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Dodd-Frank hearings continue in House Senate this week

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WASHINGTON (7/17/12)--Congressional committees last week held several hearings on the impact of the Dodd-Frank Wall Street Reform Act as the two-year anniversary of that legislation's passage approaches. Similar hearings are on the schedule this week in Washington.

The first of these hearings will take place today, with the Senate Agriculture, Nutrition and Forestry Committee focusing on the Dodd-Frank Act's impact over the last two years.

Commodity Futures Trading Commission Chairman Gary Gensler and Robert Cook, director of the Securities and Exchange Commission's division of trading and markets, are among those scheduled to testify.

The impact of the Dodd-Frank Act will also be the key topic during separate Thursday hearings in the House Financial Services financial institutions and consumer credit subcommittee and the House Financial Services oversight and investigations subcommittee. The consumer credit subcommittee hearing will focus on credit access; the oversight and investigations subcommittee hearing will focus on how the act has affected small businesses, communities and families.

The House Financial Services Committee's capital markets and government sponsored enterprises subcommittee will convene the final Dodd-Frank hearing of the week to discuss how the legislation has changed pending legislation and affected municipal advisers.

A Thursday House Ways and Means Committee hearing on tax reform and the U.S. manufacturing sector also is planned, but the highest-profile hearings of the week may take place today and Wednesday. Federal Reserve Chairman Ben Bernanke will deliver his semi-annual monetary policy report to the full Senate Banking and House Financial Services committees on today and tomorrow, respectively.

Bills addressing campaign finance reforms and job outsourcing are scheduled for debate in the Senate, and the House is expected to discuss defense appropriations this week.

Credit reporting agencies to come under CFPB scrutiny

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WASHINGTON (7/17/12)--The Consumer Financial Protection Bureau (CFPB) this fall will begin supervision and examination of consumer credit reporting agencies with more than $7 million in annual receipts, the agency announced on Monday.

The agency said its examination authority will cover about 30 firms that account for 94% of total credit report industry receipts. There are around 400 firms in the $4 billion consumer credit reporting market, according to CFPB estimates. The three largest credit reporting agencies produce more than three billion consumer credit reports each year, and maintain credit records on more than 200 million Americans, the CFPB said.

Speaking at a Monday field hearing in Detroit, Mich., CFPB Director Richard Cordray said dispute resolution and credit report accuracy would be two areas of emphasis for the agency. Inaccurate credit reports deprive lenders of the information needed to properly assess credit risk, and can also cause borrowers to be wrongly denied loans, charged higher interest rates, or passed over for jobs, he added.

Cordray said the agency also would work with credit reporting agencies to improve the accuracy of credit report information. The credit report dispute resolution process can be "unreasonably laborious" for consumers, he added, noting that credit reporting agencies can be slow to report the results of investigations to those consumers.

Audience members suggested the CFPB could also examine credit repair firms.

The consumer credit report rule is the first of many CFPB rules that would define "larger participants" in nonbank markets. Under the supervisory program, the CFPB will examine credit reporting bureaus for federal consumer financial law compliance and assess whether risks to consumers exist. The CFPB also will have the right to take enforcement actions.

The supervisory program will begin after Sept. 30, the agency said.

Consumer education will also be a component of the CFPB's credit reporting work. The agency Monday released a consumer advisory on credit reports and a question and answer document as part of that education initiative.

The CFPB advisory highlights what consumers should look for in their credit reports and how to correct any mistakes. Tips on how to monitor credit and avoid identity theft are also included.

Michigan Credit Union League President/CEO Dave Adams and representatives from Michigan credit unions later met with Cordray and other CFPB staff. The credit unions included:

  • Christian Financial CU, Roseville;
  • Michigan First CU, Lathrup Village;
  • Dort FCU, Flint;
  • Omni Community CU, Battle Creek;
  • Lake Trust CU, Lansing;
  • Genisys CU. Auburn Hills;
  • University of Michigan CU, Ann Arbor; and
  • Co-op Services CU, Dearborn.

FHFA One in five May refinances tied to HARP

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WASHINGTON (7/17/12)--One in five mortgages refinanced in May were refinanced through the Home Affordable Refinance Program (HARP), marking the largest market share percentage that program has seen since it began operating in 2009, the Federal Housing Finance Agency (FHFA) reported.

More than 78,000 HARP refinances have been completed as of May 2012, exceeding the total number of HARP refinances completed in 2011, the agency noted. HARP refinances have been most prevalent in Arizona, Florida, Michigan and Nevada, where they accounted for 40% of the mortgages that were refinanced in each of those states.

More than half of those that used HARP to refinance in Arizona and Nevada were underwater on their mortgages, and 40% to 50% of California, Florida and Idaho HARP refinancers owed more than their homes are worth.

The FHFA in a release said the increased volume of HARP refinances is partly due to record low 30-year mortgage rates. However, the FHFA said recent changes to the program also contributed to the increased volume.

"These numbers show HARP 2.0 is accomplishing the goals set forth--to provide relief to borrowers who might otherwise be unable to refinance due to house price declines," FHFA Acting Director Edward DeMarco said.

The Obama Administration last October revised HARP by:
  • Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
  • Removing the 125% loan-to-value ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
  • Waiving certain representations and warranties made by lenders on loans owned or guaranteed by Fannie Mae and Freddie Mac;
  • Eliminating the need for a new property appraisal where there is a reliable automated valuation model estimate provided; and
  • Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to Fannie Mae and Freddie Mac on or before May 31, 2009.
Senate Democrats earlier this year encouraged the FHFA to make further efforts to allow refinancing by homeowners with Fannie Mae and Freddie Mac mortgages. In a letter to DeMarco, the senators said the FHFA should reduce or eliminate loan-level price adjustments for HARP refinances where Fannie and Freddie already carry credit risk, and streamline the refinance process for homeowners with more than 20% equity in their homes.

For the FHFA release, use the resource link.