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Inside Washington (12/12/2008)
* WASHINGTON (12/15/08)--The U.S. Small Business Administration (SBA) Friday issued an interim final rule for new lender oversight regulations in its guaranteed loan program. Effective Jan. 12, the rule is intended to give the SBA greater enforcement authority and increase transparency on how risk is evaluated. It codifies in SBA regulations SBA's process of risk-based oversight including: accounting and reporting requirements; off-site reviews/monitoring; on-site reviews and examinations; and capital adequacy requirements. It also codifies SBA Supervised Lender regulation and updates SBA's business loan program regulations to specify program standards. Finally, the rule lists the types of, grounds for, and procedures governing SBA enforcement actions against 7(a) Lenders, Certified Development Companies, Microloan Intermediaries, and Non-Lending Technical Assistance Providers within consolidated enforcement regulations … * WASHINGTON (12/15/08)--Though the Federal Housing Finance Agency (FHFA) is expected to unveil a plan that would allow Fannie Mae and Freddie Mac to purchase mortgage-backed securities in an effort to lower rates, mortgage rates may drop to 4.5% on their own, FHFA Director James Lockhart said Thursday (American Banker Dec. 12). Fannie last week issued debt for five-year maturities at 2.8%--a positive sign, he said. Lockhart also noted that a recently announced Federal Reserve Board plan to buy Fannie and Freddie’s debt eliminates the need for the government to back the enterprises. Fannie and Freddie also will be required beginning Monday to support modifications from servicers that lower borrowers’ debt ratio to 38%. Lockhart said he is aware of the problems the Home Loan banks are facing, but said he is not looking to make accounting changes. The Chicago, Atlanta and Seattle banks reported “other-than-temporary” impairments regarding writedowns of private securities in the third quarter … * WASHINGTON (12/15/08)—A provision in a Department of Housing and Urban Development mortgage fee and disclosure rule--the Real Estate Settlement Procedures Act (RESPA)--could end partnerships that some lenders have with builders, according to industry observers. Under the provision, builders would be prohibited from giving homebuyers discounts if they use an affiliated mortgage or settlement company--such as Bank of America, Wells Fargo or JPMorgan Chase and Co. The provision is effective Jan. 16. Also on that day, lenders will be granted permission to charge borrowers average fees for settlement services, instead of the actual fees the lender paid the service provider. However, the rule does not allow average charges for fees based on loan amounts, such as daily interest, reserves, escrow, insurance or transfer taxes … * WASHINGTON (12/15/08)—More than 3,100 banks—mostly community banks--are not planning to participate in the Federal Deposit Insurance Corp.’s (FDIC) program to back debt. About 863 institutions also are not using the program’s coverage of checking deposits that bear no interest (American Banker Dec. 12). Some institutions said they chose not to participate in the program because the backing cost was high and they did not issue senior unsecured debt. The FDIC’s plan was released in October. It was designed to back debt for three years and back checking deposits with 0% interest through the end of 2009. Guarantees were offered free until Dec. 5, and banks could opt out before paying any fees. Banks who keep the coverage will pay to insure new senior unsecured debt—costing about 50 to 100 basis points …


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