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CFPB FHFA to Create Groundbreaking Mortgage Database
American Banker (11/01/12) Davidson, Kate

A national mortgage database to track mortgage and housing market trends and support policymaking research is being developed by the Consumer Financial Protection Bureau (CFPB) and Federal Housing Finance Agency (FHFA). It is expected to be available in 2013. The database, which will be updated monthly, will help monitor the health of the mortgage market, provide new insight on consumer decision making, monitor new and emerging products, consolidate data on first and second lien mortgages for a given borrower, and help policymakers understand the consumer debt burden.
The database will be built by matching a nationwide sampling of credit bureau files on borrowers’ mortgages and payment histories with data released under the Home Mortgage Disclosure Act and property valuation models. It will include information spanning the life of a loan from origination through servicing, as well as a variety of borrower characteristics, although it will not include personally identifiable information. The database also will include loan level data about each mortgage, such as the borrower’s financial and credit profile, loan terms and the ongoing payment history of the loan.
While some say the data will help policymakers be better informed, others are concerned about how borrowers’ information will be protected, the very detailed data they are collecting, if the data will be used to impose new obligations on lenders, whether lenders will face the burden of providing the information, and the costs associated with the database. Many also think the database should be open to notice and comment, giving industry a chance to examine and provide feedback on the database’s design and how it is being analyzed and shared. “There should be a requirement to assess the regulatory burdens on lenders to provide the information, and there should be clear legal guidelines on what they can collect, how they protect, and how they can use the information,” said Laurence Platt of K&L Gates.

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AFSA Comments on Integrated Mortgage Disclosure Forms

On Nov. 6, AFSA submitted a comment letter on the Consumer Financial Protection Bureau’s (CFPB) proposed rule that seeks to integrate mortgage disclosures under the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA). AFSA supported the CFPB’s effort to integrate RESPA and TILA disclosures, and applauded the CFPB for its careful approach to this monumental task. “The proposed disclosures are much clearer and more understandable for consumers for many transactions, particularly the standard home purchase money mortgage,” the letter stated. “There are, however, problems with the proposed Closing Disclosure that need to be addressed before the proposed forms can be used with non-purchase money loans and refinancing (single party loans).”
The letter outlined additional concerns with the proposed rule. For example, AFSA objected to the proposed new, more limited definition of “application.” AFSA also expressed concern that the new loan estimate requirements would delay closings, creating problems for borrowers. In addition, the letter suggested changing the threshold for when a lender needs to issue a new closing disclosure. Furthermore, AFSA urged the CFPB to provide a safe harbor for using the proposed forms.
In the comment, AFSA reiterated its request that the CFPB table any discussion of adopting an all-in finance charge until after all regulations mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act have been finalized, lenders have had a chance to implement the new rules, the full impact of the regulations can be gauged, and the CFPB can conduct studies on the regulations.

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AFSA Marketing Committee Launches Toolkit

To help association members that have limited marketing resources and staff, AFSA’s Marketing Committee created the Marketing 101 Toolkit. An educational guide intended to serve as a starting point rather than a comprehensive marketing plan, the toolkit is designed to explain fundamental marketing concepts and provide suggestions for implementing or enhancing a marketing campaign.
The toolkit covers marketing basics, conducting market research, creating a marketing strategy, identifying target markets, establishing a measurement plan, and incorporating marketing into a finance company. A sample news release and marketing research survey also are included.

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Inside the Beltway
How Hensarling Will Guide the House Financial Services Panel
American Banker (11/05/12) Finkle, Victoria

While the GOP leadership has yet to make committee leadership assignments, Rep. Jeb Hensarling (R-TX) is expected to replace Rep. Spencer Bachus (R-AL) as head of the House Financial Services Committee. Hensarling is known for his public defense of the free market and limited government, voting along party lines 95 percent of time. Observers expect Hensarling will be an effective chairman due to his behind-the scenes Hill experience, decade of service in the House, and fierce debate skills. “I always thought Bachus’ biggest strength and biggest weakness is he’s just a nice guy,” said Mark Calabria, director of financial regulation studies at the Cato Institute. “There were too many instances where [Ranking Member Rep. Barney] Frank was able to steamroll Bachus. I don’t see anybody steamrolling Hensarling in a debate.” Hensarling’s relationships with other policymakers, especially the Senate, will also play a part in his success as chairman. Hensarling has credibility with both the GOP leadership and with Tea Partiers, but his ideology is a sharp contrast to House Financial Services Ranking Member Maxine Waters (D-CA).
Insiders predict Hensarling will connect and build an agenda around revamping the Dodd-Frank Wall Street Reform and Consumer Protection Act and reforming the government-sponsored enterprises. Issues he could raise as chairman include changing the Consumer Financial Protection Bureau’s management structure to a five-person commission, making the Bureau subject to the budget appropriations process and altering instructions for how regulators should deal with institutions deemed “too big to fail.” While Hensarling has previously introduced legislation to privatize Fannie Mae and Freddie Mac, it is unclear whether that will become a focus due to other pressing issues.

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For Wall Street, Obama’s Reelection Means No Dismantling of Dodd-Frank Law
The Washington Post (11/07/12) Douglas, Danielle

Now that President Obama has been elected for a second term, analysts say the financial services industry must come to terms with the fact that the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) is here to stay. The effects of regulatory reforms on the industry will be determined by the numerous rules coming out of Dodd-Frank, many of which have yet to be finalized. While many expect the Obama administration will increase enforcement in a second term, Jaret Seiberg at Guggenheim Partners suspects the administration will take a more moderate approach to implementing financial reform and will not place additional pressure on banks. Regulatory agencies likely will continue their pattern of “proposing something radical, but finalize something more moderate,” said Seiberg. According to Brian Gardner of Keefe, Bruyette & Woods, the general consensus in Washington and on Wall Street is that financial reform must come to a definitive conclusion. “Large banks have devoted incredible monetary resources, time and effort into implementing Dodd-Frank. They may not like it, but they want the certainty of finality,” he said.

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New Faces Likely for Key U.S. Economic Posts, Starting at Treasury
Los Angeles Times (11/07/12) Puzzanghera, Jim

Several key economic posts could be replaced in President Obama's second term. Treasury Secretary Timothy Geithner already has stated that he would not stay if Obama was reelected, and nearly stepped down in 2011 after bitter negotiations with Congress over increasing the nation's debt ceiling. Obama persuaded him to stay through the end of his first term. Cabinet secretaries rarely serve more than four years. Geithner took the post in 2009.
It is unclear when Geithner will depart, but it likely will not be before Obama's first term ends on Jan. 20. Geithner will be a key player in the administration's negotiations with Congress over avoiding the fiscal cliff. Analysts have been speculating for months on possible replacements, with White House Chief of Staff Jacob Lew and former Clinton White House Chief of Staff Erskine Bowles cited most often.
Securities and Exchange Commission Chairwoman Mary Schapiro also may step down before her five-year term ends in early 2014. Democratic Commissioner Elisse Walter has been cited as a possible replacement. Federal Reserve Chairman Ben Bernanke also could leave rather than face another potentially tough confirmation fight. Last month, The New York Times reported that Bernanke told friends he would not seek another term. Possible replacements include former Obama economic advisor Lawrence Summers, Fed Vice Chair Janet Yellin and Alan Krueger, chairman of Obama's Council of Economic Advisors.

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What Wall Street Needs to Know about Elizabeth Warren
The New York Times (11/07/12) Alden, William

Elizabeth Warren, a Harvard Professor and the architect of the Consumer Financial Protection Bureau (CFPB), was elected to the Senate on November 6, giving her greater ability to influence financial regulation while regulators work to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). While her new position will give her the opportunity to weigh in on financial services issues, many from industry feel it is better to have her in the Senate where she is one of 100 members than to have her regulating them, according to Douglas Elliot, a fellow at the Brookings Institution. Warren faced strong opposition from Republicans during discussions over whether she would serve as director of the CFPB, leading President Obama to withdraw her name from consideration.
In the Senate, Warren likely will defend the regulatory agencies against budget cuts and will throw her support behind investigations of potential wrongdoing. “We need to demand that the Justice Department, our state attorneys general, and federal regulators do more to push back on the big banks and their lobbyists,” said Warren. “We need to demand that they investigate those whose illegal actions have broken the economy and, when the evidence warrants it, that they bring public prosecutions.”

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National and State News
U.S. Consumer Credit Rose More than Forecast in September
Bloomberg (11/07/12) Louis, Meera and Klimasinska, Kasia

Driven by a rise in student and auto loans, U.S. consumer credit increased $11.4 billion, surpassing forecasts calling for a $10.2 billion increase, according to the Federal Reserve. The gain followed an $18.4 billion jump in August. The increase in borrowing may be a result of improvements in labor and housing markets. “It’s pretty clear that consumer confidence has risen,” said Russell Price, a senior economist at Ameriprise Financial Inc. “I think what’s really driving that improvement in consumer confidence is that average Americans are seeing the value of their homes now recover somewhat or rebound somewhat after four or five years of steady declines.” Auto sales also rose, reaching the highest level in four years. Non-revolving debt, such for as college tuition or auto purchases, climbed $14.3 billion, and lending by the federal government, which mainly consists of education loans, rose $13.8 billion. Revolving debt, such as credit cards, however, continued to decline, decreasing by $2.9 billion. “Credit card spending is the easiest portion of consumer spending to contain, because it’s revolving, and because many of those related expenses are discretionary,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC.

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World Omni Financial Reveals New President to Replace Frank Armstrong
Auto Remarketing (11/08/12)

Dan Chait, who most recently served as senior vice president of World Omni Financial, will be replacing retiring President Frank Armstrong. Armstrong joined World Omni in 2001 and has been president since 2008. According to JM Family Enterprises Inc. President and CEO Colin Brown, Armstrong has been an integral part of the company’s success. Under his leadership, the “company experienced significant growth and experienced its best financial results,” said company officials.
Chait, who has been with World Omni since 2002, will be responsible for strategic and operational management of World Omni and its divisions: Southeast Toyota Finance, CenterOne Financial Services, DataScan Technologies and DataScan Field Services. Chait will continue servicing as a member of JM Family’s executive management team. “Dan’s appointment to president is a testament to his leadership and proven commitment to our company and our associates. With his extensive experience in the financial services industry and the collective efforts of our World Omni team, we are well positioned for continued growth,” said Brown.

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November 8, 2012

Forward To A Colleague

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AFSA Newsbriefs

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