Consumer Law & Policy Blog

Good news on Foreclosures?

HOPE NOW released its numbers for August today, and while one month is not a trend, there are positive signs.  Foreclosure starts were down about 10% from the levels of the past six months, foreclosure sales were down, and modification activity, combined with temporary HAMP mods, seems to be up. 

Treasury reported that there were about 120,000 temporary modifications under HAMP in August, and HOPE NOW now reports that there were 86,000 permanent mods for the month.  The total of more than 200,000 is a large increase from the roughly 120,000 mortgage modifications per month that were done in the first half of the year, before HAMP.  On the other hand, a temporary HAMP mod is not the same thing as a permanent modification.  Until we know that servicers are successfully transitioning temporary agreements to permanent modifications, we will have to reserve judgment on HAMP.  Early indications on the "fallout", i.e. temporary mods that do not become permanent, are discouraging.

The totals to date are also a grim reminder of the toll the foreclosure crisis has taken:  1.8 million completed foreclosure sales since HOPE NOW started counting in July 2007, more than 5 million foreclosures started in that period, and 2 million new foreclosures started just since January 2009. 

Meanwhile, my own survey of investor reports for September suggests that the permanent HAMP modifications are still not happening.

Fed Proposes New Amendments to Reg Z to Implement Credit CARD Act

An excerpt from the press release:

Among other things, the proposed rule would:

• Protect consumers from unexpected increases in credit card interest rates by generally prohibiting increases in a rate during the first year after an account is opened and increases in a rate that applies to an existing credit card balance.
• Prohibit creditors from issuing a credit card to a consumer who is under the age of 21 unless the consumer has the ability to make the required payments or obtains the signature of a parent or other cosigner with the ability to do so.
• Require creditors to obtain a consumer's consent before charging fees for transactions that exceed the credit limit.
• Limit the high fees associated with subprime credit cards.
• Ban creditors from using the "two-cycle" billing method to impose interest charges.
• Prohibit creditors from allocating payments in ways that maximize interest charges.

Comments will be due within 30 days after publication of the proposal in the Federal Register.  The Fed expects to propose additional amendments to implement the Credit CARD Act as well.