WASHINGTON — Health care reform has drawn most of the attention on Capitol Hill lately, but for homebuyers, sellers and mortgage applicants the legislative ballgame will really get under way in September, when Congress begins serious work on the proposed Consumer Financial Protection Agency.
Legislation creating the new agency already is pending in the House, pushed by Financial Services Committee Chairman Rep. Barney Frank, D-Mass., who is its principal author. The Obama administration had outlined a similar plan at the end of June and considers passage of a bill a top priority.
Why should you care? What might the new agency do for you — or to you?
To begin with, you should be aware that the agency’s powers and oversight would extend far beyond mortgages and real estate — into all credit cards, debit cards, consumer loans, payday loans, credit reporting agencies, debt collection, stored-value cards and even investment advisory and financial advisory services, to name only part of the list.
The agency would be the dominant federal consumer protector in all home real estate settlements. It would regulate "affiliated” title, escrow and financing businesses connected with realty firms and builders. It would oversee equal credit opportunity and fair housing, and would set standards for all mortgage offerings, whether from the biggest national banks or the smallest local brokers.
Generally it wouldn’t seek outright bans on mortgage products that carry elevated risks — interest-only loans, for instance — but would require that lenders restrict such mortgages to well-informed applicants who can document that they understand the risks and afford the payments.
Within its first year, the agency would be tasked with creating consumer-friendly, uniform disclosures for all home purchase and financing transactions, starting with a combined "good-faith estimates” and truth-in-lending statement.
Banking and mortgage trade group leaders generally agree that the existing regulatory system failed badly, for consumers and the industry itself.
"Are reforms needed? Yes, absolutely. We’re in favor of better consumer protection,” said Anne Canfield, executive director of the Consumer Mortgage Coalition, a trade group that represents major mortgage originators and banks. How to go about achieving those reforms is where Canfield’s group and others part company with the administration and consumer supporters.
Canfield and other industry lobbyists are concerned about any radical shakeup of the way banks and mortgage companies traditionally have been overseen by the federal government. Currently the regulators responsible for checking on banks’ "safety and soundness” also are empowered to look for risky, discriminatory or anti-consumer practices and products at those institutions.
Handing over consumer protection and enforcement powers to a separate agency that might not understand the business side of the ledger could be burdensome for lenders, they argue, and could add extra layers of bureaucracy and nightmarish legal liabilities.
But proponents, such as Harvard Law School professor Elizabeth Warren, say the industry’s criticisms about stifling consumers’ choices and reshaping banking industry regulation are simply efforts to preserve the status quo.
"If the status quo is about choice,” asked Warren, an Oklahoma City native, "then explain why half of those (consumers) with subprime loans ‘chose’ high-risk, high-cost loans when they qualified for prime mortgages. The truth is no consumer ‘chose’ to accept the tricks and traps buried in the legalese of financial products,” she said — they were steered to those loans by lenders, brokers and Wall Street promoters who were not required by regulators to explain the risks to their customers.
→Outlook for the bill: Passage in the House appears likely. Count on the banks to mount their biggest battles in the Senate.
Washington Post Writers Group
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Showing posts with label Congress. Show all posts
Showing posts with label Congress. Show all posts
Saturday, August 8, 2009
Sunday, June 7, 2009
Congress try to help homeowners in trouble
WASHINGTON — Can’t afford your mortgage payment? If the bank won’t take your call, your member of Congress just might.
Several lawmakers whose districts are drowning in foreclosures are taking unprecedented steps to help people stay in their homes, including picking up the phone themselves to negotiate with banks on behalf of their constituents.
The pain of being put on hold for an eternity can be an educating experience for a member of Congress.
As a body, Congress has failed to come up with a broad fix for the foreclosure crisis. So some lawmakers are helping homeowners one at a time and seeking creative ways to make a difference in their districts.
Rep. Elijah Cummings, a Maryland Democrat whose Baltimore district has been walloped by unemployment, arranged for 19 banks to set up shop at Morgan State University on Saturday to work with homeowners struggling to pay their mortgages.
Foreclosure tsunami?
Cummings is asking people to come to his anti-foreclosure fair with recent pay stubs, tax returns, their monthly budget and any late notices or foreclosure threats they’ve received by their banks.
He predicted 500 people would show up, a turnout he hopes will help convince the White House that federal money is needed to bailout homeowners directly.
"We may very well be reaching the point of a tsunami of foreclosures,” he said.
342,000 U.S. properties fell into foreclosure in April, with 96,500 of those filings — more than one in four — in California, according to RealtyTrac, a Web-based company that compiles data for most U.S. counties.
Last month, Republicans and conservative Democrats defeated a proposal by Sen. Dick Durbin, D-Ill., that would have given judges the power to lower mortgage payments for people declaring bankruptcy.
Offering hope
President Barack Obama had once promised to help push the measure through Congress but backed off after banks warned that it would devastate the industry.
In the end, Obama signed a "Hope for Homeowners” bill that makes it easier for people to qualify for a program featuring government-insured mortgages. That program, however, relies on voluntary participation by lenders and so far has been largely unsuccessful.
Treasury officials say the program needs more time.
by the associated press
Several lawmakers whose districts are drowning in foreclosures are taking unprecedented steps to help people stay in their homes, including picking up the phone themselves to negotiate with banks on behalf of their constituents.
The pain of being put on hold for an eternity can be an educating experience for a member of Congress.
As a body, Congress has failed to come up with a broad fix for the foreclosure crisis. So some lawmakers are helping homeowners one at a time and seeking creative ways to make a difference in their districts.
Rep. Elijah Cummings, a Maryland Democrat whose Baltimore district has been walloped by unemployment, arranged for 19 banks to set up shop at Morgan State University on Saturday to work with homeowners struggling to pay their mortgages.
Foreclosure tsunami?
Cummings is asking people to come to his anti-foreclosure fair with recent pay stubs, tax returns, their monthly budget and any late notices or foreclosure threats they’ve received by their banks.
He predicted 500 people would show up, a turnout he hopes will help convince the White House that federal money is needed to bailout homeowners directly.
"We may very well be reaching the point of a tsunami of foreclosures,” he said.
342,000 U.S. properties fell into foreclosure in April, with 96,500 of those filings — more than one in four — in California, according to RealtyTrac, a Web-based company that compiles data for most U.S. counties.
Last month, Republicans and conservative Democrats defeated a proposal by Sen. Dick Durbin, D-Ill., that would have given judges the power to lower mortgage payments for people declaring bankruptcy.
Offering hope
President Barack Obama had once promised to help push the measure through Congress but backed off after banks warned that it would devastate the industry.
In the end, Obama signed a "Hope for Homeowners” bill that makes it easier for people to qualify for a program featuring government-insured mortgages. That program, however, relies on voluntary participation by lenders and so far has been largely unsuccessful.
Treasury officials say the program needs more time.
by the associated press
Saturday, June 6, 2009
Real estate War , Congress
WASHINGTON — It may not have made a big splash on network news or in print, but for real estate it was the equivalent of a congressional declaration of war — a war against mortgage fraud.
Just as security and intelligence agencies were given huge funding boosts by Congress after 9/11, the FBI, the Justice Department, the Secret Service and the U.S. Postal Service have just gotten a combined half billion dollars in funding authority to investigate and prosecute individuals and companies who engage in mortgage fraud. President Barack Obama signed the legislation May 20.
The targets range from people who lie about their incomes on home mortgage applications to highly organized roving networks of "foreclosure relief” scammers who bilk money out of homeowners seeking mortgage modifications.
Known as the Fraud Enforcement and Recovery Act of 2009, the legislation will fund new SWAT teams of fraud-busters and broaden federal legal powers to go after individuals and mortgage operations that currently get attention — if at all — only at the state or local levels. The law also creates a Financial Crisis Inquiry Commission with broad powers to investigate who and what got us into the real estate mess, starting with the subprime boom, Wall Street hanky-panky and more recent bank failures.
How bad is mortgage fraud? The Treasury Department estimates it causes losses to consumers and the mortgage industry of from $15 billion to $25 billion a year. FBI Director Robert Mueller told Congress his agency’s mortgage fraud caseload has tripled in the past three years.
Reports of potential fraud filed with the Financial Crimes Enforcement Network exceeded 65,000 in 2008 — up from about 25,000 in 2005 and just 5,400 in 2002. Officials say the recession and the end of the housing boom have stimulated more fraud rather than the reverse.
What do these frauds look like and where are they occurring? The Mortgage Asset Research Institute performs an annual study of the problem for the Mortgage Bankers Association, and its 2009 report found:
• Roughly two-thirds of all frauds involve deceptions at the application stage. For example, some borrowers tell the lender they plan to occupy and use the property as their main residence, but they really plan to turn it into a rental unit. That ruse often gets the applicant a lower rate on the loan, but it’s a violation of federal law.
• About 28 percent of frauds last year involved deliberate misinformation about tax returns or financial statements. Fake IRS filings can be created with software programs and documentation of financial assets can be manipulated, as well.
• Appraisal shenanigans rank high and were involved in about 22 percent of fraud cases in 2008. Appraisal fraud — typically inflated valuations intended to squeeze more mortgage money out of the lender — may be more common than statistics show. That’s because many overvaluations are small enough to avoid detection.
• Other widespread forms of home loan fraud include faked employment verifications, misinformation on closing or escrow documents, and credit reports or scores that have been manipulated in some way to get unqualified borrowers approved, or lower interest rates, or both.
With the federal agencies gearing up new prosecution teams devoted solely to detecting and fighting mortgage fraud, scammers should be on notice: Now more than ever, you’re likely to end up before a grand jury, get smacked with a big fine or do prison time.
from the oklahoman
Just as security and intelligence agencies were given huge funding boosts by Congress after 9/11, the FBI, the Justice Department, the Secret Service and the U.S. Postal Service have just gotten a combined half billion dollars in funding authority to investigate and prosecute individuals and companies who engage in mortgage fraud. President Barack Obama signed the legislation May 20.
The targets range from people who lie about their incomes on home mortgage applications to highly organized roving networks of "foreclosure relief” scammers who bilk money out of homeowners seeking mortgage modifications.
Known as the Fraud Enforcement and Recovery Act of 2009, the legislation will fund new SWAT teams of fraud-busters and broaden federal legal powers to go after individuals and mortgage operations that currently get attention — if at all — only at the state or local levels. The law also creates a Financial Crisis Inquiry Commission with broad powers to investigate who and what got us into the real estate mess, starting with the subprime boom, Wall Street hanky-panky and more recent bank failures.
How bad is mortgage fraud? The Treasury Department estimates it causes losses to consumers and the mortgage industry of from $15 billion to $25 billion a year. FBI Director Robert Mueller told Congress his agency’s mortgage fraud caseload has tripled in the past three years.
Reports of potential fraud filed with the Financial Crimes Enforcement Network exceeded 65,000 in 2008 — up from about 25,000 in 2005 and just 5,400 in 2002. Officials say the recession and the end of the housing boom have stimulated more fraud rather than the reverse.
What do these frauds look like and where are they occurring? The Mortgage Asset Research Institute performs an annual study of the problem for the Mortgage Bankers Association, and its 2009 report found:
• Roughly two-thirds of all frauds involve deceptions at the application stage. For example, some borrowers tell the lender they plan to occupy and use the property as their main residence, but they really plan to turn it into a rental unit. That ruse often gets the applicant a lower rate on the loan, but it’s a violation of federal law.
• About 28 percent of frauds last year involved deliberate misinformation about tax returns or financial statements. Fake IRS filings can be created with software programs and documentation of financial assets can be manipulated, as well.
• Appraisal shenanigans rank high and were involved in about 22 percent of fraud cases in 2008. Appraisal fraud — typically inflated valuations intended to squeeze more mortgage money out of the lender — may be more common than statistics show. That’s because many overvaluations are small enough to avoid detection.
• Other widespread forms of home loan fraud include faked employment verifications, misinformation on closing or escrow documents, and credit reports or scores that have been manipulated in some way to get unqualified borrowers approved, or lower interest rates, or both.
With the federal agencies gearing up new prosecution teams devoted solely to detecting and fighting mortgage fraud, scammers should be on notice: Now more than ever, you’re likely to end up before a grand jury, get smacked with a big fine or do prison time.
from the oklahoman
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