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Inside Washington (12/05/2007)

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* WASHINGTON (12/6/07)—The Treasury Department announced that Secretary Henry M. Paulson, Jr. will join Housing and Urban Development Secretary Alphonso Jackson today for a press conference to discuss the Bush administration's ongoing efforts to help struggling homeowners keep their homes. Members of the mortgage industry, as well as mortgage investors and mortgage counselors, will also participate in the 1:45 p.m. EST press event in the Treasury’s Media Room … * WASHINGTON (12/6/07)—House Financial Services Chairman Barney Frank (D-Mass.) met with about 150 members of Women in Housing and Finance Tuesday evening at a reception at Credit Union House on Capitol Hill. Frank spoke to the group about mortgage reform legislation passed last week by the House... * WASHINGTON (12/6/07)--The Office of Federal Housing Oversight (OFHEO) announced Wednesday the appointment of Christopher H. Dickerson as the director of OFHEO’s Office of Supervision, effectively immediately. Dickerson has served as the agency’s first chief compliance examiner in charge of the Office of Compliance, established in December 2003. In his new position, Dickerson will provide oversight and ensure coordination among all supervisory offices: Examinations, Capital Supervision, Chief Accountant, Compliance, Risk Analysis and Financial Performance, Policy and Research, and Policy Systems and Quality Assurance … * WASHINGTON (12/6/07)--The Office of the Comptroller of the Currency is the sole enforcer of banking laws for national banks, a federal appeals court ruled Tuesday. In 2005, then-attorney general Gov. Eliot Spitzer tried to access national bank records to determine their compliance with anti-discrimination laws (American Banker Dec. 5). The OCC denied the request, stating that it had sole regulatory powers. The appeals court also overturned a decision made by a lower court regarding Spitzer’s access to records of national banks enforcing the Fair Housing Act. The appeals court ruled that the lower court did not have the authority to decide on the matter, and remanded the case to district court. The district court has been instructed to dismiss the claim. The ruling is important to the scope of preemption, said Rob Lacy, a partner at Sullivan and Cromwell LLP, because it upholds the fact that national banks are subject to only one supervision system …

NCUA posts info on free tax prep help

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ALEXANDRIA, Va. (12/6/07)—The National Credit Union Administration (NCUA) has made accessible through it website a recent webcast on credit union opportunities to provide fee tax preparation service. The November webcast was a follow up to an NCUA Access Across America program, which included a panel on Volunteer Income Tax Assistance (VITA), and was a collaborative effort between NCUA, the Department of Housing and Urban Development and the Internal Revenue Service (IRS). The webcast features speakers from the IRS and two credit unions, actively involved in the VITA program, who presented information regarding VITA and partnerships with community coalitions. Currently, nearly 200 credit unions are involved in the VITA program and related coalition outreach efforts. “Providing free tax preparation enhances credit unions’ ability to connect with their communities and provides a vital service to the members,” NCUA board member Gigi Hyland said introducing the webcast. “What’s more, the VITA program provides credit unions access to a network of national organizations, 325 community coalitions and the IRS.” Hyland promised future NCUA webcasts that will focus on ways to establish a VITA website and additional opportunities to partner with government agencies. Use the resource links below to access the NCUA webcast and to view additional information regarding the VITA program.

CUNA suggests limitations in Senate bankruptcy bill

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WASHINGTON (12/6/07)—As Senate Majority Whip Richard Durbin was poised to conduct a hearing on the “looming foreclosure crisis,” the Credit Union National Association (CUNA) urged him to include some limits on a plan to allow mortgage modifications in bankruptcy proceedings. In a letter to Durbin, a Democrat from Illinois, CUNA addressed the Helping Families Save Their Homes in Bankruptcy Act (S.2136), which would eliminate the current exemption for first mortgages from modification during Chapter 13 bankruptcy proceedings. The CUNA letter said credit unions could support the legislation only if it included five limitations. It should:
* Permit bankruptcy judges to lower the principal amount of a loan, no less than the value of the house at the time the mortgage was made; * Permit bankruptcy judges to lower interest rates on mortgages, no less than current market rates for standard mortgage loans; * Permit bankruptcy judges to extend the remaining term of a loan secured by a borrower’s primary residence by up to five years, but to no more than 40 years; * Permit the cancellation of prepayment penalties; and * Extend the authority for bankruptcy judges to modify the terms on loans secured by a borrower’s primary residence only to loans made between January 1, 2003 and the date of enactment of the bill.
“This approach targets the real source of the threat to the many borrowers and the economy over the coming few years: payment shock resulting from loan rate resets,” wrote CUNA President/CEO Dan Mica. “It does this by providing for substantial reductions in payments from what the post-reset levels would otherwise be,” the CUNA executive said and added that this approach not only limits “cramdowns” to amounts resulting from high fees that were financed into the mortgage, negative amortization, and greater than 100% loan-to-value lending; but it also sets a timeframe that targets the solution to the specific problem. On Wednesday afternoon, Durbin presided over a hearing entitled “The Looming Foreclosure Crisis: How to Help Families Save Their Homes.” Scheduled witnesses included: Jacqueline P. Cox. U.S. Bankruptcy Court Judge for the Northern District of Illinois, Thomas Bennett, U.S. Bankruptcy Court Judge for the Northern District of Alabama, and Henry J. Sommer, president, National Association of Consumer Bankruptcy Attorneys.

Hyland to testify on subprime issues today

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WASHINGTON (12/6/07)—National Credit Union Administration (NCUA) board member Gigi Hyland is scheduled to testify today as the House Financial Services Committee takes a broad look at recent proposals to help troubled subprime mortgage borrowers threatened with the loss of their homes. Rep. Barney Frank (D-Mass.), the committee’s chairman, has announced the panel intends to examine recent proposals intended to improve the pace and volume of mortgage loan modifications, such as interest rate resets that could keep people from moving into foreclosure proceedings. Frank has noted that, to date, most modifications to subprime loans are being made by servicers and lenders on a case-by-case basis, which may be slowing the pace and limiting the number of these workouts. The committee has scheduled the following three panels of witnesses:
* Panel One: NCUA’s Hyland, Sheila C. Bair, chairman, Federal Deposit Insurance Corporation; Randall S. Kroszner, governor, Federal Reserve Board; John C. Dugan, comptroller, Office of the Comptroller of the Currency ; Scott M. Polakoff, senior deputy director/CEO, Office of Thrift Supervision ; and North Carolina Deputy Commissioner of Banks Mark E. Pearce, on behalf of the Conference of State Bank Supervisors. * Panel Two: George P. Miller, executive director, American Securitization Forum; Faith Schwartz, executive director, HOPE NOW Alliance; Michael Calhoun, president, Center for Responsible Lending; Damon Silvers, associate general counsel, AFL-CIO; and Richard Kent Green, Oliver T. Carr, Jr. Chair of Real Estate Finance, The GW School of Business, George Washington University. * Panel Three: Laurence E. Platt, partner, K&L Gates, on behalf of the Securities Industry and Financial Markets Association; Hilary O. Shelton, director, National Association for the Advancement of Colored People; and John Taylor, president/CEO, National Community Reinvestment Coalition.

Levin keeps heat on credit card issues

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WASHINGTON (12/6/07)—Sen. Carl Levin (D-Mich.) said at a hearing this week that he will keep the heat on a credit card system that he believes engages in practices that are unfair to consumers. As chairman of the Senate Permanent Subcommittee on Investigations, Levin conducted a second hearing Tuesday on credit card practices zeroing in on the circumstances under which credit card issuers may increase the interest rates of cardholders who are in compliance with the terms of their credit cards. In March, the subcommittee examined credit card grace periods, interest charges assessed against debt paid on time, and excessive fees. Many credit Levin’s efforts with inspiring changes at the card companies who appeared before him on the witness stand. At that time, he criticized a JPMorgan Chase representative for his company’s practice of assessing repeated over-the-limit fees. The company dropped the practice soon after the hearing, although it attributed its action to a reevaluation of customers’ needs and not to the political environment. Citibank, also on the March witness list, announced at the time that it had changed its repeat-fee practice. Levin opened this week’s credit card hearing by reviewing the woes of his first panel of three consumer witnesses, which included:
* Retroactive interest rate increases; * FICO score drops resulting in card interest rate increases; and * The difficulty of understanding credit reports and the causes of interest rate increases.
Levin, with co-sponsor Sen. Claire McCaskill (D-Mo.), has introduced the Stop Unfair Practices in Credit Cards Act (S. 1395), which would, in part: Prohibit interest on debt paid on time; prohibit interest charges on any portion of a credit card debt which the card holder paid on time during a grace period. prohibit added interest charges on credit card debt which the card holder paid on time and in full; limit on penalty interest; allow interest rate increases only to future debt; and prohibit the charging of interest on credit card transaction fees, such as late fees and over-the-limit fees. Credit card industry witnesses included representatives from Capital One, Discover and Bank of America.

Senators urge Treasury to forego narrow loan changes

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WASHINGTON (12/6/07)—Four members of the Senate Banking Committee pressed Treasury Secretary Henry Paulson to ensure that the terms of the department’s much-anticipated plan to address subprime mortgage problems help as many borrowers as possible. Paulson announced a press conference for today (see related story in Inside Washington) conference to discuss the Bush administration's efforts to help struggling homeowners keep their homes. In anticipation of the Treasury’s announcement, the banking panel members wrote urging Paulson to negotiate rigorous terms, which would include the following five points:
* Eligibility for modification must not be too narrow, and people must be afforded every opportunity to ensure that they remain in their home; * Loan modifications must be long enough to ensure the long-term affordability of mortgages, not merely delay foreclosure; * All prepayment penalties must be waived; * The guidelines must guarantee the fair treatment of families who will not be able to avoid foreclosure, even with modification; and * The modification program must be transparent to allow for independent monitoring.
The letter was signed by Senate Banking Committee Chairman Christopher Dodd (D-Conn.), and four other Democrats, Sens. Bob Casey of Pennsylvania, Charles Schumer of New York, and Sherrod Brown of Ohio. “All of these matters are extremely important to the economic well being of millions of families and the country as a whole. These issues are also evolving very quickly and we understand you may be entering the final stages of negotiating the loan modification plan,” the lawmakers wrote. They noted to Paulson that there is not a consensus in the Senate that “strong legislative action is needed. “ “Majority Leader Reid’s efforts to pass the reform of the Federal Housing Administration prior to the Thanksgiving recess were frustrated by an objection from Senate Republicans. Just as you have adjusted your position over time and begun to see the need for actions we have been advocating for some time, we hope that you will join us in impressing upon our colleagues the dire need for action,” the letter urged.