Archive for the 'Consumer Protection' Category (Chronologically Listed)

The House Passes Tax Relief for Homeowners

Today the House passed on a legislation that will help homeowners that have to restructure their mortgages to avoid foreclosure.

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Posted by Ryan Fiore on Dec 18 2007 under Consumer Protection, Foreclosure, Housing Market





Bernanke announces the Fed will act to curb fallout of “credit crunch”

Federal Reserve Chairman Ben Bernanke informed congress today that the credit crisis has caused “significant market stress”. He offered new assurance that regulators would take steps to curb fallout related to the mortgage mess.

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Posted by Ryan Fiore on Sep 20 2007 under Bad Credit, Consumer Confidence, Consumer Protection, Housing Market, Mortgage Advice, Mortgage Fraud





Some Democrats Pushing For Mortgage Assistance Bill

After nearly a decade of trying, Democrats will again push for legislation this year establishing an assistance program to help families on the verge of foreclosure make their mortgage payments for up to three years.

The program, which according to Inman News, would apply only to government-insured mortgages such as VA-backed loans and FHA home loans, would allow borrowers to keep their homes by making monthly payments not to exceed 35 percent of their incomes.

The government would cover any additional amount owed to lenders for up to three years, at which time those receiving assistance would be expected to resume making full mortgage payments.

Beneficiaries would be required to repay the program for the assistance they received, plus interest.

Attempts to establish the program under the authority of the Department of Housing and Urban Development date back to 1998, when Rep. Luis Gutierrez, an Illinois Democrat representing parts of Chicago in Congress, introduced the Homeowners’ Emergency Mortgage Assistance Act, or HEMA.

The bill had no co-sponsors and was promptly referred to the Subcommittee on Housing and Community Opportunity and never heard from again.

When Gutierrez reintroduced the FHA mortgage-friendly bill again the following year as HR 595, it gained the support of 56 co-sponsors, including Democrats Nancy Pelosi of California and Barney Frank of Massachusetts.

Pelosi is now Speaker of the House, and Frank is chairman of the House Committee on Financial Services. But in 1999, with Republicans in control of Congress, the HEMA bill was once again referred to the Subcommittee on Housing and Community Opportunity, where it died.

It would be four years before Pennsylvania Democrat Chaka Fattah brought it back - or at least a nearly identical version of the mortgage rescue bill, HR 1357. That incarnation of HEMA, introduced in 2003, languished in the same committee as its predecessors.

Fattah said he plans to reintroduce yet another HEMA bill as soon as this week, and his staff is hopeful that this piece of legislation - vital to those seeking an FHA home loan - will finally have the support of leading Democrats, including Pelosi and Frank.

Fattah’s communications director, Debra Anderson, said bill 378 received limited support because Democrats had other issues that were higher priorities - not because those who had supported the bill in the past had changed their stance.

“I would suppose those same people (who co-sponsored previous versions of the bill) will sign on,” Anderson said - including Pelosi and Frank.

Fattah’s legislative director, Nuku Ofori, said there has not been a recent estimate of what such a bill pertaining to these home mortgage loans would cost, which would require funding through a separate appropriations bill. Ofori said that based on a previous estimate, the cost could be $50 million or more.

A spokesman for Gutierrez, the sponsor of the original HEMA legislation, said the Congressman is “definitely supportive” of Fattah’s effort.




Posted by Richard Barber on Jan 16 2007 under Consumer Protection, FHA Home Loans





Home Loan Practices That Should Be Illegal

The home loan origination field lends itself to predatory practicing. Due to the complicated aspects of the process, borrowers are easily confused.

Sadly, too many firms that service mortgages for consumers take advantage of this fact. With that in mind, here are a few practices we believe should be outlawed in order to protect hopeful owners:

Mandatory Provision of Complete and Comprehensible Monthly Statement. The law should require servicers to provide easy-to-understand monthly statements showing everything that transpired during the month that affected the borrower’s account. This should include balance changes and their sources, payments, disbursements, mortgage rate adjustments, and fees.

Rationale: In the absence of comprehensible monthly statements, predatory practices can go unnoticed by the borrower indefinitely.

No Suspension of Payments Because of an Escrow Shortage. Servicers should be prohibited from placing scheduled mortgage payments of principal and interest in suspense accounts when only the escrow payment is short.

Rationale: This pernicious practice results in unnecessary delinquencies and late payments, and can lead down a slippery slope to collections and ultimate foreclosure.

No Profits From Loans in Collection. On services purchased from third parties in connection with a loan in collections, such as legal fees and property inspections, servicers should be barred from marking up third-party fees, receiving payments for referral of business, or purchasing the services from affiliated entities.

Rationale: Profiting from home loans in collections provides an incentive to move borrowers to that status unnecessarily. It also increases the cost to borrowers struggling to return to good standing by paying back arrears.

Mandatory Reporting to Credit Bureaus. Servicers would be required to report payment history on all their accounts.

Rationale: Servicers should not be able to cripple the ability of borrowers to refinance profitably by not reporting good payment records to the credit bureaus.

No Conversions to Simple Interest. On purchased servicing contracts, the purchasing servicer should not be permitted to convert a mortgage to simple interest merely because the note does not explicitly prevent it.

Rationale: Simple-interest mortgages, which accrue interest daily, are more problematic for borrowers than standard monthly accrual mortgages. If a borrower did not negotiate a simple-interest mortgage at origination, a later conversion to simple interest following the transfer of servicing is unconscionable.

Mandatory Disclosure of Policy Toward Crediting Extra Payments. Servicers should disclose exactly what their procedures are for crediting extra payments to the loan balance.

Rationale: Borrowers making extra payments of principal have the right to this information so that they can plan their schedule of extra payments in the most advantageous way.




Posted by Jed Moss on Jan 15 2007 under Consumer Protection





Incoming Banking Committee Chair Promises Home Buying, Mortgage Reforms

Can Chris Dodd (left) run for President of the United States at the same time he shepherds an ambitious Banking Committee agenda through a divided U.S. Senate that Democrats now control by the slimmest of margins?

And will he be comfortable taking campaign money from the banking, financial services and insurance interests that so badly need help from his committee, and from which he has taken millions of dollars over the years?

Sure, the Connecticut Democrat told the Hartford Courant Thursday as he presented his detailed 2007 agenda for the powerful Senate committee he will head, beginning next month.

Dodd has coveted the banking post for years; he has been a committee member for 25 years, and he finally became chairman when Sen. Paul Sarbanes, D-Md., retired. His record on the committee has been mixed.

“There are times he’s been an effective friend of the consumer on crucial issues, and at other times, he’s opposed some of the things that matter to us most,” said Travis Plunkett of the Consumer Federation of America.

Dodd pledged Thursday to be a friend of the consumer, but also said he’s not hostile to business. He outlined three major thrusts of his plans in leading the committee:

1. Consumers. Dodd wants to simplify the home-buying process so consumers don’t have to wait until closing on their new home to know the terms of a home mortgage loan.

Although he provided no specifics, he said he will propose ways to keep people from losing their properties when the costs of home loans rise.

He also vowed to end the mortgage fraud and predatory lending practices “that strip equity out of consumers’ homes and leave them on the verge of default.”

Jordan Ash, director of the ACORN, a Minnesota-based consumer group, was encouraged by Dodd’s views, particularly about stopping such lending.

“The last time a Democrat was chairman of that committee made a world of difference,” Ash said. “We’re very excited about Dodd as the chairman.”

2. Credit cards. The senator wants to provide more scrutiny of how regulators, and those they regulate, deal with consumers and credit card debt. Plunkett called this initiative unusually promising, and he said a presidential bid could be a benefit.

3. Banks and regulatory agencies. The committee oversees the work of financial institution regulators, as well as the Federal Reserve and U.S. Treasury Department. Those who own homes, or are in the process of trying to, know how important these agencies are in ensuring fair mortgage rates and other consumer protections.




Posted by Richard Barber on Dec 09 2006 under Consumer Protection