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Mortgage Investors Raise Alarm as Eminent Domain Spreads
Housingwire (06/10/13) Mlyinski, Christina

 Industry quickly voiced its opposition to the intentions of several California jurisdictions to use eminent domain to seize and restructure underwater residential mortgages. Those municiplaties are no longer considering such measures, but Richmond, Calif., and North Las Vegas are. Several mortgage investors and securitization trade groups again are voicing their strong opposition to the practice. Under the proposal, which is being put forth by Mortgage Resolution Partners (MRP), the municipalities would seize control of the title to the mortgages, but not the underlying property, allowing them to pay the original mortgage holders at fair market value and then restructure the mortgages for the homeowner.

Trade groups argue, however, that the eminent domain power of cities and towns only extends to "property of private owners who are domiciled within that municipality, and certainly not from owners who are not even within that state." Further, they argue that most mortgages are held in securitization trusts, whose investors are headquartered around the world - and that using the eminent domain powers will both drastically affect international mortgage markets and the local housing market.

While towns continue to consider the use of eminent domain, a working group in Brockton, Mass., determined that they simply do not have the legal authority to use the power to seize mortgages.

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Retooled Management Training Program Draws Large Numbers

The inaugural session of The EDGE – Education, Development, Growth and Enrichment – was a success, with 84 participants from 22 AFSA member companies. Held June 2-7 at Mercer University in Atlanta, the program provides high-quality management training classes for the consumer finance industry.

The industry’s top executives shared their personal formulas to be successful in a fast-paced and ever-changing environment. Several AFSA representatives volunteered their time as instructors and serve on The EDGE Board of Governors. AFSA member company executives Tim Stanley, Steve Schmelzer, Mark Roland, Billy Fuller, Stephanie D’Amico, Kelly Malson, and Andrew Morrison taught various courses along with AFSA President & CEO Chris Stinebert, who conducted a session on the competitive environment for the consumer finance industry. AFSA Chairman Tim Stanley, President & CEO, Heights Finance Corporation, kicked off the week by discussing qualities of leadership.

Class I selected Phyllis Buchanan, Personal Finance Company, to be its class representative, while Class II chose Joe Keys, Mariner Finance, for this honor. The two class representatives will participate in THE EDGE board meeting in October to provide insights into the program and help ensure it continues to meet expectations.

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Inside the Beltway
FHFA to Hold Hearings on Force-Placed Insurance
American Banker (06/10/13) Horwitz, Jeff

 The Federal Housing Finance Agency (FHFA) is planning to host a summit to learn more about the forced-placed insurance market. Attendance will be limited to stakeholders, meaning large banks, insurance companies, consumer and industry advocacy groups and other regulators. The meetings will take place in private. Although Fannie Mae, the largest purchaser of forced-placed insurance, will be allowed to attend the meeting, they will be prohibited from contributing or asking any questions. Fannie Mae and Freddie Mac guarantee more than 31 million home loans combined.

Forced-place insurance has come under considerable fire of late as the banks responsible for requiring it are accused of receiving kickbacks and lucrative commissions. The FHFA has charged that these "kickbacks" are often passed onto the consumer and that the banks pay inflated rates for the insurance and in return receive commissions or reinsurance deals from the companies.

New York recently banned the payments and regulators in Florida are considering a similar measure. Florida is the largest force-placed market in the country, accounting for about 30 percent of the total market.

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National and State News
Oregon Court Supports Non-Judicial Foreclosures in Ruling
Brock, Krista Franks (06/07/13) DS News

 In Niday v. GMAC Mortgage LLC, an Oregon court ruled on June 10 that Mortgage Electronic Registration Systems (MERS) could legally take certain actions on home mortgages on behalf of the lender, as long as they had the lender's permission to do so. The court noted in their decision that "if it can be shown that the original lenders and their successors conferred sufficient authority on MERS, to act on their behalves in the necessary respects, MERS may have the authority, as the true beneficiary’s agent to hold and transfer interests in the trust deed.”

The decision reversed a previous decision by the appeals court and opens the way for lenders to begin requesting non-judicial foreclosures in the state. Industry and trade groups have applauded the decision and said that the decision will keep costs low for both the industry and the consumer.

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Number of Underwater Borrowers Drops below 10 Million
The Wall Street Journal (06/12/13) Timiraos, Nick

 Due to rising house prices, the number of homeowners who are underwater dropped to 19.8 percent at the end of March from 21.7 percent at the end of 2012 and 25.2 percent at the end of 2011, according to a new CoreLogic report. In late 2011, 12.1 million properties were underwater, compared to 9.7 million at the end of the first quarter in 2013. In addition to rising home prices, foreclosures and short sales also have eliminated some underwater households. CoreLogic estimated that another 23 percent of homes with a mortgage have less than 20 percent equity, and 4.4% of borrowers only have five percent equity.

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Payday-Loan Measure Advances in Senate
The Seattle Times (06/09/13) Lovaas, Jimmy

The Washington Senate Rules Committee passed a bill that would allow payday lenders to make installment loans up to $1,500 with repayment periods ranging from six to 18 months. Currently, payday lenders in the state can make loans up to $700 that have to be repaid on the borrower’s next payday. Sen. Sharon Nelson (D-Maury Island) has been one of the most vocal opponents of Senate Bill 5312. She said the “harmful effects of predatory lending” would offset any jobs created by the legislation. Primary bill sponsor Sen. Steve Hobbs (D-Lake Stevens) said it was “an attempt to get rid of payday lending and replace it with something better.” He said the outcome “would be something of a compromise between payday lending and traditional bank loans.” Hobbs would like to add amendments prohibiting service members from taking out the loans — which the Department of Defense has insisted on since the bill was first introduced -- and reducing some of the associated fees with the proposed loans. He even stated his unlikelihood to vote for the bill without at least one of the amendments.

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Florida Passes Expedited Foreclosure Bill
DS News (06/09/13) Franks Brock, Krista

Florida Governor Rick Scott signed a bill that designates new requirements for filing a foreclosure. Under Florida H.B. 87, banks must have proof of the right to foreclose on a property before filing for foreclosure. The bill also will reduce the time lenders have to file a deficiency judgment from five years to one year. Both requirements become effective in July. Effective immediately, property associations or other third parties can move for expedited foreclosures.

“Florida’s housing market is important to our economy’s continuous recovery and this bill will aid in that effort by placing abandoned homes, caught up in the foreclosure backlog, back onto the market,” Scott stated. “This bill expedites an existing voluntary alternative court process for defaulted home loans in uncontested cases when the borrower and the bank both seek a more speedy finality.”

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GE Names CFO Sherin to Lead Finance Unit as It Scales Back
Catts, Tim (06/12/13) Bloomberg

 Effective July 1, Keith Sherin will lead GE Capital, succeeding retiring Mike Neal. Sherin, who was Chief Financial Officer for General Electric Co., will lead efforts to  shrink the finance unit. Sherin is “a trusted colleague and a smart business partner,” said GE CEO Jeff Immelt. Sherin joined GE in 1981 and has been the company's finance chief since 1998. Neal, who led GE Capital since July 2005, will continue as a GE vice chairman through the end of the year.

Immelt has pledged to reduce GE Capital’s ending net investment by more than 25 percent to as little as $300 billion by the end of 2014. GE may divest some GE Capital businesses through an initial public offering, Immelt told analysts and investors at a recent conference.

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June 13, 2013

Forward To A Colleague

Black Book
ParaData Financial
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Life of the South
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Carleton, Inc.
AFSA Newsbriefs

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