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CFPB Director Outlines Priorities at AFSA Conference

On April 10, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray spoke candidly with AFSA members about the “Consumer Bureau’s” areas of focus and strategy. On the opening day of the AFSA Independents Conference & Exposition, Cordray spoke before more than 400 members. Cordray stated that the Bureau is focused on deceptive marketing practices, debt traps, “dead ends” – where consumers have no choice over business relationships – and discrimination. Cordray also emphasized that the CFPB uses a combination of five tools – regulation, supervision, enforcement, consumer education and engagement, and consumer response.

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New Member Welcome

AFSA welcomes new Active Members Solutions Finance, LLC and Veros Credit, LLC.
Solutions Finance is a Chattanooga,TN-based financial services company that specializes in debt management plans that fit the individual needs of their consumers, relying on their many years of financial expertise. Visit their website.

Veros Credit, LLC is a leading provider of auto-financing solutions to consumers through a broad network of franchise and independent automobile dealers specializing in the acquisition and servicing of non-prime and sub-prime automobile retail installment contracts. They are headquartered in Santa Ana, CA. Visit the Veros website here.

AFSA would also like to welcome new Business Partners Automotive Compliance Consultants, Inc. and DLangEMobile.

Founded in 2003, Automotive Compliance Consultants is a compliance consulting group specializing in compliance with Gramm-Leach-Bliley, EEO, PATRIOT Act, HR, OSHA, EPA, Red Flag, F&I Compliance and a host of other laws and regulations. They are headquartered in Crystal Lake, IL and their website is available here.

DLangEMobile is a mobile marketing company headquartered in Augusta, GA and founded with the idea of connecting consumers with businesses via the mobile phone. They specialize in mobile marketing via text, websites, mass vocal broadcasts, email and apps. Visit the DLangEMobile website here.

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Inside the Beltway
Senators Seek to Cap Interest Rates on Consumer Loans
The Hill (04/09/13) Needham, Vicki

Senate Majority Whip Dick Durbin (D-IL), who has been pushing similar legislation since 2009, has introduced a bill that would create a national interest rate cap of 36 percent on consumer loans. The bill, which is cosponsored with a number of other Senators including Senator Jeff Merkley (D-OR) and Barbara Boxer (D-CA), comes as many states attempt to pass and enact similar legislation. The bill is written so as to not impact stricter state laws.

Senator Durbin has been pushing regulators, including Consumer Financial Protection Bureau (CFPB) Director Richard Cordray, to stop big banks from participating in payday lending and to get a handle on the high interest rates that smaller payday lenders charge. Previous legislation that attempted to cap interest rates failed because legislators were unable to define “predatory lending,” a term often used for high-interest loans. The Durbin bill attempts to solve this problem by placing an overall cap on all lending, regardless of its definition, and would include credit cards, open lines of credit, mortgages, and car loans.

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Mary Jo White Confirmed as SEC Chief
The Washington Post (04/08/13) ElBoghdady, Dina

The full Senate moved forward with the confirmation of President Obama’s selection of Mary Jo White to head the Securities and Exchange Commission (SEC) on Monday. Her nomination was expected to proceed relatively quickly. She skated through a Senate Finance Committee hearing last month with a vote of 21-1 after impressing lawmakers with her credentials as a former prosecutor and New York City white collar lawyer, despite having strong ties to Wall Street.

Previously, White was a lead attorney with Debevoise & Plimpton before becoming a prosecutor. In 2012, she returned to Debevoise before getting tapped by President Obama to head up the SEC.

White gave senators a number of assurances and policy pronouncements during her confirmation hearing before the Senate Finance Committee, including agreeing that credit rating agency reform was a top priority. “Ms. White has assured me that she will give this critical issue the attention it deserves,” said Senator Al Franken (D-Minnesota).

White has a challenging regulatory agenda in front of her, as the SEC and related agencies continue to implement the Dodd-Frank Wall Street Reform Act.

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Banks Healthy, Bernanke Says
Associated Press (04/08/13)

Federal Reserve Chairman Ben Bernanke said in a statement Monday that the Fed’s annual stress tests of national banking institutions had been successful in detecting issues and that the banking system has grown healthier since the financial crisis. In prepared remarks to the Atlanta Federal Reserve, Bernanke noted that all the banks tested had nearly doubled the cushion of assets they carry, which would allow them to weather a financial crisis successfully.

The details of how the stress tests are calculated have been a sticking point for some banks. The Fed does not release the algorithms used to determine the strength of the banks. Still, the tests provide critical information for regulators and bankers alike, allowing them to get a window into the stability of the national financial system. Bernanke noted that banks will, in time, come to understand the standards used in the tests.

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Politico PRO (04/11/13) Prior, Jon

The Federal Housing Finance Agency (FHFA) announced this morning that it would be extending its Home Affordable Refinance Program (HARP) for another two years. The program, which has been running since 2009, has helped more than two million borrowers refinance their mortgages. The HARP program targets homeowners who are underwater – or owe more on their mortgage loan than the house is worth. Changes to the HARP program last year allowed 200,000 additional homeowners to use the program to refinance their mortgage.

The program was set to expire this year, but with the FHFA’s announcement, will extend through 2015.

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National and State News
St. Paul Park to Charge Fee for Vacant Homes
South Washington County Bulletin (04/10/13) Buss, Emily

St. Paul Park, Minnesota Mayor Keith Franke was upset by a series of vacant homes and broken windows along the town’s Heritage Day parade route, which prompted him to take action and push the city council to implement a fee for vacant homes. The homeowners, usually banks, will be responsible for the fee. “This is aimed at institutions that take over a property then ignore it,” council member Tim Jones said. “When an institution takes hold, that’s when the lack of care comes in. That’s what I imagine this ordinance helping with.”

The city council has not decided on the amount of the fee but has discussed a fee of between $300 and $500 for each property. Other city council members have posited that the fee should be closer to $100. Owners of vacant properties would also be required to register them with the city, which prevents police officers from having to investigate who owns a home. Instead, they would be able to look up the registered owner in the database.

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Vacant Property Registry Effective Around Valley
Las Vegas Review-Journal (04/08/13) Morrison, Jane Ann

Las Vegas City Attorney Brad Jerbic said that the city’s vacant property ordinance, along with Las Vegas County’s similar provision, has registered 1,595 vacant properties in the city limits as well as an additional 269 in North Las Vegas. He considers the registry a success. The program, modeled after Chicago’s vacant property registration, puts lenders on the hook for the cost of upkeep and securing foreclosed homes in the area. Since its passage in December of 2011, the ordinance has registered more than 2,200 properties.

“Prior to this registration, we’d get complaints about vacant houses and we had to do hours of research,” said Mike Bouse, a code enforcement manager for the city. “Now, we get a complaint and in a matter of minutes we can be on the phone with the right person.” The ordinance requires an initial registration fee of $200 and a fee of $50 to change the contact information for the property, which must be reported to the Department of Building and Safety.

Las Vegas and its surrounding municipalities originally passed the ordinances to cut down on squatters, who would occupy homes illegally, cause damage and create a public nuisance or health hazard.

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Lynn Foreclosure Mediation Plan Faces Mayoral Scrutiny
The Daily Item (04/10/13) Jourgensen, Thor

The Lynn, MAs city council approved a foreclosure mediation ordinance last month in an 11-0 vote. The mayor, however, believes the city council may have overstepped its bounds. “I have somewhat of a problem with Lynn developing its own banking regulations — that’s within the realm of the federal government,” said Mayor Judith Flanagan Kennedy this week.

The ordinance, which the Southern Essex Register of Deeds John L. O’Brien Jr. has said he would enforce, would require mediation to take place between a homeowner and a lender before foreclosure action can begin. O’Brien has stated that he will refuse to accept foreclosure applications without the mediation certificate attached. The ordinance would also permit homeowners to remain in their homes as renters and establishes requirements on lenders to maintain the property should it become vacant.

Mayor Flanagan Kennedy, however, is skeptical of the usefulness of the ordinance, considering that the surrounding towns do not have such an ordinance. She has ten days to review the measure before having to act on it. She has stated that she is committed to taking the full period of time allotted to her.

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First Checks to Be Issued in Mortgage Settlement
The New York Times Dealbook (04/09/13) Silver-Greenberg, Jessica

The Federal Reserve and the Office of the Comptroller of the Currency (OCC) have announced that checks will be mailed soon to homeowners who participated in the multi-billion dollar mortgage foreclosure settlement. In January, the OCC and Fed cancelled the review of millions of mortgage documents after increasing delays and rising fees. The settlement was reached after regulators found that independent contractors who were tasked with reviewing mortgages only reviewed a small percentage of claims and charged billions of dollars in fees. Additionally, the Federal Reserve and OCC created an intricate web of bureaucratic rules that prevented homeowners from seeking relief, which made it impossible for contractors to review the files accurately.

The Government Accountability Office (GAO) released a report last week condemning the regulator’s review process, and the Senate Banking Committee has scheduled hearings to investigate as well. Regulators expect to mail 1.4 million checks, totaling approximately $1.2 billion. When the settlement is completely paid out, the total will reach approximately $3.6 billion in relief to struggling homeowners.

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April 11, 2013

Forward To A Colleague

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AFSA Newsbriefs

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