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AFSA welcomes new Active Member Fidelity Finance of Hammond Inc.
Louisiana-based Fidelity Finance, which was formed in 1995, provides consumer loans. website
Financial Reform Battle Continues over Dodd-Frank LawThe Washington Post (01/02/13) Douglas, Danielle
In the two years since the far-reaching Dodd-Frank Wall Street Reform and Consumer Protection Act was passed, Republicans have sought to dismantle it, forcing Democrats to defend a law that many members have concerns with. Because the 113th Congress will have a similar makeup as its predecessor, bitter partisan battles could continue instead of meaningful action – House Republicans’ failed “Plan B” proposal to avert the fiscal cliff is evidence of the divisiveness found on Capitol Hill. That proposal included hidden language that would have cut automatic funding for the Consumer Financial Protection Bureau (CFPB) and remove regulators of certain powers.
However, rhetoric between the parties has softened of late, leading some within the industry to surmise that critical, bipartisan legislation could be forthcoming in 2013. Any meaningful legislation affecting Dodd-Frank will have to pass through Jeb Hensarling’s (R-TX) House Financial Services Committee, where he will have to work closely with Ranking Member Maxine Waters (D-CA). The two politicians have voiced concern that risk retention policies, requiring banks to hold up to five percent of mortgages on their books, will stall continued economic recovery and limit credit availability.
Additionally, the two disagree on the role Fannie Mae and Freddie Mac should play in the federal guarantee of home mortgages. Hensarling opposes government guarantee completely, while Waters prefers some federal role in the mortgage industry; the two will have to work closely to come to an agreement. “Hensarling and Waters could become the new power couple in financial services. They’re polar opposites from their political backgrounds, but they will share key objectives,” said Jaret Seiberg, senior policy analyst at Guggenheim Partners.
CFPB to Ring in the New Year with a Slew of RulesPolitico Pro (12/31/12) Davidson, Kate
The Consumer Financial Protection Bureau (CFPB) is facing a number of deadlines in the first few weeks of 2013. The most anticipated action item is the qualified mortgage rule (QM), which requires lenders to verify a borrower’s ability to repay a mortgage loan, unless the loan meets a set of criteria established by the CFPB. Setting criteria too high could bar qualified borrowers from mortgages, according to industry members and associations. QM and other mortgage-related regulations must be finalized by Jan. 21. The rule is considered by many in the industry to be the most important and impactful of the bureau’s Dodd-Frank related regulations.
The CFPB is also in the process of selecting a replacement for departing Deputy Director Raj Date. The new number two likely will take over as director after Richard Cordray’s term expires at the end of the year. The agency has stated a desire to find a qualified replacement from outside who has worked in the financial industry.
Finally, CFPB will consider a number of other measures in the first months of the year, including requirements that lenders provide additional information to borrowers on monthly statements, earlier disclosure of interest rate changes and early prevention efforts to help borrowers avoid foreclosure. Additionally, CFPB is aiming to regulate the display of customer information, requiring that payments post promptly, mandating quick correction of any accounting errors and providing additional assistance to those who may be late or delinquent.
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Mortgage-Fee Plan Faces PushbackThe Wall Street Journal (01/02/13) Timiraos, Nick
State officials and customer advocates in New York, New Jersey, Illinois, Connecticut and Florida are pushing back against a Federal Housing Finance Agency (FHFA) proposal to raise fees on loans in the states because they take the longest to process. The states are classified as judicial states, meaning that a lender must seek court approval before it can file a foreclosure claim against a borrower. "Trying to get control of that collateral has been a very slow process in some states," said Edward DeMarco, FHFA acting director. "There are material differences in these costs and…if it gets so far out of the norm, it's got to be taken into account."
While 23 states are classified as judicial, FHFA only sought to increase the fees in states where the process of foreclosure was slowest. Because courts have tended to side with borrowers over lenders and the volume of cases is high, banks argue that the speed with which foreclosures are processed has slowed down drastically in judicial states.
The majority of the 60 public responses to the FHFA proposal were against it. An agency spokeswoman said a final announcement is not expected before April.
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Some Retailers May Impose a Fee on Credit Card Transactions Beginning Jan. 27Pittsburgh Post-Gazette (01/02/13) Sabatini, Patricia
Consumers could begin seeing new checkout fees on Jan. 27. The checkout fees allow merchants to recoup swipe fees they pay to process credit card transactions. Retailers won the right to charge the fees under a class action lawsuit settlement with Visa, MasterCard and a number of large banks, in which retailers also received a cash settlement of just over $6 billion. The settlement is not yet finalized, but a judge has given preliminary approval to proceed with the fees. Before the lawsuit, credit card companies had prohibited retailers from passing processing costs onto consumers in the form of checkout fees.
Retailers are required to post the checkout fee they charge at entrances and on receipts. Advocacy groups are informing consumers that debit cards are exempt from the fees and that they should be aware of which card they are using at the register. Fees can be different depending on the type of card; rewards credit cards, for example, may have higher fees because they cost more for the merchant to process.
"We're not sure whether retailers are going to charge these fees," said Ruth Susswein, deputy director of national priorities at Consumer Action. "They may not for competitive reasons. Some of it will depend on whether the other guy does it." Ten states ban checkout fees: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. Credit card companies are continuing with their preparations for checkout fees, while awaiting a final ruling on the class action lawsuit.
Booher's Foreclosure Prevention Legislation Signed by Gov. SnyderUpNorthLive.com (12/31/12) Cook, Anne
Legislation sponsored by Michigan State Senator Darwin Booher (R-Evart) was signed into law by Governor Rick Snyder on Dec. 28, 2012. The law extends 2009 legislation that allowed a 90-day moratorium on mortgage foreclosure where the homeowner could contact and work with lenders or could petition the courts to find a solution. The new legislation extends the law through June 30, 2013.
"I sponsored this initiative because extending this foreclosure prevention program will protect homeowners while giving us six months to review and respond to new federal rules to be issued in January," said Booher after the bill was made law. The senator was referring to mortgage rules that are expected to be announced by the Consumer Financial Protection Bureau CFPB in January.
Senate Confirms Galante as FHA Chief Despite LossesReuters (12/30/12) Lawder, David
Former San Francisco affordable housing developer and acting head of the Federal Housing Administration (FHA) Carol Galante was confirmed by the U.S. Senate on a 69-24 vote as the next assistant secretary of the Department of Housing and Urban Development. She will also continue as the head of the FHA despite continued losses that could necessitate a taxpayer bailout of the mortgage funding agency.
The FHA backs nearly $1.1 billion in mortgages and reported a shortfall of $16.3 billion last month due to the housing market downturn. In response, the FHA has added a surcharge that adds, on average, $13 to a borrower’s monthly mortgage payment.
Galante’s confirmation faced some push back from Senate Republicans who objected to the deteriorating finances of the FHA. Senator Bob Corker (R-TN) was her most vocal critic, but dropped his objection after Galante vowed to make substantive changes to the agency’s financial practices, including tightening lending standards for buyers with lower credit scores and limiting the amount of money that could be borrowed in the FHA's reverse-mortgage program.
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