Dodd-Frank News Center

Rep. Cummings Announces Launch of Foreclosure Abuse Investigation

This story appeared in Bank Digest.

Rep. Elijah E. Cummings, D-Md., the Ranking Member of the House Oversight and Government Reform Committee, has announced the launch of a wide ranging investigation into increasingly widespread allegations of foreclosure fraud and abuse, seeking documents, audits, and investigations to provide the Committee with a more comprehensive understanding of these allegations and the national foreclosure picture. The requests include: document requests to mortgage and legal service companies; a  request that the Special Inspector General for the Troubled Asset Relief Program conduct an audit of reports by homeowners of servicer abuses; a request to the  Inspector General of the Federal Housing Finance Agency to conduct an investigation into attorneys who specialize in handling foreclosures and working with servicers; and a letter to Committee Chairman Darrell Issa, R-Calif., thanking the Chairman for agreeing to his request for a hearing on mortgage servicer abuses.

Rep. Bachus Media Appearances Highlight GSE Reform and CFPB

This story appeared in Bank Digest.

Through a press release, Rep. Spencer Bachus, R-Ala., the Chairman of the House Financial Services Committee, has posted interviews given to Fox News and the Weekly Standard regarding his work to reform Fannie Mae and Freddie Mac and to challenge full implementation of the Consumer Financial Protection Bureau.

In Letter to Fed, Senate Banking Committee Democrats Question Dodd-Frank Interchange Fee Provisions

By James Hamilton, J.D., LL.M., Principal Analyst, CCH Federal Securities Law Reporter and CCH Derivatives Regulation Law Reporter.

In a letter to the Fed, Senators Kay Hagan (D-NC) and Michael Bennet (D-CO) expressed concern that proposed regulations implementing the interchange fee provisions of Section 1075 of the Dodd-Frank Act might prevent small issuers from benefitting from the exemption set forth in the Act. They also asked the Board to adequately account for fraud prevention costs, which all issuers typically absorb, when determining the final rule. Section 1075 requires that the Fed issue by April 21, 2011 three final rules on interchange fees regarding a reasonable and proportional debit fee structure, fees for fraud prevention on debit transactions, and debit transaction network fees. There is a statutory exemption for small issuers under $10 billion in assets from the new debit fee rules.

Financial Services Committee to Hold Hearings on Housing Finance Proposals

This story appeared in Bank Digest.

Congressman Spencer Bachus, R-Ala., Chairman of the House Financial Services Committee, has announced hearings on bills that would end government programs that were intended to reduce home mortgage loan foreclosures. The hearings, in the Insurance and Housing Subcommittee and the full committee, will target the Home Affordable Modification Program, the Neighborhood Stabilization Program, the FHA Refinance Program and the Emergency Homeowner Relief Fund. According to Bachus, “These programs may have been well-intentioned but they're not working and, in reality, are making things worse.”

Banking Committee Chairman Sets Priorities

This story appeared in Bank Digest.

Banking Committee Tim Johnson, D-S.D., has issued a memo outlining the agenda he has set for the committee during this Congress. According to Johnson, the committee will focus mainly on oversight of the Dodd-Frank Act, housing finance reform and oversight of government investments in the Troubled Asset Relief Program and the automobile manufacturing industry. He added that the committee could hold hearings on issues such as financial consumer protection, housing, securities and international commerce.

Fed’s Hoenig Says Systemic Risk “Even Worse” Post-Crisis

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

The soundness of the largest financial institutions, and the systemic risks they continue to pose, is “even worse” than before the financial crisis, Federal Reserve Bank of Kansas City President Thomas Hoenig said.

“As well-intentioned as the Dodd-Frank Act may be, it will not improve outcomes,” Hoenig said in a Feb. 23, 2011, speech to a Women in Housing and Finance symposium in Washington D.C. He noted that the incentives for risk-taking have not changed post-crisis, while the regulatory factors that helped create the crisis remain in place.

Housing Finance Report to Be Reviewed

This story appeared in Bank Digest.

The Financial Services Committee has announced that it will convene a hearing to review the Obama Administration's report on housing finance on March 1. Committee Chairman Spencer Bachus, R-Ala., said, “Bringing a real end to the bailout of Fannie Mae and Freddie Mac is one of the most important tasks for the Committee.” He asserted that comprehensive reform of housing finance “must include FHA and have as its ultimate goal a system based on private capital, not taxpayer subsidies.”

DeMarco Discusses Mortgage Servicing

By Serena Lynn, Editor, the CCH Federal Banking Law Reporter and Bank Digest

FHFA Acting Director Edward J. DeMarco discussed mortgage servicing at the Mortgage Bankers Association's National Mortgage Servicing Conference & Expo in Dallas, Texas, on Feb. 23, 2011. According to DeMarco, to improve service, reduce financial risk and provide flexibility to better manage non-performing loans while promoting continued liquidity, any change to mortgage servicing compensation must take account of a number of factors, including:

Fed Acts on Mortgage Loan Escrow Account Rules

By Richard Roth, J.D., Editor, the CCH Federal Banking Law Reporter, CCH Bank Compliance Guide, Bank Digest co-author, Dodd-Frank Wall Street Reform and Consumer Protection Act—Law, Explanation and Analysis

The Federal Reserve Board has adopted a final rule that increases the annual percentage rate threshold used to determine whether a mortgage lender is required to establish an escrow account for property taxes and insurance for first-lien, “jumbo” mortgage loans--loans that exceed the conforming loan-size limit for purchase by Freddie Mac. The final rule implements Section 1461 of the Dodd-Frank Act.

Under the amendments to Reg. Z--Truth in Lending (12 CFR 226), the escrow requirement will apply to a first-lien jumbo loan only if the loan's APR is 2.5 percentage points or more above the average prime offer rate. This is an increase from the current 1.5-percent threshold. The threshold for loans that are not jumbo loans is not affected by the change.

Bair Urges Banks to “Get Back To Basics” and Lend

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

The long-term health of the banking industry and the economy depends on a responsible expansion of bank lending, Federal Deposit Insurance Corp. Chairman Sheila Bair said Feb. 23, 2011. Bair urged banks to “get back to basics of making loans,” and understanding a customer’s creditworthiness and ability to repay.

“You can only rely on reduced loan loss provisions for so long, you need to see more lending,” Bair told reporters following the release of the FDIC’s latest Quarterly Banking Profile. She acknowledged that loan demand is starting to pick up, especially in commercial and industrial loans, but “it’s not going as fast a pace as I would like to see.”