Conforming Loan Limits Are Too High, ABA Says 

The conforming loan limits for mortgages that Fannie Mae and Freddie Mac will purchase are too high, ABA said in a comment letter yesterday. Given post-crisis house price declines, the average mortgage loan amounted to $294,000 in March 2014 -- well below the GSEs’ $417,000 and $625,500 in high-cost areas.

“As Congress works to develop a consensus on broad reforms, ABA has advocated lowering the conforming loan limits,” the association said. “Such high limits have made it possible for the GSEs to hold too large a share of the housing finance market.” ABA acknowledged that statute prevents the conforming loan limits from being lowered.

--ABA Daily Newbytes

New Home Sales Fall to Seven-Month Low

Sales of new homes fell 6.8 percent in June to a seasonally adjusted annual rate of 482,000 units, the Commerce Department said on Friday. Sales were 18.1 percent above last year’s number and were the lowest in seven months. The median new home price for the month was $281,800. 

--ABA Daily Newsbytes

ECONOMY
Existing Home Sales Surge 

Existing home sales rose 3.2 percent in June to a seasonally adjusted rate of 5.49 million, the National Association of Realtors said yesterday. Sales -- which rose to their highest pace since February 2007 -- have increased year-on-year for nine consecutive months and were 6.5 percent above June 2014’s level. The median home price for the month reached a record high of $236,400, up 6.5 percent from a year ago and surpassing the previous record set in 2006--  ABA Daily Newsbytes

Obama Unveils New Military Lending Rules

President Barack Obama on July 21 discussed how the Department of Defense is expanding a law that helps protect active-duty personnel from predatory lending. Congress in 2006 passed the Military Lending Act, which limits rates to 36 percent and applies other protections to payday loans. The new rules expand the type of loans covered by the law as well as certain types of credit cards. They also eliminate charges for most "add-on" products, like credit default insurance, in calculating the military annual percentage rate. All loans subject to the rule would be capped at 36 percent for military members and their families. The rules take effect on Oct. 1, 2015.

From "Obama Unveils New Military Lending Rules"
The Hill (07/21/15) Matishak, Martin

U.S. Banks Prepare for Lending Revival

The 1 percent increase in total second-quarter revenues at Bank of America to $22.1 billion from $21.7 billion a year ago is a sign that the banking industry still has the power to grow, says Richard Hunt, president of the Consumer Bankers Association. Years of tighter regulation and looser monetary policy have combined to squeeze income for all the big U.S. lenders, but if BofA -- which has shed more than $70 billion of assets over the past five years while winding down other lines of business -- can start to improve its top line, then the future suddenly looks brighter. "Anything north is exciting," says Hunt. Analysts say the recent earnings reports from major banking firms seem to indicate that banks are ready to respond to a revival in appetites for borrowing in households across America. Revenues in Citigroup's retail bank were up 11 percent from a year earlier, for example, driven by a 42 percent surge in mortgage originations. Wells Fargo ended the quarter with credit card balances of more than $30 billion, up 15 percent from a year earlier.

From "U.S. Banks Prepare for Lending Revival"
Financial Times (07/17/15) McLannahan, Ben

Senate Dems Introduce Credit Reporting Accuracy Bill

A group of U.S. Senate Democrats are proposing the Consumer Reporting Fairness Act, a bill that would require banks and debt buyers to make sure a consumer's credit report is updated when debt is erased in bankruptcy. Under the legislation, financial institutions and other creditors would be obliged to update credit bureaus when a borrower declares bankruptcy. The measure is part of an effort by lawmakers, state officials, and the Consumer Financial Protection Bureau to improve credit report accuracy. Bill sponsors include U.S. Sens. Sherrod Brown (D-Ohio), Richard Blumenthal (D-Conn.), Dick Durbin (D-Ill.), Al Franken (D-Minn.), and Jeff Merkley (D-Ore.). "This bill would ensure that debts prior to bankruptcy aren't in effect double counted and don't continue to make it difficult for consumers to get a job or secure a loan for a home," Brown remarked.

From "Senate Dems Introduce Credit Reporting Accuracy Bill"
American Banker (07/16/15) Finkle, Victoria

ABA Addresses Elder Financial Abuse at White House Conference 

Financial institutions are "well-positioned" to take a proactive stance on preventing fraud and financial exploitation of seniors, ABA Board Member F. Scott Dueser -- who is chairman, president and CEO of First Financial Bankshares Inc., Abilene, Texas -- told White House Conference on Aging participants yesterday. "The more we can talk about it, the less we'll have," said Dueser, who represented ABA at the conference.

Dueser called upon financial institutions to educate employees and consumers alike on identifying these crimes against the elderly and talked about the importance of banks’ partnerships with law enforcement and social service organizations to help prevent fraud and financial abuse. “If people know what is happening to them, it makes a big difference. We have got to get out and educate our communities,” said Dueser, who is also a member of ABA's Bank Community Engagement Council.

ABA yesterday unveiled a new online tool to showcase banks' corporate social responsibility programs. The interactive map compiles entries in ABA's Community Commitment Awards since 2012, and is searchable by state, asset size and category -- including a "Protecting Older Americans" category.

---ABA Daily Newsbytes

Yellen: Interest Rate Hike to Come Later This Year

During a speech in Cleveland, Federal Reserve Chair Janet Yellen provided an outlook for the U.S. economy. She said the economy is improving, unemployment is dropping and an interest rate hike is likely to come later this year. “Based on my outlook, I expect that it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy,” Yellen said. Read Full Speech. Yellen will deliver the Federal Reserve’s semiannual report on monetary policy and answer questions from members of Congress at public hearings this week. --ICBA

Friday Rate Update

Mortgage Rates Dip in Response to Global Unrest

The rate for a 30-year fixed-rate mortgage averaged 4.04 percent this week, down from last week’s 4.08 percent, Freddie Mac said today. At this time last year, the 30-year FRM rate averaged 4.15 percent. This week’s 15-year FRM rate averaged 3.20 percent, down from last week’s 3.24 percent rate. A year ago, the 15-year FRM rate averaged 3.24 percent. 

--ABA Daily Newbytes

Consumer Delinquencies Dip in First Quarter

Delinquencies in closed-end loans and bank cards edged down in the first quarter, driven by large declines in home loan-related delinquencies, according to the ABA Consumer Credit Delinquency Bulletin that was released today. Delinquencies fell in five of the 11 loan categories and remained unchanged in two others.

The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, dipped by one basis point to 1.53 percent of all accounts -- well under the 15-year average of 2.28 percent. Bank card delinquencies fell by three basis points to 2.49 percent of all accounts, also well below their 15-year average of 3.76 percent. ABA Chief Economist James Chessen remarked that credit card delinquencies have remained “remarkably stable at historically low rates.”

Delinquencies in all three home-related categories -- home equity loans, HELOCs and property improvement loans -- trended downward, with HELOC delinquencies dropping by 11 basis points. “Home equity loan and line delinquencies are tracking the slow and steady improvements in the housing market,” said Chessen. “Greater household wealth and income gives consumers more breathing room to meet their financial obligations.” 

--ABA Daily Newsbytes

Mortgage Rates Rise

The rate for a 30-year fixed-rate mortgage averaged 4.08 percent last week, up from the previous week’s 4.02 percent, Freddie Mac said Thursday. At this time last year, the 30-year FRM rate averaged 4.12 percent. Last week’s 15-year FRM rate averaged 3.24 percent, up from the previous week’s 3.21 percent rate. A year ago, the 15-year FRM rate averaged 3.22 percent.

--ABA Daily Newbytes 

Smaller Lenders Take Growing Share of Fannie, Freddie Business

The percentage of loans that Fannie Mae and Freddie Mac purchased from small lenders in 2014 rose substantially, according to a report yesterday from the Federal Housing Finance Agency. The share of Fannie and Freddie single-family mortgage acquisitions from the GSEs’ top five sellers fell from 49 percent to 39 percent, while the share sold by lenders not in the GSEs’ top 100 rose from 19 percent to 28 percent.

The report also showed that the guarantee fees lenders pay Fannie and Freddie rose from 22 to 58 basis points from 2009 to 2014. They rose 7 basis points between 2013 and 2014. FHFA suspended a planned G-fee increase in 2014.

--ABA Daily Newsbytes