WASHINGTON -- The Federal Reserve Board has published an online guide aimed at consumers looking for information on refinancing their home loans.
"A Consumer's Guide to Mortgage Refinancing" (available at www.federalreserve.gov/pubs/) is expected to help consumers determine when refinancing makes sense. It includes mortgage worksheets, a link to an online calculator that can figure out how much time it takes to recoup refinancing costs and whether it is advisable to switch into a different type of mortgage.
A glossary of mortgage terms, a printable PDF format and links to the board's other consumer education resources on mortgages are also provided.
The guide is part of the Fed's consumer outreach efforts.
The Fed has also updated "What You Should Know about Home Equity Lines of Credit" to include information to consumers on line of credit freezes and reductions in lines of credit. The updated information is also available at www.federalreserve.gov/pubs.
Lenders and creditors can use the earlier version of the print version of the brochure until supplies are exhausted.
Trades Present Mixed Views On Proposed Change to HMDA
WASHINGTON -- A Federal Reserve proposal requiring greater disclosure of higher priced mortgage loans will require greater time for compliance than proposed, according to letters from CUNA and NAFCU, which presented different points of view on the matter.
The board wants to amend Regulation C to require a lender to report the spread between the loan's APR and a survey-based estimate of rates currently offered on comparable prime mortgage loans if the spread meets or exceeds 1.5 percentage points for a first-lien loan (or 3.5 percentage points for a subordinate-lien loan). Currently, lenders have to report the spread between the APR on a loan and the yield on Treasury securities of comparable maturity if the spread meets or exceeds 3.0 percentage points for a first-lien loan (or 5.0 percentage points for a subordinate-lien loan).
CUNA Senior Assistant General Counsel Jeffrey Bloch praised the agency for proposing to change the rules to base the threshold on conventional mortgage rates instead of on Treasury securities. He also suggested that the Fed provide data in electronically retrievable form so lenders can comply with the Home Mortgage Disclosure Act more easily.
NAFCU Associate Director of Regulatory Affairs Pamela Yu wrote that the new threshold "will unintentionally cover a substantial amount of prime jumbo loan transactions." She added that her group is concerned that "the inclusion of prime or near-prime and, in particular, prime jumbo loan transactions will inappropriately skew Home Mortgage Disclosure Act data, thereby negating the usefulness of pricing data on higher priced loans."
Bloch and Yu also said the board should postpone the date of the regulations taking effect from Jan. 1, 2009 to Jan. 1, 2010 to balance institutions' need for more time to prepare for the changes with the board's need for more consistent data collection methods.
NAFCU Nominates Anderson and Berry To Fed's Consumer Advisory Council
WASHINGTON -- Cary Anderson, president/CEO of the LA DOTD Federal Credit Union, and Daniel Berry, chief financial officer of Duke University Federal Credit Union, were nominated by NAFCU as credit union representatives to the Federal Reserve Board's Consumer Advisory Council.
Anderson's credit union has held more than 375 financial literacy classes and has three in-school branches. Anderson is also a member of the board of directors for the Louisiana Corporate Credit Union and a member of the Credit Union Executives Society.
Berry's credit union created a 100% financing program for first-time homebuyers and a money market savings option for members of lesser means. Berry is also a member of the board of directors for the North Carolina Council of CUES.
The Fed's Consumer Advisory Council was established in 1976 at the direction of Congress to advise the Federal Reserve Board on the exercise of its duties under the Consumer Credit Protection Act and on other matters in the area of consumer financial services. The 30-member council represents the interests of consumers, communities and the financial services industry. Ten new members will be appointed to serve three-year terms beginning in January 2009.
FDIC Likely to Raise Insurance Premiums
WASHINGTON -- Those banks not in financial trouble will likely have to pay more for their insurance because of the strain on the insurance system caused by the woes of others.
As of June 30, the FDIC's reserve ratio was 1.01% of insured deposits, down from 1.19% at the end of the first quarter.
By contrast, the NCUSIF had an equity ratio 1.24% on June 30, projected by NCUA to reach 1.28% by year-end. At the end of the first quarter the fund had an equity ratio of 1.31%.
The FDIC is scheduled to discuss its rates at its October meeting. Currently, banks are assessed premiums of between 5 and 7 basis points per $100 of insured deposits.
CUs Show Growth; Banks Are Hurting
WASHINGTON -- Though some credit unions are being hurt by the current economic slowdown, the health of the industry is good, said the NCUA.
Membership grew to nearly 88 million in federally insured credit unions, while savings outpaced lending in the first six months of 2008. Savings grew 7.0%, lending was up 3.7% and assets increased 6.5%.
"Although current mortgage and credit markets continue to cause fluctuations in the financial sector, the overall fiscal condition of federally insured credit unions remains stable," said NCUA Chairman Michael E. Fryzel. "In addition, first mortgage real estate loans grew by 10% from January through June 2008, illustrating that credit unions continue to meet their members' mortgage loan needs."
Combined earnings of banks and savings institutions fell 86.0% during the first half of 2008 compared to the same period last year, according to the FDIC.
Banks and savings institutions had combined earnings of $5.0 billion. The industry set aside $50.2 for loan losses.
"The results were pretty dismal," said FDIC Chairman Sheila Bair.
FDIC's Bair Ranked as Forbes Second Most Powerful Woman
WASHINGTON -- FDIC Chairman Sheila Bair was named the world's second most powerful woman by Forbes magazine. Several other women in the financial services industry were also among the 100 people on the list.
Bair has an important and stressful job, according to the magazine because, "as banks continue to fail, Bair must continue to show the fortitude that has helped her lead an institution that is suddenly an actor in this global drama."
The most powerful woman, according to the list, is German Chancellor Angela Merkel.
Women from the financial services field included: No. 48--Amy Woods Brinkley, global risk executive of Bank of America; No. 64--Sallie Krawcheck, chairman/CEO, global wealth management, Citigroup; and No. 82--Nancy McKinstry, CEO of Wolters-Kluwer, a Dutch company that provides a range of publications and other products to credit unions, banks and other financial services providers.
Other notable names on the list include Secretary of State Condoleezza Rice at No. 7 and Oprah Winfrey at No. 36.
Trigger Adjusted for HOEPA Disclosures
WASHINGTON -- The dollar threshold for disclosures under the Home Ownership and Equity Protection Act of 1934 received its annual bump.
The current minimum of $561 has been adjusted to $583, based on the Consumer Price Index. The new dollar amount minimum becomes effective Jan. 1, 2009.
The slightly upward revision of points and fees does not affect the rules for higher priced mortgage loans adopted by the Fed in July 2008, according to a written statement issued by the Federal Reserve.
Credit insurance premiums for insurance written in connection with the transaction are considered fees and should be included in the computation.
HOEPA regulates high-cost home loans. Congress enacted HOEPA in 1994 in response to concerns about predatory lending in the home equity market.