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Inside Washington (07/06/2011)
* WASHINGTON (7/7/11)--The Federal Housing Administration (FHA) may tighten borrowers’ required debt-to-income ratios, a move that could keep many consumers out of the mortgage market (American Banker July 6). Although the agency has yet to issue definitive ratios, lenders fear such tightening could hurt the still-recovering housing market and cause a further decline in home prices. But a hard cap on debt-to-income ratios likely would lower delinquency rates and bolster the financial health of the FHA’s Mutual Mortgage Insurance fund, according to the agency. The FHA is assessing the variables that go into its Total Scorecard automated underwriting system. Robert Ryan, FHA’s acting commissioner, suggested the debt-to-income ratios could be tightened, and instead of automated approval, lenders would conduct manual reviews to ensure borrowers had adequate income or savings … * WASHINGTON (7/7/11)--The Federal Deposit Insurance Corp. (FDIC) board of directors approved the authority to dismantle “too-big-to-fail” financial firms as part of the government’s effort to end bailouts of large firms because the government lacked an effective way to wind them down (The Wall Street Journal July 6). Dodd-Frank gave the FDIC resolution powers for firms deemed too systemic to be wound down through bankruptcy. In Chairman Sheila Bair’s last meeting, the board also approved rules allowing the government to recover compensation from executives whose actions lead to the failure of a financial services firms. Bank executives could be subject to clawbacks on their pay if they do not conduct their responsibilities with “the degree of skill and care an ordinarily prudent person in a like position would exercise under similar circumstances,” the agency said … * WASHINGTON (7/7/11)--The Office of the Comptroller of the Currency (OCC) has published a community development investments electronic newsletter that provides a guide for national banks seeking to expand their small-business lending initiatives. The newsletter describes new federal initiatives created by the Small Business Jobs Act and additional enhancements to Small Business Administration (SBA) credit support programs designed to provide sources of capital so banks can provide financing to small businesses. The online newsletter describes the Small Business Jobs Act’s flagship programs, the Small Business Lending Fund and the State Small Business Credit Initiative. It also highlights federal programs designed to promote mission-focused and entrepreneurial small businesses and small business exports. Community Developments Investments can be accessed on the OCC’s website … * WASHINGTON (7/7/11)--The Federal Housing Administration (FHA) has published updated condominium policy guidelines and instructions that clarify the approval and recertification process and policies for condo projects. FHA’s mortgagee letter includes a condominium policy guide and implementation schedule identifying timelines for lenders to comply with the guidelines. The Housing and Economic Recovery Act of 2008 required the issuance of updated administrative guidance and regulations. “This guidance formalizes and expands the policies we put in place in 2009 and lays the groundwork for a more formal rulemaking process going forward,” said FHA's Acting Commissioner Robert Ryan. The Condominium Project Approval and Processing Guide is available online


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