Business Reorganization

Senate Passes Four Bipartisan, Bicameral Bankruptcy Bills

The U.S. Senate today passed four bipartisan and bicameral bankruptcy bills before adjourning for its August recess. The bills are H.R. 3311, the Small Business Reorganization Act; H.R. 2336, the Family Farmer Relief Act; H.R. 2938, the Honoring American Veterans in Extreme Need Act (HAVEN Act); and H.R. 3304, the National Guard and Reservist Debt Relief Extension Act. ABI testified in support of H.R. 3311, H.R. 2336 and H.R. 2938. All the bills passed the U.S. House of Representatives last week and are non-controversial. The bills received unanimous consent to proceed to passage. The legislation will now be sent to President Trump to be signed into law. Click here to read ABI’s press release.

Consumer Groups Seek Extension of FDCPA Comment Period

Consumer advocacy groups have formally requested a two-month extension — to Oct. 21 — on the comment period for the Consumer Financial Protection Bureau’s proposed debt-collection rule, Auto Finance News reported. The comment period is currently set to expire on Aug. 19. Seven advocacy groups signed the letter, citing the long and complicated nature of the proposal. “The proposal’s broad and potential impact — on virtually every person in this country — adds to the complexity of analyzing and commenting on the implications for different constituencies,” the letter said. In fact, the consumer advocacy groups hold that these rules affect not only consumers with debt, but “anyone who may mistakenly be the subject of debt collection communications and litigation against the wrong person, wrong number or email address, or debts paid long ago,” making it difficult to respond adequately. Further, the letter cites the CFPB’s other activities as having consumed many of the resources of the consumer advocacy groups, including a proposal to rescind much of the payday loan rule, request for comment on overdraft opt-in rules, and the proposed rule under the Home Mortgage Disclosure Act. As of yesterday, 1,978 comments on the proposal had been submitted on the CFPB’s website.

Tapping Homes for Cash to Get Tougher Under New FHA Limits

The Trump administration is moving to restrict mortgage refinancings in which borrowers withdraw cash, the latest effort to curb the federal government’s exposure to potential defaults, the Wall Street Journal reported. The Federal Housing Administration, an arm of the Department of Housing and Urban Development that insures loans for mostly first-time buyers, announced today that it will limit cash-out refinancings in its program. Borrowers will be able to pull cash out only when the new loan amounts to 80 percent of the value of the home or less, down from 85 percent. The policy change, expected to take effect in September, follows a sharp rise in the use of cash-out refinancings over the past several years. Officials believe this has added risk to the $1.3 trillion government mortgage program. Borrowers aren’t tapping their homes for nearly as much cash as they did before the financial crisis. But rising home prices have rewarded owners with more equity in their homes, and many are turning it into cash to make home improvements or pay bills. In the FHA program, there were nearly 151,000 cash-out refinances in the 12 months that ended in September, versus roughly 43,000 during the same period five years earlier. (Subscription required.)

Commentary: Mortgage Rates Are Already Lower, but Not Providing a Spark to Homebuying*

Cheaper mortgages are usually a boon to the housing market, but this year, a sharp drop in mortgage rates hasn’t provided much of a lift, according to a New York Times commentary. Consumer borrowing costs, including mortgage rates, are heavily influenced by the market for government bonds, and yields on those bonds have been falling this year. Similarly, the rate on the 30-year fixed mortgage rate is down more than one percentage point, to 3.75 percent last week, according to Freddie Mac. Over the last 30 years, the rate has averaged about 6.25 percent. So the current rates might reasonably have been expected to spark a flurry of refinancing and home buying. But, because of rising home prices, there has been no boom so far. Through June, sales of existing homes were down 2 percent from a year earlier, and investment in residential structures had declined for six straight quarters. Sales of newly built homes remain well below their recent peak in late 2017. The housing market has traditionally been one of the most important channels by which the Fed’s rates can influence the economy because it can spur construction employment, sales of appliances and furniture, and services such as landscaping, all of which multiply the economic impact of a home’s purchase. But the math facing prospective American home buyers is daunting. Since June 2009, when the U.S. economy started its current expansion, the median price of existing homes has risen nearly 60 percent, far outpacing the 24 percent gain in median weekly earnings.



*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

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