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BITS unveils mortgage fraud toolkit for consumers

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WASHINGTON (2/1/08)—BITS Financial Services Roundtable, a financial service industry consortium, has unveiled a new mortgage fraud prevention toolkit for consumers, an educational packet developed through the input of the Credit Union National Association (CUNA) and other BITS members. The toolkit was developed by the BITS Mortgage Fraud Reduction project group to help financial institutions educate consumers about mortgage fraud and how to protect themselves against the most common schemes. The materials include details about a variety of mortgage fraud schemes, including foreclosure bailouts, "dos and don'ts" that consumers should consider when getting a mortgage, and resources that consumers can refer to for more information. BITS is encouraging all financial institutions to incorporate the information into their own consumer education materials and programs on preventing mortgage fraud. Entitled the "Mortgage Fraud Prevention: An Education and Awareness Toolkit for Consumers," the packet is available on the BITS Web site. (Use the resource link below to access that site.)

Inside Washington (01/31/2008)

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* WASHINGTON (2/1/08)--The Office of the Comptroller of the Currency could cut national bank exam fees for the first time in a decade (American Banker Jan. 31). The reduction amount is not known, but observers said reasons for the change include the credit crisis, national bank conversions and excess revenue. Industry officials expect the cut to be announced this month. The reduction would be the first since 1996, when former comptroller Eugene Ludwig dropped the rates by 12% for 600 national banks ... * WASHINGTON (2/1/08)--The Senate Banking Committee is scheduled to consider government-sponsored enterprise reform legislation at a hearing Feb. 7 (American Banker Jan. 31). James Lockhart, director of the Office of Federal Housing Enterprise Oversight; Ronald Rosenfeld, chairman of the Federal Housing Finance Board; and Robert Steel, Treasury Department undersecretary for domestic finance, are expected to testify ... * WASHINGTON (2/1/08)--Fannie Mae CEO Daniel Mudd took a 15% pay cut in 2007. He received $12.2 million in compensation, with a $990,000 salary, $9 million long-term incentive award and a $2.23 million bonus (Reuters Jan. 31). Fannie Mae has been hit by the credit crisis and mortgage delinquencies, which increased its expenses in the first nine months of 2007 to $2 billion from $400 million ... * WASHINGTON (2/1/08)--Senate Democrats said they were 60 votes short of advancing their $157 billion economic stimulus package and would have to accept the less expensive House plan (The New York Times Jan. 31). However, they said they would try to make some changes to the House plan before next week’s vote. Democratic amendments include extension of unemployment benefits, food stamp increases, funds for mortgage counseling and subsidies for low-income families’ heating and energy costs. The Democrats also have yet to agree on extending the Bush administration’s terrorism surveillance program, which the Republicans are using as leverage to push the stimulus bill to the floor ... * WASHINGTON (2/1/08)—Sen. Hillary Clinton (D-N.Y.) said this week that she will be seeking to crack down on certain abusive credit card practices and vowed to create an independent regulator to oversee consumer protections in financial services (American Banker Jan. 31). Clinton—who is running a tough and tight race for the Democratic presidential nomination—said she would seek, among other things, a 30% cap on annual interest rates for credit cards, payday loans, and refund anticipation loans. The cap would include penalty fees. Clinton told her audience at a campaign stop in North Little Rock, Ark., that the cap would be lowered over time. The article noted that in December, Sen. Barack Obama ( D-Ill.), Clinton’s rival for the Democratic nomination, introduced a bill that would press the Federal Reserve Board to create a five-star rating system for credit card safety ... * WASHINGTON (2/1/08)—Sen. Christopher Dodd’s plan to create a temporary government agency to purchase troubled subprime loans was criticized by Senate Banking Committee Republicans during a hearing on the proposal Thursday. Critics of the proposal said they did not believe that the country’s housing problems were bad enough to justify a $20 billion price tag for refinancing at-risk mortgages through the Federal Housing Administration's mortgage insurance program or secured under Fannie Mae or Freddie Mac. Sen. Robert Bennett (R-Utah), said he did not want the federal government to "become an enabler," bailing out borrowers who speculated in the real estate market while home prices escalated. Dodd, a Democrat from Connecticut, noted his frustrations with current attempts to address the housing crisis, which he said are not working. (CongressDailyPM Jan. 31) …

NCUA clarifies Reg Z definition of open-end credit

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ALEXANDRIA, Va. (2/1/08)—The National Credit Union Administration (NCUA), in a recent legal opinion letter, clarified that an extension of consumer credit by a federal credit union (FCU) meeting the definition of “open-end credit” under Regulation Z is a "line of credit" under the NCUA’s regulations. What that means, the letter said, is that such credit would not be subject to a maturity limit. The Jan. 16 letter also acknowledge that an earlier legal opinion, OGC Op. 92-0232, has created confusion in its discussion of a particular loan product as a “hybrid or bifurcated loan.” It added that this new communication supersedes the older one, and is intended to clarify the agency’s interpretation regarding application of the Regulation Z definition of open-end credit in determining if a loan product is a line of credit for purposes of NCUA regulations. “Upon reconsideration, we believe OGC Op. 92-0232 is incorrect in concluding that a loan could be neither open-end credit nor closed-end credit; in the 15 years since it was issued, the opinion has created some confusion.” wrote Michael J. McKenna , NCUA deputy general counsel. “NCUA’s interpretation of Regulation Z, confirmed as correct by legal staff at the Federal Reserve Board), is that any extension of consumer credit is either open-end credit or closed-end credit. “Accordingly, an extension of consumer credit by an FCU meeting the Regulation Z definition of open-end credit is, for NCUA’s purposes, a line of credit and not subject to maturity limits. An extension of consumer credit by an FCU that does not meet the Regulation Z definition of open-end credit is, therefore, closed-end credit and subject to applicable maturity limits under the FCU Act and NCUA’s regulations,” the letter clarified. Use the resource link below for more on the NCUA letter.

Treasury seeks comment on CDFI definition

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WASHINGTON (2/1/08)—The Treasury Department’s Community Development Financial Institution (CDFI) Fund is asking for public comment on whether it should change its criteria for certifying organizations as CDFIs. Under current rules, CDFIs must meet seven criteria to be eligible for certification. That certification allows qualified entities to apply for funding through a variety of CDFI Fund programs, and potentially access benefits from other agencies and organizations. The CDFI comment request encourages evaluation of such things as:
* Should the primary mission criteria differ by organization type? If so, how? * Should the CDFI Fund consider the types of financial products offered by an entity as relevant to the primary mission criteria? Specifically, should the CDFI Fund review, as part of the certification process, evidence of the affordability of an entity’s Financial Products to the intended customers? * How else might the CDFI Fund ensure that CDFI certification is not given to entities that engage in what are commonly called “predatory lending practices” or include so-called “predatory lending terms” in their lending products? * Should the CDFI Fund require entities to provide products and services at a cost that is at least comparable to market rates or at some minimum level of affordability to their target markets in order to satisfy the primary mission criteria? If yes, how should market rates or minimum levels of affordability be determined?
For more detail of the CDFI request for public comment, use the resource link below.