Month: August 2010

Fed Rules Regarding Mortgages

On August 16, the Fed issued proposed, interim and final rules relating to mortgage loans.  The proposed rule revises escrow account requirements for first-lien “jumbo” mortgages.  The interim rule revises disclosure requirements for closed-end mortgages under Regulation Z (Truth in Lending).  The final rules (i) implement a statutory amendment to the Truth in Lending Act requiring that consumers receive notice within 30 days of a sale or transfer of their mortgage and (ii) bar a loan originator from receiving compensation that is based on the interest rate or other mortgage loan terms.  The Fed also proposed enhanced consumer protections and disclosures for home mortgage transactions (including significant changes to Regulation Z) and is seeking comments on this proposal within 90 days after publication of the proposal in the Federal Register. Fed Proposed Rule on Escrow Accounts for Jumbo Mortgages. Fed Interim Rule on Closed-End Mortgages. Fed Final Rule on Notice of Sale or Transfer. Fed Final Rule on Originator Compensation. Fed Proposal and Request for Comment on Consumer Protection and Disclosure.

Treasury/HUD Conference on the Future of Housing Finance

On August 7, Treasury Secretary Geithner made opening remarks at the Conference on the Future of Housing Finance.  Secretary Geithner outlined four key questions underlying the approach to housing finance reform: (i) what role the government should play to provide stability in the housing finance system, (ii) what role the government should play in providing financial support to improve access to affordable housing, (iii) how to manage the securitization market, and (iv) how to manage the transition into a new housing finance system.  Secretary Geithner also highlighted the need for government involvement in providing a form of guarantee or insurance in a reformed system, noting that any government guarantee should be priced to cover the risk of losses and structured to minimize taxpayer exposure. HUD Secretary Donovan followed Secretary Geithner’s remarks and focused on policy issues and the broader social impact of housing finance. Secretary Geithner’s Remarks. Secretary Donovan’s Remarks.

Rating Agency Developments

On August 13, Fitch published updates to 15 global master criteria reports. Fitch Release.

On August 11, Fitch announced that effective August 16, all new and existing international scale structured finance ratings assigned by Fitch will be denoted with an “sf” modifier. Fitch Release.

Note: Free registration is required for Fitch releases and reports.

IRS Releases Temporary Regulations Addressing Cancellation of Debt Income Deferral Election

On August 11, the Internal Revenue Service released a set of temporary regulations providing additional rules for an election to defer cancellation of debt income for corporations, partnerships, and S corporations under Section 108(i) of the Internal Revenue Code. Temporary Regulations 1. Temporary Regulations 2.

Obama Administration Announces Panelists for Housing Conference

On August 12, the Obama administration announced a list of panelists and conference agenda for the August 17 “Conference on the Future of Housing Finance“. The goal of the conference is to provide a forum for input to the administration as it develops a comprehensive housing finance reform proposal anticipated to be delivered to Congress by January 2011.

Please see the following links to indexed compilations of the comment letters provided to HUD and Treasury in response to the Obama administration’s request for public input on reform of the housing finance system. HUD Responses. Treasury Responses.  Treasury Release.

New York State Adopts Mortgage Loan Servicing Regulations

On August 10, the New York State Banking Department issued new regulations, effective October 1, that address the business practices of mortgage loan servicers handling New York-based mortgages and establish additional consumer protections for homeowners.  The regulations set forth standards for handling loss mitigation efforts, directions for day-to-day dealings between servicers and borrowers, and prohibited actions such as engaging in unfair or deceptive business practices.  The requirements are similar to the voluntary servicer guidelines under HAMP, but will be enforceable by state as well as by federal regulators.  Release. Adopted Regulations.

FDIC Open Door Policy for Regulatory Reform Rulemaking

On August 12, the FDIC announced an open door policy to make it easier for the public to comment on and track the rulemaking process as it implements reforms required by the Dodd-Frank Act. The FDIC will hold a series of roundtable discussions on implementation issues and will allow any interested party to request a meeting with FDIC officials. In addition, the FDIC will release, on a bi-weekly basis, the names and affiliations of private sector individuals who meet with senior FDIC officials to discuss implementation, and the subject matter of these meetings. The FDIC will also publish notices on major developments, bill summaries, and fact sheets to provide updated information about policy decisions. Release.

Banking Agencies ANPR on Alternatives to Credit Ratings in Capital Rules

On August 10, the Fed, the FDIC, the OCC and the OTS issued an advance notice of proposed rulemaking regarding alternatives to the use of credit ratings in their risk-based capital rules for banking organizations.  The ANPR is being issued in response to Section 939A of the Dodd-Frank Act, which requires the agencies to remove references to credit ratings and adopt alternative standards of credit-worthiness.  The ANPR solicits comment on a range of potential alternative standards, a set of criteria the banking agencies believe are important in evaluating these standards, and the feasibility and burden associated with these alternative measures.  Comments must be received within 60 days of publication of the ANPR in the Federal Register. Release. Advance Notice of Proposed Rulemaking.

FDIC Organizational Changes to Implement Regulatory Reform

On August 10, the FDIC approved the creation of a new Office of Complex Financial Institutions (OCFI) and Division of Depositor and Consumer Protection (DCP) to help carry out its responsibilities under the Dodd-Frank Act.  The CFI will review and oversee bank holding companies with more than US$100 billion in assets, as well as non-bank financial companies designated as systemically important by the new Financial Stability Oversight Council.  It will also be responsible for carrying out the FDIC’s new authority under the Act to implement orderly liquidations of bank holding companies and non-bank financial companies that fail.  The establishment of the DCP is intended to provide increased visibility to the FDIC’s compliance examination and enforcement program. FDIC Release.