Consumer Law & Policy Blog

Product Safety Recalls for April 2008

Consumer Product Safety Commission recalls for April 2008 are here. As usual, the monthly recall report from the National Highway Traffic Safety Administration is delayed. We'll post NHTSA's April 2008 report when it becomes available.

Times Articles on Mortgage Plans

Today's Times reports, in "House Panel Approves Bill to Assist Borrowers," that the House Financial Services Committee, "pushed forward on Thursday with an aggressive effort to help troubled homeowners, approving legislation that would make up to $300 billion in federally insured loans available to refinance the mortgages of borrowers in danger of foreclosure."  The Times summarized the bill as follows:

The Democrats’ legislation seeks to help homeowners by requiring lenders to reduce the principal balances for borrowers at risk of default. The bad loans, typically with high adjustable rates, would be refinanced into more affordable 30-year fixed-rate loans insured by the F.H.A.

The new loans would be limited to no more than 90 percent of a property’s value, based on an updated appraisal. The government would retain a stake in any future sale of the property, worth 3 percent of the initial loan balance or 50 percent of net profit from a sale, whichever is greater.

Borrowers would have to demonstrate the ability to repay the new loan, and if they default, they will forfeit the property. Democrats say the plan could help as many as 1.5 million homeowners.

Yesterday's Times reported here on a proposal by Sheila C. Bair, the head of the FDIC "to permit the Treasury Department to lend directly to as many as a million homeowners to help ease the housing crisis."  The paper observes that the "Bush administration and Congress reacted coolly to" the proposal.  Meanwhile, a report on Wednesday, "Who is Getting the Mortgage Aid?," on the FHA Secure program, stated that "Fewer than 2,000 homeowners at risk of foreclosure have been helped by a Federal Housing Administration program that President Bush promised would help homeowners who had fallen behind on their mortgage payments, federal housing statistics show."  And earlier this week, on Monday, the lead article in the Times, titled "Lenders Fight Stricter Rules on Mortgages," reported on opposition to the Fed's proposed subprime mortgage lending regulations.  Some excerpts:

* * * One common industry criticism is that at a time of tight credit, tighter rules could make many mortgages more expensive by creating more paperwork and potentially exposing lenders to more lawsuits.

To the chagrin of consumer groups that have complained that the proposed rules are not strong enough, the industry’s criticism has already prompted the Fed to consider narrowing the scope of the plan so it applies to fewer loans.

* * *

Earlier this month, as the comment period was about to close, the Fed was deluged with more than 5,000 comments, mostly from lenders who said the proposals could affect loans that have not presented problems. Some bankers and brokers also said the rules would discourage them from lending to some creditworthy borrowers.

Much More on Proposed Federal Reserve Credit Card Rules

Earlier today, we blogged about a new Federal Reserve proposal to protect credit card users from predatory bank practices. You can go to the Federal Reserve's webpage on the proposal to find a ton of information, including the agency's press release, a synopsis of the proposed rules, and the proposed rules themselves. Happy reading!

Federal Reserve Proposing New Protections for Credit Card Consumers

The top story in the Washington Post this morning is this story entitled "Fed to Pursue Aggressive Checks on Credit Cards." The Federal Reserve, along with the Office of Thrift Supervision and the National Credit Union Administration, will issue proposed regulations today that seek to put a halt to certain credit card practices. This excerpt from the Post story provides an overview:

The proposed regulations, which could be finalized by year's end, would label as "unfair or deceptive" practices that consumers have long complained about. That includes charging interest on debt that has been repaid and assessing late fees when consumers are not given a reasonable amount of time to make a payment. When different interest rates apply to different balances on one card, companies would be prohibited from applying a payment first to the balance with the lowest rate.

We will post the proposal itself when it becomes available.

Rent-a-Center reconsiders hunger aid

Rent-a-Center, the publicly-traded rent to own chain, is having some second thoughts about its charitable donations to an Ohio food bank. Second Harvest signed on to the Ohio Coalition for Responsible Lending, which favors stricter regulation of credit, including payday loans and rent-to-own sales. The organization's director hastened to withdraw from the coalition. The credit industry continues to oppose all forms of regulation, no matter what.