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Fannie Freddie to coordinate late mortgage guidelines

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WASHINGTON (4/29/11)—Fannie Mae and Freddie Mac will soon align their guidelines for servicing delinquent mortgages that they own or guarantee in an effort to help servicers better resolve delinquencies, to keep owners in their homes, and to minimize taxpayer losses. The mortgage servicers plan to issue new detailed guidelines to mortgage servicers in the second or third quarters of this year. The alignment, which was ordered by Federal Housing Finance Agency Acting Director Edward DeMarco, will, according to the FHFA, “establish uniform servicing requirements as well as monetary incentives for servicers that perform well and penalties for those that do not.” DeMarco said that the directive should “result in earlier servicer engagement to identify the best solution available for homeowners, given their individual circumstances.” The updated guidelines will streamline and expedite borrower outreach, align mortgage modification terms and requirements, and establish a consistent schedule of performance-based incentive payments and penalties, the FHFA said. Servicers will be required to contact borrowers as soon as they become delinquent and servicers will need to focus solely on remediating the given delinquency. The FHFA release added that “the foreclosure process may not commence if the borrower and servicer are engaged in a good-faith effort to resolve the delinquency.” Each delinquency case must be reviewed to ensure that foreclosure alternatives have been considered, and financial incentives will be provided to “encourage servicers to continue to help borrowers pursue a foreclosure alternative.” “Once fully implemented by the servicing industry, the Enterprises’ aligned policies should give homeowners a greater understanding of the process and faster resolution by requiring earlier contact, more frequent communication, and prompt decisions,” DeMarco said. For the full release, use the resource link.

Inside Washington (04/28/2011)

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* WASHINGTON (4/29/11)--In the first-ever press conference held by the Federal Reserve, Chairman Ben Bernanke steered the discussion toward monetary policy. Bernanke’s remarks focused on the Federal Open Market Committee’s decision Wednesday to keep the federal funds rates unchanged and its intent to complete a $600 billion bond purchase in June (American Banker April 28). Bernanke was not asked questions about the banking industry, the interchange proposal or the credit market. Though the press conference is viewed as a step toward transparency within an agency guarded in secrecy, Bernanke did not address that topic directly. He said the benefits of speaking directly with the press outweigh some of the risks, despite the argument that some remarks by the chairman might create market volatility. During the press conference, Bernanke warned that the deficit is by far the most pressing economic concern for the U.S. … * WASHINGTON (4/29/11)--In a 5-to-4 decision, the Supreme Court on Wednesday ruled that businesses may require customers to sign binding arbitration agreements that prohibit them from joining class-actions (American Banker April 28). The decision is viewed as a victory for banks and other corporations, but a provision in the Dodd-Frank Act allows the Consumer Financial Protection Bureau (CFPB) to potentially limit arbitration agreements. Jo Ann Barefoot, a co-chair with Treliant Risk Advisers and a former deputy comptroller at the Office of the Comptroller of the Currency, said she believes consumer advocates will turn to the CFPB in the wake of the ruling. Barefoot said mandatory arbitration has been a major complaint of consumer groups for years and Dodd-Frank provides leeway for the CFPB to overturn the ruling. Mandatory arbitration agreements often are used for credit cards, auto financing, installment loans and checking and deposit accounts. The Dodd-Frank Act requires the CFPB to study the use of the agreements in connection with consumer financial products and provide a report to Congress. The act also allows the agency to issue rules that may limit or prohibit arbitration agreements if it determines that it would protect consumers ... * WASHINGTON (4/29/11)--The Federal Reserve is featuring three cities in a series of video reports that showcase promising neighborhood stabilization efforts in the wake of the foreclosure crisis. The announcement was made on Wednesday by Federal Reserve Governor Elizabeth Governor Elizabeth A. Duke at the 2011 Federal Reserve Community Affairs Research Conference in Arlington, Va. “Over the last several years, every community across the country has felt the effects of the financial crisis,” said Duke. “Foreclosed, vacant, and abandoned properties threaten neighborhoods nationwide, and community leaders are working to stabilize those neighborhoods. While the problem touches every community, it doesn’t look the same in each because it’s shaped by the circumstances that prevailed in those neighborhoods before the crisis hit. The neighborhoods featured are in Phoenix, Detroit and Cleveland. The videos are featured on the Federal Reserve Web site

CUs use Congress break to keep up interchange drive

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WASHINGTON (4/29/11)—With the July 21 final interchange fee cap implementation date drawing near, credit union advocates nationwide continued to use this week’s congressional district work period to reach out to their representatives and urge them to stop, study and start over on interchange. The Pennsylvania, Ohio, New York, North Carolina, Delaware, Minnesota and Missouri leagues were among those reporting significant interaction with their legislators on the interchange issue during individual meetings and community town halls, and credit union members nationwide have spoken out against the interchange fee cap at their local events. The Ohio Credit Union League said that over 10,000 credit union members in that state have signed a petition urging Sen. Sherrod Brown (D-Ohio) to support Senate interchange delay legislation pending action in the U.S. Congress. League representatives have also met with Brown in recent days. Leagues nationwide have also worked with local news outlets to publish editorials backing the interchange delay. The California and Nevada Leagues grassroots efforts have resulted in over 52,000 letters to Congress as of April 27, and the league told News Now that more are expected. Credit unions in those states are also engaging their members directly to aid the anti-interchange cap fight. The Credit Union National Association’s (CUNA) own grassroots communications efforts, many of which have been made via CapWiz, have resulted in nearly 185,000 congressional contacts. CUNA Senior Vice President of Legislative Affairs John Magill said that credit union backers must work to ensure that the momentum that interchange implementation delay legislation has gained in recent weeks can continue when Congress returns to session next week. Magill added that it is “important that credit unions not ease up” in the critical period between now and the proposed July 21 interchange fee cap implementation date. The timeline for action is tighter than one might think, with a number of holidays and constituent work weeks planned between now and the end of July, Magill added. The proposed interchange rule would lower the maximum fee charged per debit card transaction to 12 cents, or lower. The statute, as enacted, would exempt credit unions and other small institutions with assets of $10 billion and under from the terms of the regulations. The effectiveness of the proposed exemption has been hotly debated, and many analysts agree that the statutory exemption will not work as intended. Separate House and Senate bills would delay implementation of the new interchange rules and would order a study of the impact a debit card interchange fee cap would have on consumers, financial institutions, and merchants. In the House, Rep. Shelley Moore Capito's (R-W.V.) H.R. 1081 has 84 cosponsors. The Senate version of interchange delay legislation (S. 575), introduced by Sen. Jon Tester (D-Mont.) and Bob Corker (R-Tenn.), has 16 co-sponsors. For more on CUNA’s interchange delay efforts, use the resource link.

Two CUs among pilot lenders for energy improvement program

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WASHINGTON (4/29/11)--University of Virginia Community CU and SOFCU Community CU will join 16 other lenders in a joint federal pilot program that will help qualified borrowers finance energy saving home improvements through low-cost loans. University of Virginia Community CU is based in Charlottesville, Va. SOFCU Community CU's home office is located in Grants Pass, Ore. The program was created by the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Energy. The loans, which will be known as PowerSaver loans, will be backed by the U.S. Federal Housing Administration. The loans will offer homeowners up to $25,000 in funding for a host of energy-efficient home improvements, including installation of replacement doors and windows, insulation, heating and cooling systems, solar panels, geothermal systems, and water heaters. Up to 90% of the loans will be covered by FHA mortgage insurance. However, credit unions and other lenders will be required to retain the remaining risk on each loan, a move that the federal agencies said would incentivize “responsible underwriting and lending standards.” The loans will only be made available to borrowers with satisfactory credit histories and adequate levels of debt and home equity. HUD Secretary Sean Donovan said that the PowerSaver program would help credit-worthy homeowners finance upgrades while cutting their energy bills and boosting the local job market. HUD has predicted that the pilot program could create up to 3,000 new jobs. “While FHA and these lenders are jumpstarting this pilot, we hope its success will lead to a growing private sector interest in making these types of loans," he added. Energy Secretary Dr. Steven Chu said that the program is “the right thing to do” for the environment, the economy and “the pocketbooks of American families." For the full release, use the resource link.