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Montana Retail Installment Sales Bill Amended to Address AFSA Concerns
After a Jan. 10 hearing, the Montana House Business and Labor Committee amended Montana House Bill 63, a bill that makes several changes to the Retail Installment Sales Act, to address concerns raised by AFSA and other industry trades. On Jan. 7, AFSA submitted a letter to Montana Banking and Financial Institutions Commissioner Melanie Hall recommending several changes to HB 63, which as drafted would have resulted in an unnecessary burden on financial institutions that purchase retail installment sales contracts. At the hearing, the committee and Commissioner Hall agreed to several revisions proposed by AFSA and other trade associations, including the removal of a proposed section that would have subjected the holder of a retail installment sales contract to all claims and defenses of the buyer.
FDIC Approves Home Appraisal RulePolitico PRO (01/15/13) Davidson, Kate
The Federal Deposit Insurance Corp. (FDIC) approved a joint rule on Jan. 15 that would impose new appraisal requirements for high-priced mortgages, as part of a slew of new rules stemming from the continued implementation of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.
The joint rule will require a lender to obtain a written appraisal for a high-priced mortgage loan from a licensed appraiser who has visited the property in person. In a move to prevent fraudulent home flipping, a lender must also pay for and submit a second appraisal if the home has been sold at a lower price within the last six months. A high-priced mortgage under the rule is considered one that is not a “qualified mortgage,” is secured by a primary dwelling and has an interest rate that exceeds the average prime offer rate by 1.5 percentage points, or 2.5 points for jumbo loans.
The rule, which will take effect Jan. 18, 2014, was issued jointly by the Consumer Financial Protection Bureau, Office of the Comptroller of the Currency, Federal Reserve Board, National Credit Union Administration and Federal Housing Finance Agency.
FDIC's Longtime Head of Supervision to LeaveAmerican Banker (01/14/13) Adler, Joe
The Federal Deposit Insurance Corporation’s (FDIC) supervision chief is stepping down to take a job at the Federal Housing Finance Agency (FHFA). Sandra Thompson, who has been with the FDIC's Division of Supervision and Consumer Protection since 2006, will be replaced by Doreen Eberly.
Eberly has been with the FDIC since 1987 and has served in a wide variety of roles, including the New York regional director, the acting deputy to former FDIC Chairman Sheila Bair and senior deputy director for Risk Management Supervision.
Sandra Thompson has held numerous positions at the FDIC, including deputy to the FDIC vice chairman and deputy director for special projects in the Division of Depositor and Consumer Protection.
At the FHFA, Thompson will be the agency's deputy director of housing mission and goals. Her last day at the FDIC will be Feb. 1.
Captives Gain Stature among Auto ExecsAutomotive News (01/16/13) Henry, Jim
In KPMG’s latest Global Automotive Executive Survey of top auto executives, CEOs of captive finance companies received increasingly high marks. “Captive finance is becoming an increasingly important part of the value proposition for consumers and OEMs alike,” said Gary Silberg, Chicago-based national automotive industry leader for KPMG.
Two hundred auto executives, representing manufacturers, captive financers, suppliers and dealers, participated in the survey, which found that 54 percent of respondents rated captive financing and leasing either “extremely important” or “very important” as a key automotive trend. The figure is more than double last year’s 26 percent. In 2013, 71 percent of survey respondents rated operating a captive finance company as important to an OEM’s future success, up from 64 percent in 2012.
Also in 2013, 82 percent of survey respondents rated competitive financing options as either “extremely important” or “important” to consumer vehicle purchasing decisions, up from 60 percent in 2012.
Eminent Domain Mortgage Plan — Who Wants to Go First?Politico PRO (01/14/13) Prior, John
Investor groups are poised for a lengthy legal battle, as numerous county and city governments have been exploring using their eminent domain powers to assist homeowners who may be underwater on their mortgages. The plan was devised by Wall Street firm Mortgage Resolution Partners (MR) and was brought to national attention last year when San Bernardino, Calif. developed a joint powers authority to consider the proposal. The city council will meet Jan. 24, and if they decide to move forward with a plan to use eminent domain, the jurisdiction will be the first to take such drastic action.
However, very few municipalities are moving ahead with plans to use eminent domain any time soon. Brockton, Mass., City Council President Tim Cruise said that his jurisdiction would not be a testing ground for such a plan. Wayne County, Mich., has dismissed using the eminent domain tool. Likewise, the city of Chicago, whose city council is still officially considering its use, has unofficially tossed the idea aside. All of the municipalities have cited the high cost of litigation as the main reason behind not pursuing the plan.
MRP would stand to make the most from a municipality’s use of eminent domain. The company would help determine which loans to select, handle writing down the appropriate principal and then refinance the mortgage into a new one backed by the Federal Housing Administration. Investors in MRP would profit off the difference between what is paid to seize the loan and the revenue gained from the new refinanced mortgage, plus a $4,500 advisory fee per loan charged to the local government.
Prepaid Debit Card Marketers Settle Florida Case Over Disclosure of FeesOrlando Sentinel (01/16/13) By Burnett, Richard
Several pre-paid debit card companies have reached a settlement with Florida state regulators after complaints surrounding their marketing practices surfaced. The companies will pay a combined $325,000 to the state for investigation costs and $115,000 in charitable donations to Orlando-based Junior Achievement of Central Florida for financial literacy programs. The deal also requires the companies to provide better disclosure of fees in their marketing, as well as stop advertising that claims the use of pre-paid debit cards helps increase a user’s credit rating.
Florida regulators noted that while prepaid cards may offer a convenient service for some consumers, consumers should be mindful that undisclosed or poorly disclosed fees can make the cards very costly.
Santander, JAC Get Regulatory Approval for Car Lending VentureWall Street Journal (01/13/13) Bjork, Christopher
Banco Santander has been approved to operate a joint-financing company with Chinese automaker Anhui Jianghuai (JAC) by the Chinese Banking Regulatory Commission. Santander, which has operations in Europe and the United States, first began setting up Fortune Auto Finance Co. in December 2011.
The venture will offer financing for a number of automakers, including JAC, which sells cars in China through nearly 1,000 dealers. With approximately 19 million cars sold in the country in 2012, China is the world’s largest vehicle market. Santander and JAC will put up an initial 500 million yuan, or $80 million. Santander will name Fortune Auto Finance’s chief executive and key management, while each company will have three board members apiece.
MetLife Exits Banking with Sale to GEWall Street Journal (01/15/13) Holm, Eric
A deal to sell MetLife’s online-banking division to General Electric Co. has been finalized, receiving approval from the Office of the Comptroller of the Currency (OCC) after a lengthy approval process that began in December 2011. MetLife has been eager to shed its banking division and the Federal Reserve capital constraints that accompany it. However, MetLife likely will be regulated as a systemically important non-bank financial institution under the Dodd-Frank Wall Street Reform and Consumer Protection Act for its insurance business.
The sale process gained some urgency in March 2012, when MetLife failed the Fed's stress test, forcing the insurer to backtrack on a plan to return capital to shareholders. MetLife and GE were forced to restructure the transaction in September 2012 after waiting months for approval from the Federal Deposit Insurance Corporation (FDIC). As a result, MetLife sold its banking division to a different department at GE, allowing the OCC to approve the transaction and move the process forward.
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AFSA's mission is to protect and improve the consumer credit business, maintain a positive public image, and create a legislative climate in which reasonable credit regulation can and will be enacted. The association operates in the public interest, encourages and maintains ethical business practices, supports financial education for consumers of all ages, and provides other assistance in related fields on an as-needed basis.
The American Financial Services Association has provided services to its members for over ninety years. The association's officers, board, and staff are dedicated to continuing this impressive legacy of commitment through the addition of new members and programs, and increasing the quality of existing services.