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Inside Washington (10/26/2010)
* WASHINGTON (10/27/10)--Deputy Treasury Secretary Neal Wolin said the Obama Administration has made major strides toward enacting the regulatory reform law (American Banker Oct. 26). Noteworthy developments include the work done to set up a consumer protection bureau and a data collection agency as well as the creation of the Financial Stability Oversight Council and the Office of Financial Research (OFR). The OFR will aid regulators by standardizing financial reporting and reference data for better data collection and analysis. In a speech presented at Georgetown University's McDonough School of Business, Wolin countered concerns that the OFR would increase financial institutions’ reporting requirements by stating that the OFR will not duplicate existing data collection or create unnecessary burdens … * WASHINGTON (10/27/10)--There are more canceled mortgage loan modifications than active modifications in the foreclosure prevention program created by the Obama administration. A U.S. Treasury Department report stated that almost 700,000 loan modifications started under the program were canceled through Sept. 30, while 466,708 permanent modifications remain active (American Banker Oct. 26). A permanent modification is canceled when a mortgage holder falls behind on three or more consecutive monthly payments. Redefaults remain a problem for the program, with a permanent modification canceled if a borrower misses three or more consecutive monthly payments. In the first quarter of 2010, 9.8% of modifications that became permanent were delinquent by 60 days or more after six months. Delinquencies continue to increase, with 3 million loans delinquent as of Aug. 31 … * WASHINGTON (10/27/10)--Regulators should have recognized the warnings signs of eroding standards at foreclosure servicers, according to Sheila Bair, chairman of the Federal Deposit Insurance Corp. Bair said regulators failed to follow up on clues that some servicers were overloaded with foreclosures (American Banker Oct. 26). For example, regulators should have looked at major decreases in servicing fees in recent years and then asked how servicers could achieve those efficiencies without impacting quality. Bair said the temporary mortgage freeze enacted at several large institutions, including Bank of America Corp., indicates that securitization practices need to be revamped at every stage, from origination, to securities underwriting, to servicing. She called on the industry to ponder offering foreclosure “triage,” which might include providing safe harbor relief if a property is vacant or if the servicer offered a minimum payment reduction of at least 25% and the borrower still could not make the payments. Bair was addressing a regulatory symposium on the future of housing and finance…


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