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Inside Washington (04/04/2012)
  • WASHINGTON (4/5/12)--The Federal Housing Administration (FHA) has eased underwriting guidelines for borrowers with ongoing credit disputes. Under new requirements, loans held by borrowers with disputed credit accounts or billings of less than $1,000 will be processed by FHA's TOTAL automated underwriting system (American Banker April 4). The new requirement applies to debts that are at least two years old.  The change is designed to speed up the processing of loans for some borrowers. Borrowers with credit disputes of $1,000 or more must pay them off or start a repayment plan to be considered for a FHA single-family loan, the agency said. Some lenders have said the more rigid requirements could prevent borrowers from qualifying for FHA mortgages. Borrowers have the option of explaining in writing why a collection occurred and why it has not been paid, the FHA said in a letter to lenders on Friday …
  • WASHINGTON (4/5/12)--The Financial Stability Oversight Council, an interagency group headed by Treasury Secretary Tim Geithner, approved a rule outlining how it will designate nonbank financial firms that pose a threat to the system (American Banker April 4). The rule defines a three-step process in identifying nonbank firms, including insurance companies, hedge funds and private-equity firms, as systemically important financial institutions. In the first stage, nonbank firms must have at least $50 billion in assets to be potentially considered systemically risky. A firm must also meet at least one of the following thresholds: $20 billion in total debt outstanding, a minimum leverage ratio of 15 to 1, or $30 billion in gross notional credit default swap outstanding to trigger a closer look by regulators. After the initial evaluation, each company's individual risk profile and characteristics will be considered. Firms that move on to the final stage would receive a notice from the council for additional information such as internal risk management procedures, resolvability, or potential acquisitions that could pose risk to the financial stability of the U.S. The council would then vote on the company's designation, which would require a two-thirds majority and approval from the chairman of the council …


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