Held Feb. 26, the purpose of the hearing was for Donovan to further outline the details of the plan and field questions surrounding concerns committee members have. Throughout the important discussions on the facets of the plan, one topic seemed to resurface among the senators, and that was: How is the plan going to be understood by and presented to the American people so troubled homeowners can fully utilize it to help their situation? In what turned into a nearly three-hour hearing, Donovan came prepared with an answer to this question. He encouraged anyone seeking assistance or having questions about their eligibility to benefit from the plan, to visit HUD’s Web site at www.hud.gov or call (888) 995-HOPE, which is a national hotline set up specifically for borrowers who have questions about the plan or want to see if they’re eligible to participate. Sen. Michael Bennet , D-Col., highly encouraged the use of a hotline and gave a real life example of how the state of Colorado has benefited from one. According to Bennet, Colorado used to be number one in the amount of filed foreclosures compared with other states, and now they rank in at number five. Bennet attributes this significant decrease in foreclosures to a hotline in Colorado that was established for troubled homeowners. According to Bennet, four out of five callers avoided foreclosure. “There is a profound lack of clarity out there,” Bennet commented. Donovan agreed. “A centralized hotline can connect folks with the servicers as well as the counselors in their neighborhood who can help them stay in their homes,” he said. “Outreach and education are key to this program.” Donovan also mentioned HUD will ensure a broad geographic outreach, including services provided in different languages. Sen. Christopher Dodd , D-Conn., committee chair, also expressed his concern about public outreach of the plan. He recommended using media outlets to help with distributing information to the public. Dodd said people need to be hooked up with those who can answer questions directly, and numbers need to be provided of where people can call, so they don’t have to watch Congressional hearings to retrieve information. Donovan said HUD has already spent much time contacting organizations that will be dealing first-hand with homeowners. “We already have communicated with the servicers and counselors about how to talk to borrowers and help them understand if they’re eligible,” he said. According to Donovan, we will see positive results from the plan soon. On March 4, Donovan said HUD will issue a set of guidelines to loan servicers providing instruction on modifying loans for homeowners who are on the brink of default. He noted that servicers have been ordered to stop foreclosures until the guidelines are out and there is an opportunity to modify loans, a process intended to decrease foreclosures. “We expect to see a large number of modifications happen very quickly,” Donovan said. “It will be effective with the set of guidelines we provide.” According to Donovan, once the guidelines are released, the servicers will implement the plan as quickly as possible and many are eager to begin. Donovan said he estimates seeing a decline in foreclosures as early as next month. Plan overview The Affordability and Stability Plan is comprised of three parts: Refinancing for responsible homeowners suffering from falling home prices, A comprehensive $75 billion homeowner stability initiative and Supporting low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac. The comprehensive $75 billion homeowner stability initiative has six components: A loan modification plan to reach three to four million homeowners, Shared effort with lenders to reduce interest payments, Incentives to servicers and borrowers, Clear and consistent guidelines for loan modifications, Required participation by financial stability plan participants, Modifications of home mortgages during bankruptcy, Strengthen Hope for Homeowners and other FHA loan programs and Support local communities and help displaced renters. The plan is part of the President’s broad, comprehensive strategy to get the economy back on track. According to HUD, it is designed to help seven to nine million families restructure or refinance their mortgages to avoid foreclosure. In doing so, HUD said the plan will not only help responsible homeowners on the verge of defaulting, but prevent neighborhoods and communities from being pulled over the edge too, as defaults and foreclosures contribute to falling home values, failing local businesses and lost jobs. Long-awaited plan Overall, the committee members were glad to see an action plan, and some noted that they have been trying to act on the housing crisis since the beginning of 2007 and were accused by the past administration of raising false alarms. Several noted the past administration did not respond to the concerns they were hearing from the public. “It was about this time two years ago that we had a series of hearings on foreclosures,” noted Dodd. “This was early 2007. Maybe we didn’t push hard enough. Nothing happened. We are in large part where we are because of that. We could have mitigated this problem substantially.” Dodd said back in January and February 2007, you were considered an alarmnest if you talked about the future severity of the housing market. Referring to the plan, Dodd said the “sharp change in direction” couldn’t have come at a more critical time. “At the end of the day today, nearly 10,000 will see foreclosure,” Dodd said. Sen. Mel Martinez , R-Fla., was quick to disagree with some of the statements made about nothing being done previously to address the housing issues. He said that, in the past, HUD was aware of the crisis unfolding and did take measures to help the situation, and those efforts should not be forgotten. “It is important that we don’t ignore history,” said Martinez . “It’s unfair to say that this problem was ignored.” To support his comment, Martinez mentioned the progress of the Hope for Homeowners program. HUD’s budget Questions also came up in the hearing about the availability of resources at HUD to deal with this massive undertaking. Donovan assured the committee that there will be resources directed to providing oversight and accountability through the loan modification process. Timely to these comments, late Thursday, HUD issued a release announcing Obama’s proposed budget for the agency. In the release, Donovan said he was pleased with the outcome and focus of the proposal. “In tough fiscal times, we will be given the resources and flexibility to put this agency back on track: to be a resource for homeowners who are trying to buy or refinance their homes; to be a catalyst for the production and preservation of affordable rental housing, through new vehicles like the affordable housing trust fund; to give HUD the tools to combat mortgage fraud and predatory loans; to make energy efficiency and sustainable development a significant part of housing policy; and, to support and enhance programs and policies such as vouchers and community development block grants that play an important role in the lives of low income families and communities,” Donovan said. The total proposed allocation for fiscal year 2010 for HUD is $47.5 billion. “I look forward to working closely with the administration to finalize our budget and then with Congress on giving HUD the resources and the reforms to make HUD an effective part of the housing solution,” Donovan said. According to Obama’s report on the budget, monies are intended for the Community Development Block Grant program, the Housing Choice Voucher program and the Project-Based Rental Assistance Program. Money is also intended to create a new Choice Neighborhoods Initiative and Energy Innovation Fund. In addition, the budget is intended to provide the initial funding for the Affordable Housing Trust Fund created last summer, as well as strengthen efforts to combat mortgage fraud and predatory lending. The report noted that the proposed budget is consistent with the president’s goal of eliminating funding for ineffective and duplicative programs like the Section 108 Community Development Loan Guarantees program and the American Dream Downpayment Initiative. Also noted in the report was an additional $13.6 billion included in the Recovery Act. Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 27 Feb 2009 00:00:00 EST 78322C4BDAE647F4BEA9CFEC3F96DEAD http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=2C75B9CB5C5145D7B9362EE11273C72E Washington recently has been a flurry of activity, with the Obama Administration proposing several new initiatives to help get the country out of its current economic slump. This week that included the unveiling of the Homeowner Affordability and Stability Plan to encourage refinancing and modifying loans to stem the tide of foreclosures as well as several housing provisions being passed as part of the American Recovery and Reinvestment Act. On Feb. 18, President Barack Obama announced his $75 billion plan to help up to 9 million homeowners who are underwater refinance into lower rates and encourage loan modifications for homeowners on the brink of default. The first part of the plan would provide access to low-cost refinancing to 4 million to 5 million homeowners who would otherwise be ineligible due to falling home prices. It would allow homeowners who took out conforming loans owned or guaranteed by Fannie Mae or Freddie Mac to refinance into 30- or 15-year fixed-rate loans through the GSEs. Though complete eligibility details will be announced on March 4, homeowners who owe 105 percent of the value of their home or less on their first mortgage may be eligible. The Administration has posted answers to several questions borrowers might have about how to refinance through the President’s proposal. As part of an answer to a question about whether refinancing would decrease a borrower’s monthly payments, the Administration states that when a borrower submits an application to a lender “your lender will give you a Good Faith Estimate that includes your new interest rate, mortgage payment and the amount that you will pay over the life of the loan.”  Howard Lax , an attorney with Lipson, Neilson, Cole, Seltzer & Garin, P.C. was quick to point out that the current GFE does not include interest rate and payment information. “The new GFE form that would include these disclosures, and potentially lock in the lender, is not required until Jan. 1, 2010 ,” he said. “I wonder whether the government will condition participation in the homeowner rescue program on use of the new disclosure scheme, and whether this is an attempt to get around the fact that RESPA did not authorize HUD to promulgate all of the facets of the rule it finalized in November.” The plan would also create a $75 billion Homeowner Stability Initiative to reach up to 4 million at-risk homeowners. The goal of the initiative is to reduce the amount homeowners owe per month to sustainable levels. It would use money allocated under the Financial Stability Plan and Fannie Mae and Freddie Mac to make these modifications. In general, borrowers would be able to qualify for a mortgage modification if: they occupy the house as their primary residence; their monthly   mortgage payment is greater than 31 percent of their gross monthly income and the loan does not exceed Fannie Mae and Freddie Mac loan limits. Under the Homeowner Stability Initiative, lenders would receive incentives to cut borrowers’ monthly payments to levels considered sustainable. Sustainable would be defined as no more than 31 percent of a borrowers’ income. For each eligible modification a servicer completes that meets initiative guidelines, they would receive an up-front fee of $1,000. They would also receive “pay for success” fees monthly for as long as the borrower stays current on the loan. This would add up to $1,000 a year for three years. Borrowers who make mortgage payments on time would be provided with monthly balance reduction payments towards the principle balance of their loan. This could add up to $1,000 a year for five years. The initiative also provides for incentives for servicers to modify loans for people who are struggling but not yet in default. “Because loan modifications are more likely to succeed if they are made before a borrower misses a payment, the plan will include households at risk of imminent default despite being current on their mortgage payments,” the Treasury said in its own announcement about the plan. The plan would also include provisions to improve confidence in Fannie and Freddie. To do this the Treasury Department will increase its funding commitments to the GSEs using funds that were already authorized by Congress. The Treasury also plans to increase its preferred stock purchase agreements from $100 billion each to $200 billion each. It would also continue to buy GSE mortgage-backed securities to promote liquidity in the marketplace, increasing the GSEs’ retained mortgage portfolios by $50 billion to $900 billion. On Thursday HUD Secretary Shaun Donovan went up to bat for the plan in an interview on NBC’s Today Show. According to an Associated Press report about the secretary’s remarks, Donovan said that it was important for banks and lending institutions to help make sure the new program is successful. He added that there were many requirements and incentives in the program to encourage lending institutions to participate in the program. Charles McMillan¸ president of the National Association of Realtors, was quick to praise the President’s plan. “ The administration’s proposed plan, combined with provisions like the $8,000 first-time homebuyer tax credit in the just-enacted American Recovery and Reinvestment Act, will help minimize foreclosures, shrink housing inventory, stabilize home values and move the country closer to an economic recovery,” he said. The Wall Street Journal reported that critics of the plan believe that it does not do enough to address the difficulty of altering some of these loans, particularly the ones that are packaged into securities. It also pointed out that it will be much harder for people to refinance their mortgages if they own significantly more than their house is worth or if Fannie or Freddie doesn’t own or guarantee their mortgage. The report stated that this provision would leave out many borrowers in Florida , California and Arizona , states that have been hit hard by the foreclosure crisis. Lastly, the report said that the plan does not find a way to spur demand for the oversupply of homes on the market. The President’s plan was unveiled just a day after he signed the American Recovery and Reinvestment Act, which had its own provisions to aid the housing market. It included provisions to bring FHA and GSE loan limits back up to 2008 levels for 2009 and raise the FHA reverse mortgage national loan limit from $417,000 to $625,500 for 2009 as well as spending a total of $13.6 billion on programs and grants designed to improve communities and help homeowners. Fri, 20 Feb 2009 00:00:00 EST 2C75B9CB5C5145D7B9362EE11273C72E http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=CCA1A72CC07A444BB82CFDF3EF9D5AB3 Treasury Secretary Timothy Geithner introduced his Financial Stability Plan on Tuesday and spoke before the Senate Committee on Banking, Housing and Urban Affairs in a hearing further detailing the plan. Many are criticizing Geithner’s words, while others feel the plan is a step in the right direction. The plan is comprised of six sections, of which the fifth discusses housing support and foreclosure prevention. “There is bipartisan agreement today that stemming foreclosures and restructuring troubled mortgages will help slow the downward spiral harming financial institutions and the real American economy,” noted Geithner. “Many Congressional leaders, housing advocates, and ordinary citizens have been disappointed that the Troubled Asset Relief Program was not aimed at ending the foreclosure crisis.” The plan commits to $50 billion to prevent avoidable foreclosures of homes by helping to reduce monthly payments in line with prudent underwriting and long-term loan performance. Geithner noted that details of the housing crisis plan will be announced in the next few weeks. Sen. Barney Frank , D-Mass., chairman of the House Financial Services Committee had some concerns regarding these statements. “First, I’m concerned that $50 billion to reduce foreclosures understates the amount that we will need, and we need some assurance that, assuming this works as we hope it will, there will be more money available,” commented Frank. “Secondly, the Secretary said the administration would present details of their foreclosure reduction plan in a few weeks, which is too much time.” Because of this timeframe, Frank has urged institutions that hold or service mortgages to delay and stop any foreclosure proceedings. “I have said in the past that I have been skeptical of the question of a moratorium in general because it wasn’t clear where that would lead us, but in this situation where the Obama Administration will have a specific plan shortly, a moratorium is clearly called for,” Frank noted. The housing support and foreclosure prevention portion of the plan also focuses on driving down overall mortgage rates by “freeing up funds for working families through continuation of its efforts to spend as much as $600 billion for purchasing of GSE mortgage-backed securities and GSE debt.” Other parts include helping to bring order and consistency to efforts aiding the foreclosure crisis by establishing loan modification guidelines and standards for government and private programs, requiring all financial stability plan recipients to participate in foreclosure mitigation plans, and building flexibility into Hope for Homeowners and the FHA to enable loan modifications for a greater number of distressed borrowers. In his opening statement at the hearing, Sen. Christopher J. Dodd , D-Conn., warned the committee of a message many Americans have been all too familiar with. “Nearly 10,000 families receive foreclosure notices each and every day, and experience the anxiety of possibly losing their homes. Another nineteen-thousand lose their jobs —the source of their livelihoods. Countless more watch their hard-earned retirement savings responsibly invested over a lifetime evaporate in an instant,” Dodd said. He added that simply put, “our economy is withering, and the confidence of America is at a record low.” Regarding the $50 billion to be used to prevent home foreclosures, Dodd commended Geithner but said banks need to do their part as well “so that families can access the credit they need to pay for a home, a car and college tuition for their children, and businesses can stock inventory and meet payroll.” The other five points of the plan surround the issues of: Financial stability trust, which involves a comprehensive stress test for major banks, increased balance sheet transparency and disclosure, and a capital assistance program, A public-private investment fund of $500 billion - $1 trillion, A consumer and business lending initiative, A transparency and accountability agenda, including dividend limitation, and A small business and community lending initiative. According to Geithner, the plan is devised to do a number of things to help restart the flow of credit, clean up and strengthen banks, and provide critical aid for homeowners, and for small businesses. "To be successful, we must address the uncertainty, troubled assets and capital constraints of our financial institutions as well as the frozen secondary markets that have been the source of 40 percent of our lending for everything from small business loans to auto loans,” Geithner said. Many in the general public are criticizing Geithner, saying the plan is not sufficient to meet the needs of the crisis. A recent blog indicated that banks, not consumers will benefit more from the plan, while some Americans feel $1 trillion is too much spending at this time and wonder where the money will come from. In his remarks, Geithner said, “Without credit, economies cannot grow at their potential, and right now, critical parts of our financial system are damaged.” In response to this, one blogger said this line of thinking is opposite what we should be working towards and that is to become debt free. Still, others are worried that the length at which the government is intervening will not be beneficial to America and many feel banks should be taking more blame for their lack of sound business practices. Some bloggers think Geithner’s plan will stir panic and is not detailed enough. There are some, however defending the plan, saying it is good so long as it will be carried out. Full text of Geithner’s remarks introducing the Financial Stability Plan Geithner’s opening statement at the Senate hearing Financial Stability Plan fact sheet Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 13 Feb 2009 00:00:00 EST CCA1A72CC07A444BB82CFDF3EF9D5AB3 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=BA798F7DA2AC43E491EF83C27F03CAD0 A pumped-up and cheering staff at the Department of Housing and Urban Development (HUD) warmly welcomed the first lady at the agency’s headquarters on Wednesday, in what was Michelle Obama’s second stop on her general tour of the agencies. According to a White House report, Obama was introduced to a crowd of “quite enthusiastic” HUD employees by HUD Secretary Shaun Donovan . Nearly 1,000 people were present to hear the first lady’s remarks. According to White House staff, when Michelle Obama entered the room, there were gleeful cheers and applause and lots of cameras held high. Someone even called out ‘We love you,’ and the sentiment was echoed throughout the room. This kind of excitement was not a surprise, since prior to her entrance, the sound of “thumping dance floor” music echoed the walls of the gathering room, although according to the report, the music wasn’t what revved up the crowd. It was the excitement of the first lady’s visit.   Obama described her appearance as a way to say, “hello” and “thank you” to the federal workers. She urged HUD employees to rededicate themselves to their work, given the desperate need to keep people in their homes. “I want to learn, listen [and] know what’s going on from you. But I also want to say thank you, on behalf of my husband, my family, and this country. Because what we do know, [is] even though this is a brand new administration, the folks working in this department, many of you, have been here for decades working hard on the issues that impact our communities,” she said. Offering more praise, Obama reminded the employees that they are public servants, and she recognizes that every day they “carry out the nation’s work without any fanfare, oftentimes,” as well as without “attention” or “acknowledgment.” “You do it and get the job done because it’s the right thing to do,” she commented. With the initial greetings behind her, Obama then addressed the more critical issues, telling HUD employees that given the nature of the housing market, they will be asked to do even more than what’s been expected in the past. “It’s of critical importance that we stem the tide of foreclosures and find a way to keep people in their homes. Because what we do know is that homeownership, at least as I know it, growing up on the south side of Chicago , has always been one of the building blocks for strong neighborhoods, for strong schools and strong families. People who own their homes and take care of their homes, it leads to the well-being of the entire community. It’s critical. And the housing crisis has drastic consequences, not just on our economy but on the very fiber of our communities all across this country,” Obama said. Obama said in addition to taking the time to meet with the agencies, she and President Barack Obama plan to get to know the new community in which they now live. “We're going to be visiting schools and neighborhoods throughout this area, because Barack and I always believe that investing in the community that you live in first and foremost is critical. And for the people here in this agency, we are now your neighbors,” she said. Obama also played up the role of HUD moving forward with regards to the economic recovery and reinvestment plan designed to aid communities. “This plan is important. With these investments…we’ll be able to strengthen the Neighborhood Stabilization Program to help communities purchase foreclosed or abandoned properties, and rehabilitate or resell or redevelop these homes so that they don’t contribute to community blight and force down the value of neighboring properties,” she emphasized. Obama said the investment not only will benefit neighborhoods, but will also create new jobs, due to the need to weatherize at least 2 million low-income homes. Obama said the weatherization will save working families on average $350 per year in heating costs. “It’s important to remember that these investments will expand the availability of affordable housing by 15,000 units ­— and that is not insignificant — which, coupled with other homeless programs here at HUD will play an important role in preventing an increase in homelessness during these tough economic times,” she said. She also mentioned how pleased she was with the stimulus plan, which is intended to make needed repairs to military family housing “so the quality of troops’ homes matches the quality and excellence of their service to this nation.” Although brief, Obama’s remarks were intended to leave an imprint on staff employees as they begin their work under a new regime. “So there’s a lot of work to do.  And we have great leaders in Secretary Donovan and in Barack Obama.  But great leaders are only as great as the people who hold them up,” she offered. “So that’s why it’s important for us to come here now, before the hard work happens, to say thank you and to remind you that we need each and every one of you to recommit to the task at hand, to look at your work with a new level of passion and vigor, and to know that everything you do every day is going to lead to stronger communities all over this nation,” she said. This past Monday, Obama launched her tour, stopping first at the Department of Education, where she emphasized more so the reason behind her agency visits. Fri, 06 Feb 2009 00:00:00 EST BA798F7DA2AC43E491EF83C27F03CAD0 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=5342BB744F4A4F5E9265D6C7A93DED9D If a bill sponsored by U.S. Rep. Al Green , D-Texas, is passed into law, Congress could reinstate seller-funded downpayment assistance. HR 600, the FHA Seller-Financed Downpayment Reform Act of 2009, would revise the requirements for seller-financed downpayments for mortgages insured by the Federal Housing Administration (FHA). Green introduced a similar bill in 2008 after President Bush signed H.R. 3221, the American Housing Rescue and Foreclosure Prevention Act, into law.   The law includes a provision barring the Federal Housing Administration (FHA) from insuring seller-funded downpayment-assisted loans. “Seller downpayment assistance has helped more than one million Americans who are able to afford a monthly payment but do not have the downpayment needed to become homeowners,” Congressman Green said. The Department of Housing and Urban Development (HUD) had argued that foreclosure rates for seller downpayment-assisted loans are “three times” that of other FHA loans.   However, HUD often compares the success rate of seller downpayment-assisted loans to loans that do not receive any type of down payment assistance.   According to a U.S. Government Accountability Office (GAO) report, seller downpayment assistance loans have a 94% success rate after three years and government, employer, union, parent or family assisted loans have a 95% success rate after three years. “If we can maintain FHA loans with downpayment assistance from the government, employers, unions, parents, or family, we can maintain loans with assistance from sellers.   I believe that we should compare apples to apples when discussing the foreclosure rates associated with seller downpayment-assisted loans,” Congressman Green said.   Ann Ashburn , president of AmeriDream Inc. said that HR 600 would encourage sustainable homeownership by making non-profit downpayment assistance an allowable gift source for creditworthy borrowers of FHA loans. Downpayment assistance program gifts do not have to be paid back and do not cost taxpayers anything, she said. Congress outlawed seller-financed assistance last October. The bill allows for seller-financed downpayments for the following mortgages: A mortgage under which the mortgagor has a credit score equivalent to a FICO score of 680 or greater A mortgage under which the mortgagor has a credit score equivalent to a FICO score of at least 620 but less than 680 and for which mortgage insurance premiums charged are established “at levels necessary, but no higher than needed to allow such class of loans to be insured without resulting in a need for an appropriation of for a credit subsidy.” The bill states that for mortgages insured in fiscal year 2010 or after, seller-financed downpayments would be accepted for mortgages under which the mortgagor has a credit score equivalent to a FICO score of 619 or less, but only if the HUD secretary certifies that such loans can be insured without resulting in a need for an appropriation for a credit subsidy. The bill gives the secretary the authority to establish a credit or FICO score limitation or impose other requirements he feels are necessary to meet the conditions for certification. Any entity participating in a program that provides downpayment assistance to homebuyers would have to offer counseling to the mortgagor regarding the responsibilities and financial management involved in homeownership. If the entity is a private nonprofit organization, it would be required to implement a conflict of interest policy that prohibits directors, officers, employees and immediate family members from receiving financial benefits from any entity that is providing the program with goods or services other then the homeownership assistance program entity itself or its wholly owned affiliate. Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 29 Jan 2009 00:00:00 EST 5342BB744F4A4F5E9265D6C7A93DED9D http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=DDAAC3C363854680B0523CB0DFBF93DB On Nov. 7, Americans exercised their right to choose their future president, and after the votes were in and the count tallied, Barack Obama became the nation’s president-elect. Then the nation had to wait, and in the weeks following, concerned Americans talked positively about change, realistically about the failing economy, negatively about Wall Street and, among a number of other steamy topics, controversially about bailout plans, healthcare, taxes and the Middle East . Within all this chatter, one massive question still remained: What is in the crystal ball for the nation’s economic condition? The good and the ugly The good news is we made it. Tomorrow is here. Tomorrow is today ­­— at least in the eyes of the government. On Tuesday, when Obama officially became the 44 th president of the United States, his inaugural speech made it clear that the day has come to realize the dynamics of our situation and take immediate action. “Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America ,” Obama proclaimed. “Today I say to you that the challenges we face are real. They are serious and they are many. They will not be met easily or in a short span of time. But know this, America : They will be met.” Obama proved this statement his first day on the job by halting all new and pending regulation until he or his appointees and designees have the opportunity to review them. (See Obama delays regulations: Will ‘required use’ go under the microscope? ) He also ordered heads of executive departments and agencies to “consider extending for 60 days the effective date of regulations that have been published in the Federal Register but not yet taken effect,” and consider re-opening the comment period for pending regulation for 30 days. After listening to Obama speak of moving in the right direction, one thing came to mind, that being, the direction of the U.S. Department of Housing and Urban Development (HUD), now that Shaun Donovan will lead the agency. Many industry experts in the past few months have been talking about the future role of HUD and how Donovan must run the agency as a more prominent entity in Washington to fix the monstrous challenges of the mortgage crisis. HUD faces digging America out of the foreclosure pit that it has sunk itself into. Steps to defeat this problem began, according to Donovan, as soon as his confirmation was official. In what Sen. Christopher Dodd , D-Conn, chair of the U.S. Senate Committee on Banking, Housing and Urban Affairs , described as eloquent words, Donovan’s opening remarks at his nomination hearing expressed that he will act immediately to revamp systems, policies and programs to put HUD in a position to pull America up from the mortgage devastation. The appointment became official late Thursday, which means, tomorrow has become today for HUD, as well. The good news is apparent: Our nation’s new leaders have spoken about ways to fix our problem, have seemed eager to begin their work and now are in the capacity to begin. The ugly news is even more apparent. Even though tomorrow is now today, we still have to play the waiting game while Obama and his team begin pushing America in what is hoped, the right direction, at a time when so many national issues are at a scary phase of failing. A bit of hope There has been a lot of skepticism in the past few months regarding how big an impact Obama could possibly have in the early months of his presidency and what will become of the American economic climate, specifically, the housing crisis in 2009. At the end of his speech, Obama brought a piece of America ’s history to light as encouragement to the country. “Now, there are some who question the scale of our ambitions ­— who suggest that our system cannot tolerate too many big plans. Their memories are short. For they have forgotten what this country has already done; what free men and women can achieve when imagination is joined to common purpose, and necessity to courage,” he said. He continued with a clip from America ’s beginning. “In the year of America ’s birth, in the coldest of months, a small band of patriots huddled by dying campfires on the shores of an icy river. The capital was abandoned. The enemy was advancing. The snow was stained with blood. At a moment when the outcome of our revolution was most in doubt, the father of our nation ordered these words be read to the people: ‘Let it be told to the future world ... that in the depth of winter, when nothing but hope and virtue could survive... that the city and the country, alarmed at one common danger, came forth to meet [it].’” Obama closed with what many feel was an engaging message to America . “…With hope and virtue, let us brave once more the icy currents, and endure what storms may come. Let it be said by our children's children that when we were tested, we refused to let this journey end...” Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 23 Jan 2009 00:00:00 EST DDAAC3C363854680B0523CB0DFBF93DB http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=A7101F6B3D9F43379311EA15508E4A93 The House Committee on Financial Services held a hearing recently regarding the Federal Housing Administration’s (FHA) oversight of loan originators, after hearing reports that FHA may not be able to handle the growing surge of banks and brokers who are entering the FHA lending market and an increased volume of loans submitted for approval, as well as reports that FHA may be letting originators with questionable lending histories into their originator pools. The hearing was scheduled after the committee received reports that there has been a surge in the number of originators that were approved by the FHA. Rep. Barney Frank , D-Mass., chairman of the committee, stated that a Dec. 1 article in Business Week reported that the FHA would not be able to handle such a surge and would possibly let in lenders who were involved in questionable lending practices in the sub-prime and Alt-a mortgage markets. Frank said that in order to increase the role of the FHA, it must have the policies and tools it needs to handle a surge in lenders and loans coming through its office. Opening statements brought to light many concerns committee members had about FHA’s practices and authorities, including flaws that may be a part of its approval process, the outdated resources the agency is using to facilitate its programs and the shrinking reserves the agency has to handle its insurance claims. One of the biggest concerns on the minds of the members of the committee was that unethical lenders who had been involved in sub-prime lending would be able to reconfigure their company and come back into the marketplace working in FHA-insured loans. Rep. Michael Castle , R-Del. said that “there is no doubt” that there have been a lot of individuals who got into mortgage lending who should not have. He said that if you read the recent articles, a lot of these people are being approved as FHA-approved lenders. James Heist , assistant inspector general for audit at the U.S. Department of Housing and Urban Development (HUD), noted that FHA lender approvals increased 525 percent in a two-year period. At the end of fiscal year 2008, FHA had over 3,300 approved lenders. In 2007, it had 997, a 330 percent jump. In fiscal year 2006, the number was only 692. He also said that so far in fiscal year 2009 the FHA has received 1,007 open applications, of which 827 have already been approved. “The integrity and reliability of this crop of program loan originators, in our view, is unproven and, in light of the aggressive recent history of this industry, may pose a risk to the program,” he said. Members of the committee also asked about the resources the FHA had and whether the agency would be able to meet increased loan demands. “HUD has been vocal in recent years about its needs for FHA, particularly in the area of information technology systems,” Murray said. “FHA data is stored on 35 separate legacy systems, which have been obsolete for nearly two decades.” Some members also raised concerns about the compliance mechanisms FHA has in place and its authority to enforce compliance and reprimand those who are not compliant and who are involved in unethical lending practices. In response, Phillip Murray , the deputy assistant secretary for Single Family Housing Programs at HUD, outlined several of the compliance and enforcement tools used by the FHA. Two of those tools are Credit Watch and Appraiser Watch, which process and monitor lenders and appraisers associated with unacceptably high default and claim rates. This program is used to help terminate these lenders and appraisers from FHA program participation. He also said that FHA is constantly monitoring loan level compliance, lender performance and portfolio performance. He said that all loans are required to pass several verification checks and the staff conducts Post Endorsement Technical Reviews of a five percent sample of its loan portfolio. Between fiscal year 2004 and fiscal year 2008, 455 appraisers and 354 FHA lender branches of 333 FHA-approved lenders were terminated from FHA program participation by this process. Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 16 Jan 2009 00:00:00 EST A7101F6B3D9F43379311EA15508E4A93 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=3F7EF8DBAEAB4B7F83B7C7887FECFB0F With the Obama administration preparing to take over and with speculation arising on what its initial focus will be regarding the housing market, it has been interesting to hear what current White House leaders are advising before their reign officially subsides. In a   final speech as the U.S. Treasury secretary, Henry Paulson addressed the Economic Club of Washington earlier this week and proposed replacing mortgage-finance companies Fannie Mae and Freddie Mac with highly regulated utilities that would have more restrictions on making money available for home loans. One might think Paulson’s advice comes late in the game and carries little weight due to the end of his tenure; however, it is well-noted that in the past year, he has been one of only a few officials that have been extremely close to the operations of Fannie and Freddie. In his comments, Paulson expressed how crucial the Government Sponsored Enterprises (GSEs) will be to seeing our way through the mortgage crisis. “The GSEs are critical to getting us through this current period, and this is our first priority,” Paulson commented. “More may need to be done to clarify and simplify their structure and to increase their effectiveness in curbing further housing price correction. But we cannot look only at this short-term need; policymakers must resolve the question of long-term structure…,” he offered. Paulson’s speech focused entirely on reshaping the nation’s housing finance system and, in particular, its policy. “The first step must be for policymakers to decide – in light of the recent housing bubble and the severe financial and economic penalty it has imposed on our nation – the role government should play in supporting home ownership,” he suggested. “Once that decision is made, the GSEs should be restructured to meet that public policy choice and satisfy three objectives: First, there must be no ambiguity as to government backing. It must be explicit or non-existent. Second, there must be a clear means of managing the conflict between public support and private profit. Third, there must be strong regulatory oversight of the resulting institutions,” he advised. Paulson said while many policymakers have acknowledged the risks created by GSEs serving both a public mission and private shareholders, there has been no attention paid to the market realities and any necessary reform. “Over time, the GSEs’ advantages enabled them to grow at a phenomenal pace, so that today they have $5.4 trillion in obligations outstanding, held by investors in the U.S. and around the world,” Paulson noted. “As a comparison, that is almost 40 percent the size of the entire $14 trillion U.S. economy. The systemic risk posed by such size was heightened by the fact that investors assumed that GSE securities were backed by the U.S. government and therefore virtually risk-free, despite repeated statements by consecutive U.S. administrations to the contrary,” he said. Paulson warned that although currently Fannie Mae and Freddie Mac are in a temporary stable condition, the companies “cannot efficiently serve their Congressionally-chartered mission and protect the taxpayers’ investment over the long-term.” From all this, several questions remain: How much attention will the new administration give to Paulson’s advice, if any, what exactly will be their first steps in solving the problems with the housing finance system and how much focus will they give to this problem? As for Paulson’s future, according to an article in The Washington Post , while his worries about Fannie and Freddie will cease with the end of his term, he will focus on a new objective, that being locating where his personal investments have been placed, having about $500 million to his name prior to becoming U.S. Treasury secretary. Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks.   Thu, 08 Jan 2009 00:00:00 EST 3F7EF8DBAEAB4B7F83B7C7887FECFB0F http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=B3A09A2DB2BB4225BF7C3A25F9FFC61F&nm=&type=Blog&mod=BlogTopics&mid=482A1427901F4C70BC209274757B91CB&tier=7&id=C79D1D27108244ADB0785259EAC175D5 In an article in the Washington Post this week, HUD Secretary Steve Preston and Rep. Barney Frank, D-Mass., were snipping back and forth on reasons why a 3-year program designed by Congress to aid homeowners is a failure. According to Preston, the program is too expensive and cumbersome, among other things. Frank agreed that there are some problems with the program, but they stem from the Bush Administration, claiming they were under pressure to make the program less expensive and more limiting. Frank stated that without the Administration’s interference, the program would have been devised in a better fashion. The program, which took effect in October, was intended to help 400,000 homeowners avoid foreclosure. The problems with it: It is difficult to get the lenders to participate and agree on forgiving a portion of the borrower’s loan amount. Also, under the program, borrowers pay large fees and high interest rates, not to mention having to split any increased value with the federal government after the home sells. Preston also noted that borrowers must sign a statement indicating they did not give false or misleading information on their original loan application, as well as having to provide two years of financial records. In a speech this week at the Illinois Chamber of Commerce Policy Luncheon, Preston’s remarks centered on strong government leadership becoming a necessity and leaders restoring credibility and taking responsibility for their actions. He also left people pondering some questions that many of us have been asking about how the government’s involvement in the mortgage crisis will affect the industry. “Homeowners complain that mortgage servicers are difficult to reach or unwilling to help,” said Preston. “Investors and servicers are still at odds over how much assistance servicers can provide. I fear that if we don’t see more results from private industry, Congress or states attorneys general will intervene aggressively,” he added. He noted that with the number of recommendations for further government involvement to reduce foreclosures, we will be asking ourselves some tough questions, such as “Who are they intended to help, will they be effective, what is the cost, and what will be the unintended consequences?” Interestingly enough, Preston, who mentioned that most public service leaders care deeply about what they do, but end up finding themselves the “sub