WASHINGTON - Mortgage companies, facing criticism that they aren’t doing enough to stem the housing crisis, are pledging to let troubled borrowers know if they’re approved for help within 45 days of getting a homeowner’s application.
The promise is expected to be announced Tuesday by the Hope Now alliance, a Bush administration-backed industry group, as part of a new set of guidelines for mortgage companies participating in the effort. The Associated Press obtained a copy of the guidelines.
The agreement is designed to clarify the mortgage assistance process for borrowers and the industry alike, but is not legally binding.
It also tries to alleviate a major stumbling block: the reluctance of companies that hold second mortgages, such as home equity loans, to agree to such modifications. Such requests should be approved, the agreement says, unless the holder of the second mortgage would be put in a worse financial position.
Consumer groups, however, say Hope Now’s efforts will never match the growth in foreclosures around the nation, and are pushing for a new $300 billion program to let the government back new loans for struggling homeowners.
“There isn’t a serious level of modification going on because the program is voluntary,” said John Taylor, president of the National Community Reinvestment Coalition, a consumer group in Washington. He described the newest announcement as “baby steps.”
Housing counselors have complained that the process of loan modifications is bureaucratic and difficult to understand, and say it is tough for consumers to get someone on the phone with the authority to help.
The industry has also favored repayment plans, which aim to help borrowers get back on track after missing a few payments, rather than lower interest rates or forgiving part of the principal balance.
Consumer advocates have pressed Congress to let bankruptcy judges rewrite the terms of mortgages for strapped borrowers, but that proposal faces intense opposition from the Bush administration and Republican lawmakers and is unlikely to make it through Congress this year.
Foreclosure filings last month were up nearly 50 percent compared with a year earlier.
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Leaders of an initiative aimed at shutting down Arizona’s payday-loan industry have withdrawn their proposal, saying they failed to collect enough signatures to make the state’s November ballot.
The chief legislative backers for the group, Stop Payday Loans, say they’ll instead focus their attention on defeating an initiative led by the payday-loan industry that would include some consumer-interest reforms but also allow the industry and its more than 600 branches to operate in perpetuity in Arizona.
A provision in state law enabling the payday-loan industry is scheduled to end in 2010, barring an extension.
Chief legislative backers for Stop Payday Loans - Rep. Marian McClure, R-Tucson, and Sen. Debbie McCune Davis, D-Phoenix - say they managed to collect only 30,000 signatures for their effort. More than 153,000 are needed by July 3 to qualify for the ballot.
But both legislators are continuing their campaign against payday-lending practices that they term “predatory.”
With loan extensions and additional fees, annual interest rates from payday lenders can reach 460 percent annually.
That rate would be capped at 391 percent under the industry-led initiative, which also would prohibit costly loan extensions and require the state to create a database so lenders could ensure that prospective borrowers had no outstanding debts with other payday lenders.
The measure is backed by a group calling itself Arizonans for Financial Reform.
Lobbyist Stan Barnes, who’s leading the initiative campaign, said the failure of McClure and McCune Davis’ effort speaks to voters’ desire to reform rather than repeal the payday-loan industry.
But McClure called those proposed reforms “window-dressing,” saying the industry’s true intent is simply to repeal the 2010 sunset date.
FRANKFURT (Thomson Financial) - French Finance Minister Christine Lagarde has written to the European Commission and her EU counterparts urging them to reduce VAT rates for fuel, and make public the amount of oil held in reserve, in order to protect consumers’ purchasing power.
‘A short-term action seems necessary to me, to respond to the shock in terms of protecting the purchasing power of our least well-off households,’ she said in a letter addressed to EU economic and Monetary Commissioner Joaquin Almunia and Tax Commissioner Laszlo Kovacs.
She said the additional amounts collected in VAT by euro zone governments due to rising oil prices could be used to protect households’ purchasing power.
In the letter, seen by Thomson Financial News, Lagarde said ‘we have entered the era of expensive oil’ and that ‘our first goal must be to prepare our economies for lasting high oil prices’.
She added that while the Manchester agreement signed by ministers in 2005 still applies, ’structural changes take time’ and the debate needs to turn to the effects of rising prices on the least well-off.
‘France, for example, plans to use the additional VAT income due to rising prices which was not included in our budget to support those most affected by rising prices and better finance energy economy programmes.’
In terms of disclosing oil reserves, she said France has been calling for a long time for the EU to publish weekly its reserve stocks of crude oil and petrol products, such as happens in the United States and Japan.
She added that this would help dialogue with oil-producing countries.
Commission spokesman Johannes Laitenberger confirmed the commission had received the letter and would study the proposals.
But the commission last week signalled it did not favour the French initiative, saying cutting taxes would send the wrong signal to oil-producing countries.
Euro zone ministers are discussing the proposals at their meeting in Frankfurt.
Ahead of the gathering, German Finance Minister Peer Steinbrueck told reporters he did not back the French proposal.
‘We should stick to the Manchester declaration and try not to react politically,’ he said.
Dutch Finance Minister Wouter Bos said the only way to combat high oil prices was to moderate consumption.
‘It’s hard to beat speculation… we have to make our economies less dependent on oil,’ Bos said.
Asked about the French proposal, he said: ‘France already has quite a few problems in balancing their budget… cutting taxes will not necessarily make that easier for them.’
The Royal Bank of Scotland (RBS) has enhanced its corporate and structured finance team in Reading with the appointment of Greg Norman.
Greg boasts considerable experience of the corporate marketplace, having previously been a relationship director in RBS’s Solent corporate team, and worked in the large corporate division in the bank’s Gatwick office.
Greg, who takes on the role of assistant director, said: “I am thrilled to be joining a team with such a strong reputation for delivering deals in the Thames Valley and South East.
“I hope to be able to add to their already excellent performance in 2008.”
Andrew Clayton, head of corporate & structured finance in the Thames Valley and the South East, added: “I am delighted to welcome Greg to the team.
“His previous experience in the corporate market place across the South region and his enthusiasm for this new role will bring additional transactional capability to the team.”