* WASHINGTON (8/12/10)--Financial industry experts expect that many merchants will steer customers toward cheaper payment methods soon, now that merchants can do so without violating contracts, said American Banker
(Aug. 11). Some may push consumers to use personal identification-number payments over signature-based transactions, the newspaper said. Retailers likely will impose minimum transaction amounts for cards, which is a practice MasterCard and Visa had prohibited until reform legislation--the Dodd-Frank Act--allowed it. Processors, who worry that steering customers away from certain payment methods could reduce transaction volumes, are telling retailers that turning away payments could cost them sales. However, debit cards could benefit if merchants set limits on credit cards, because consumers would be forced to use debit to pay for less expensive items. Bob Baldwin, president and chief financial officer of Heartland Payment Systems, said merchants should carefully look at sales records and processing expenses before imposing minimums. Heartland recently sent a notice to its merchants saying the minimum allowed under Dodd-Frank cannot exceed $10 and applies only to credit cards ... * WASHINGTON (8/12/10)--The Federal Deposit Insurance Corp. (FDIC) proposed guidance
for public comment on how the banking institutions it supervises should implement and maintain oversight of automated overdraft payment programs. The proposal focuses on ways banks can monitor their programs for excessive use by consumers as short-term credit. Under new rules, banking institutions must give consumers the opportunity to opt-in to overdraft protection. Consumers have until Sunday to opt-in ... * WASHINGTON (8/12/10)--The Federal Deposit Insurance Corp. (FDIC) plans to create two new divisions to handle consumer protection and systemic resolutions, the agency said Tuesday (American Banker
Aug. 11). The Office of Complex Financial Institutions will conduct reviews and oversee bank holding companies with more than $100 billion in assets. A Division of Depositor and Consumer Protection also will be established to complement the activities of the Consumer Financial Protection Bureau, which was created under the recently enacted regulatory reform bill ... * WASHINGTON (8/12/10)--A new Federal Housing Administration (FHA) program could help up to 1.5 million people who are current on their mortgages but owe more than their homes’ value. Participation will likely be in the low six figures, but would be higher than earlier FHA programs, the agency said (American Banker
Aug. 11). FHASecure helped fewer than 1,000 borrowers, and Help for Homeowners aided fewer than 100. Under the new program, servicers would write down a loan by at least 10%. The first lien has to be written down to 97.75% of the home’s current value before being refinanced--a “short refi.” For second liens, the combined loan-to-value after refinancing cannot be more than 115%. The program offers a debt-to-income ratio of 50% and homeowners’ total monthly mortgage payments cannot be more than 31% of monthly income ...