Lending Specialists
Anything you’d care to share?
One sales guru I heard years ago mentioned a sales idea when he confronted a family with a dog. He would carry a good size doggie treat in his pocket. When the dog checked him out, he would give the dog half the treat and put the remainder in his pocket. The dog followed him around the rest of the night. Win the dog, win the sale
Thanks to Duane Gomer duanegomer.com. A good source for education
Thanks to First Tuedsay JournalOnline firsttuesday.us for this food for thought. What do you think? Your input is always valued.
Rather than becoming a vestigial organ from the past, American single family residences (SFRs) have experienced an increase in relevance, per New Geography’s analysis of an American Community Survey. According to this information, SFRs constituted almost 80% of all new households within the last decade, with vacancy rates in multi-unit housing reaching 17.1% in 2010.
Extending this analysis to include demographic trends, members of Generation Y (Gen Y) and immigrant communities are driving the expansion of SFRs within the suburbs, increasing diversity amongst its sprawl. Many developers are choosing to invest in suburban areas through the construction of multi-generational housing development in order to cater specifically to these groups.
According to Pew Research Center, a record 51.4 million Americans are living with more than one generation under one roof. Thus, companies are betting on multi-generational living in the suburbs to shape the future of the housing market, rather than considering these developments to be short-term market trends.
first tuesday take: Don’t be fooled by this analysis. The data contrasts two arbitrary calendar dates of no importance to the future of housing. The current trend is one that commenced in 2006, not 2000. While an increase in SFRs did contribute to suburban population expansion through 2006, this generalization is ignorant of the disparities between California’s distinct and hugely influential economies.
California’s human resources are simply not distributed evenly, as in any society. Urban areas close to the city core are increasingly affluent, populated by more educated groups who are inclined to rent, and thus demand and fill rental units. By contrast, suburban neighborhoods are more likely to be supported by agriculture, farming and industry, remaining heavily dependent on SFRs.
Now, the suburbs are home to the majority of the nation’s poor, a product of lesser education. Providing homes for more lower-income tenants, suburbia imposes lower overall standards of living upon its residents. As the costs of schooling and other public services become further problematic, the unsustainable nature of the suburban cultural habitat will continue to decline, with society’s elite relocating to increasingly gentrified cities. In large part, this decline is due to the low density of these communities and the lack of agglomeration.
As a result of gentrification, the nature of urban cores has grown more culturally homogeneous, while suburban areas are now increasingly diverse. While it is true that some members of Gen Y will still choose to occupy suburbia, the majority of this demographic will gravitate towards cities in order to receive higher levels of compensation than their Baby Boomer parents. Meanwhile, a growing number of immigrants are settling in suburbia, driving the demand for an increase in the sprawl of SFRs.
As cultural preferences and economic motives cause more families to live together under one roof, the demand for multi-generational housing is at an all-time high. Developers are responding to this trend with an increase in multi-generational home building. Such a response is short-sighted, however, as this type of housing is largely a temporary remedy for families still responding to the effects of the Lesser Depression, effects which will not last for perpetuity.
Once commonly associated with its sprawl, suburbia’s constructed image of affluence and efficiency is no more. Going forward, look to California’s urban cores for economic growth.
Until now, the arena of cash buyers has been dominated by big investors, both foreign and domestic. Enter the current homeowner.
Despite historically low interest rates, the percentage of all-cash sales increased nationwide from 30.8% of all sales in October 2011 to 34.1% in January 2012. During this period, cash purchases by investors and first-time homebuyers remained flat, meaning the increase in cash purchases resulted from current homeowners. [For more information on the rising trend of cash buyers, see the March 2011 first tuesday article, January 2011 sees new record number of cash buyers.]
The average cash buyer receives a 10% discount off the asking price. Sellers frequently prefer cash buyers as all-cash transactions do not contain buyer-financing contingencies, and are favored by lenders in a shortsale and real estate owned (REO) situation trying to unload properties quickly. In both circumstances, cash offers are frequently accepted over finance-contingency offers even if the amount offered is less than the listed price.
Additionally, for properties owned by Fannie Mae and Freddie Mac, cash offers made by buyer-occupants are favored over investors who will not actually occupy the home. [For information on the seller’s preference for cash buyers, see the August 2010 first tuesday article, Speculations on speculator suppression.]
While an influx of cash offers is a good thing for bloated inventories, all-cash deals are a double-edged sword. All-cash offers drive prices down across the board, as they do not provide any upward pricing momentum. These discounted prices cause appraisal comps to fall, thus making home values languish at best, and continue in their downward spin at worst.
first tuesday take: Historically, the average rate of cash purchases in California is 14% – less than half of the current rate.
The good news: current homeowners get a great deal on a cash purchase, but the majority of cash buyers are investors. Too many are speculators looking to flip on the belief prices will rise to generate a profit for them in the short term without doing one thing to add value to the property. [For more information on flippers, see the January 2012 first tuesday article, Anti-flipping waiver reincarnated.]
But is all cash really a bad thing? It’s about the resistance of sticky pricing most of all.
As all-cash buyers allegedly drive home prices down, positive equity sellers across California cringe, fearing the hit they will take to their balance sheets if they sell. However, they have no cause to cringe about pricing if, and we mean if, they purchase a replacement home within a year or two – a financial push in terms of value sold and value received.
The claimed discounts cash buyers receive clearly reflect the defined fair market value (FMV) of a given property, not its artificially inflated price buoyed by leveraged purchases as in the past. A return to fundamental pricing paves the way for home prices to reach their equilibrium price – which they have yet to do in California (we have another 10% -15% reduction to go). That is the price point at which the current dollar value of the home matches its long-term historical price level.
Further, actual sales prices must first dip below the historic equilibrium price, which runs with consumer inflation, before significant sales volume momentum will build (sometime in 2016) and prices begin to move upward to and above that mean price again (probably in 2017). [For more information on equilibrium pricing, see the October 2011 first tuesday article, The equilibrium trendline: the mean-price anchor.]
Unfortunately, the irrational exuberance experienced in the past by both buyers and lenders thinking home values would continue to increase indefinitely led to the foreseeable terrible injury it inflicted on the housing and income property/land markets. Soon enough the permissive illusion was revealed, and here we are again, approaching the crossover at the equilibrium price. It is not a free fall, but it is moving as do glaciers.
Here are some helpful tips astute first tuesday readers can put into practice: to make an offer as attractive as possible, stay away from unnecessary contingencies and offer a quick closing date (30 to 45 days). Buyers requiring purchase-assist financing should also be pre-qualified for a mortgage to be able to show the seller their lender paperwork and demonstrate a serious intent to purchase.
Re: “In today’s topsy-turvy housing market, cash rules” from the Sacramento Bee and “Throwing cash at the housing market will make it worse” from CNN Money
Copyright © 2012 by first tuesday Realty Publications, Inc. Readers are encouraged to reprint or distribute this information with credit given to the first tuesday Journal Online — P.O. Box 5707, Riverside, CA 92517
This article looks at home sales volume, and discusses California trends in homebuying and selling. Many thanks to First Tuesday
first tuesday 3474 Niki Way, Riverside, CA 92507
Phone (800) 794-0494 Fax (877) 319-8510 Web www.firsttuesday.us
29,630 new and resale home transactions closed escrow in California during February 2012, up 8% from one year ago when 27,320 sales closed escrow, and up 5% from January. For the past two years, home sales have existed on a “bumpy plateau,” with dramatic changes in sales volume from month to month, but little overall change. All forecasts are made by first tuesday based on current data, influential factors and market trends.
Recent sales numbers suggest the upcoming years through 2016 will be characterized by a bumpy plateau in home sales volume. Volume and prices fluctuated from month to month in 2011, with little overall gain in sales from the year before. A (short-lived) rise is expected in the first months of 2012, continuing a trend started by hisorically low prices and interest rates in late-2011. [For more on the influence of interest rates on home sales, see the first tuesday Market Chart, Buyer Purchasing Power]
Little overall change from 2010’s numbers will occur until California employment growth and homebuyer confidence show consistent improvement over a substantial period of time. For example, in 1994, when the economy began to rise from the recession of 1991, it took 24 consecutive months of improved job numbers for the housing market to respond with increased sales volume.
Current trends in jobs and consumer confidence do not suggest any equivalent improvement in sales volume is imminent. At the time of this writing, 30% of all homeowners cannot sell and relocate because their homes are worth significantly less than the debt encumbering them. Worse, lenders are reluctant to consent to any discounts on short sale payoffs when sellers are even remotely capable of paying on the loan. [For a discussion of the challenges facing current job seekers, see the August 2011 first tuesday article, Jobs are scarce whether or not you can sell your home.]
first tuesday forecasts home sales volume will return to the 2006 levels around 2017-2018. The peak sales volume last seen in 2004, inflated by speculator acquisitions, may never return at all.
Relocating Baby Boomers going into retirement later this decade will be the primary propelling force in both selling homes and buying replacements. Their Generation Y (Gen Y) children will add to the sales volume as they become first-time homebuyers whose influence will peak at the end of this decade. [For an analysis of the Boomers’ lasting influence, see the first tuesday Market Chart, Boomers retire, and California trembles.]
You probably won’t bother applying for the job now. Thanks to the Niche Report for the heade’s up.
Washington, DC – 3/9/2012 – Federal Housing Finance Agency (FHFA) Acting Director Edward J. DeMarco today released a 2012 Conservatorship Scorecard, which provides the implementation roadmap for the new FHFA Strategic Plan announced in February 2012. The scorecard includes specific objectives and timetables for Fannie Mae and Freddie Mac (the Enterprises) in support of the Strategic Plan.
FHFA also announced details on the new 2012 executive compensation programs at Fannie Mae and Freddie Mac. The 2012 pay program reduces top executive pay by nearly 75 percent since conservatorship, eliminates bonuses, and establishes a target for new CEO pay at $500,000. In setting this new compensation framework, FHFA concluded that further material reductions or uncertainty around compensation would heighten safety and soundness concerns.
“I believe the new compensation program strikes the balance between prudent executive pay including the elimination of bonuses, with the need to safeguard quality staffing in order to protect the taxpayers’ investment and achieve the objectives in the Conservatorship Scorecard,” said DeMarco. “A sudden and sharp change in pay from these levels would certainly risk a substantial exodus of talent, the best leaving first
Good news for a change!
Buying existing homes contracts have hit a two year high according to NAR, the National Association of REALTORS®’ index of pending home sales., The housing recovery is looking good folks.. The index of deals for previously owned homes is up 8 percent from last January
This increase is equal to the 2010 tax credit incentive sunset. Could the market be rebounding without a major government crutch?.
While the west region showed the smallest % increase, anything is better than nothing, right? .Existing home sales nationally were up more than 4 percent in January, bumping 4.57 million.
Housing experts such as Lawrence Yun, the REALTOR® group’s chief economist, credit the sliding unemployment rate—which fell in January to its lowest point in three years —as well as a downward trend in home prices and a supply of homes that is at a nearly seven-year low.
“Movements in the index have been uneven, reflecting the head winds of tight credit, but job gains, high affordability and rising rents are hopefully pushing the market into what appears to be a sustained housing recovery,” according to Lawrence Yun, the REALTOR® group’s chief economist, in a statement.
Here’s something you might find interesting. As usual good intentions that may lead to unintended consequences.
California Attorney General Kamala D. Harris has announced the California Homeowner Bill of Rights designed to protect homeowners from unfair practices by banks and mortgage companies and to help consumers and communities cope with the state’s urgent mortgage and foreclosure crisis. Joined by Senate President pro Tem Darrell Steinberg and Assembly Speaker John A. Perez, Attorney General Harris announced her sponsorship of six bills designed to guarantee:
►Basic standards of fairness in the mortgage process, including an end to dual-track foreclosures
►Transparency in the mortgage process, including a single point of contact for homeowners
►Community tools to prevent blight after banks foreclose upon homes
►Tenant protections after foreclosures
►Enhanced law enforcement to defend homeowner rights – paid for by fees imposed on banks
►A special grand jury to investigate financial and foreclosure crime
“California communities and families are being devastated by the mortgage and foreclosure crisis. We must ensure the deceptive practices that caused it never happen again,” said AG Harris. “The California Homeowner Bill of Rights will provide basic fairness and transparency for homeowners, and improve the mortgage process for everyone.”
The legislation builds on the California commitment announced by Attorney General Harris earlier this month, which is expected to result in $18 billion of benefits for California homeowners. That agreement included reforms for mortgages owned by the five banks that were signing parties. The California Homeowner Bill of Rights will strengthen those protections, make them permanent, and apply them to all mortgages in the state.
“I want to congratulate the Attorney General on the victory she won on behalf of the people of California,” said Speaker John A. Perez. “Our state has suffered greatly as the result of bad actors in the banking and financial industries, and this settlement holds them accountable as we continue the difficult work of recovering the housing market and stemming the tide of foreclosures, evictions and auctions.”
If passed, the following bills would:
Assembly Bill 1602/Senate Bill 1470: The Foreclosure Reduction Act of 2012Authors:Assemblymen Mike Eng and Mike Feuer; Senators Mark Leno, Fran Pavley, and Senate President pro Tem Darrell Steinberg
►Require creditors to provide documentation to a borrower that establishes the creditor’s right to foreclose on real property prior to recording a notice of default.
►Require creditors to provide documentary evidence of ownership, the chain of title to real property, and the right to foreclose, at the time of the filing of a notice of default.
►Prohibit creditors from recording a notice of default when a timely-filed application for a loan modification or other loss mitigation measure is pending.
►Prohibit creditors from recording a notice of sale when a timely-filed application for a loan modification or other loss mitigation measure is pending.
►Prohibit creditors from recording a notice of sale while a borrower is in compliance with the terms of a trial loan modification or after another loss mitigation measure has been approved.
►Require creditors to disclose why an application for a loan modification or other loss mitigation measure has been denied.
►Require that notices of foreclosure sales be personally served, including notices of foreclosure sale postponement.
►Provide homeowners with a private right of action in instances in which the requirements set forth in the legislation are not followed
Assembly Bill 2425/Senate Bill 1471: Due Process Reform Legislation
Authors: Assemblywoman Holly Mitchell; Senators Mark DeSaulnier and Fran Pavley
► Require creditors to provide a single point of contact to borrowers in the foreclosure process who will be responsible for providing accurate account and other information related to the foreclosure process and loss mitigation efforts.
►Require creditors to provide a dedicated electronic mail address, facsimile number and mailing address for borrowers to submit information requested as part of a loan modification, short sale or other loss mitigation option.
►Authorize borrowers to challenge the unlawful commencement of a foreclosure process in court.
►Impose a $10,000 civil penalty on the recordation or filing of “robosigned” documents, defined as documents that contain information that was not verified for accuracy by the person or persons signing or swearing to the accuracy of the document or statement.
►Require that certain documents be recorded in a county recorder’s office.
Assembly Bill 2314/Senate Bill 1472: Blight Prevention Legislation
Authors: Assemblywoman Wilmer Carter; Senator Fran Pavley
► Prevent blight enforcement actions from being taken against new purchasers of blighted property for 60 days, provided that repairs are being made to the property.
►Require banks that release liens on foreclosed property to inform local code enforcement agencies of the release so that demolition of blighted property can proceed.
►Increase fines against owners of blighted property from $1,000 per day to $5,000 per day, and allow the imposition of the costs of a receivership over blighted property to be imposed directly against the owner of blighted property.
Assembly Bill 2610/Senate Bill 1473: Tenant Protection Legislation
Authors: Assemblywoman Nancy Skinner; Senator Loni Hancock
►Require purchasers of foreclosed homes to honor the terms of existing leases and give tenants at least 90 days notice before commencing eviction proceedings.
Assembly Bill 1950: Enhancement Of Attorney General Enforcement
Author: Assemblyman Mike Davis
►Impose a new $25 fee to be paid by servicers upon the recording of a notice of default. The fee would be deposited into a real estate fraud prosecution trust fund that would support the Attorney General’s efforts to deter, investigate and prosecute real estate fraud crimes, including the work of the Mortgage Fraud Strike Force.
►Extend the statute of limitations from one year to four years from the date of discovery for violations of law commonly occurring in connection with foreclosure-related scams, including acting as a real-estate agent without a license and charging up-front fees for loan modification services.
Senate Bill 1474/Assembly Bill 1763: Attorney General Special Grand Jury
Authors: Assemblyman Mike Davis; Senator Loni Hancock
►Authorize the Attorney General to impanel a special grand jury for the purposes of investigating and indicting multi-jurisdictional financial crimes against the state.
Fred Kreger, CMC
President Elect & Vice President, Government Affairs
California Association of Mortgage Professionals (CAMP)
“Excellence and Integrity in Lending”
Certified Mortgage Consultant
American Family Funding,
A Division of American Pacific Mortgage – A Direct Lender
24961 The Old Road Ste 101
Stevenson Ranch, CA 91381
Phone: (661) 505-4311
Cell: (661) 400-8905
Fax: (661) 705-8339
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Check out our GA blog site: www.campga.org
If government loans twist your knickers, this may be of interest
FHA TAKES ADDITIONAL STEPS TO BOLSTER CAPITAL RESERVES
New premium structure will help protect FHA’s MMI fund
WASHINGTON – As part of ongoing efforts to encourage the return of private capital in the residential mortgage market and strengthen the Federal Housing Administration’s (FHA) Mutual Mortgage Insurance Fund, Acting FHA Commissioner Carol Galante today announced a new premium structure for FHA-insured single family mortgage loans. FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500 and by 0.35 percent for loans above that amount. Upfront premiums (UFMIP) will also increase by 0.75 percent.
These premium changes will impact new loans insured by FHA beginning in April and June of 2012. Details will soon be published in a Mortgagee Letter to FHA-approved lenders.
“After careful analysis of the market and the health of the MMI fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market,” said Galante. “These modest increases are one of several measures we are taking towards meeting the Congressionally mandated two percent reserve threshold, while allowing FHA to remain a valuable option for low- to moderate-income borrowers.”
The Temporary Payroll Tax Cut Continuation Act of 2011 requires FHA to increase the annual MIP it collects by 0.10 percent. This change is effective for case numbers assigned on or after April 1, 2012. FHA is also exercising its statutory authority to add an additional 0.25 percent to mortgages exceeding $625,500. This change is effective for case numbers assigned on or after June 1, 2012.
The UFMIP will be increased from 1 percent to 1.75 percent of the base loan amount. This increase applies regardless of the amortization term or LTV ratio. FHA will continue to permit financing of this charge into the mortgage. This change is effective for case numbers assigned on or after April 1, 2012.
FHA estimates that the increase to the upfront premium will cost new borrowers an average of approximately $5 more per month. These marginal increases are affordable for nearly all homebuyers who would qualify for a new mortgage loan. Borrowers already in an FHA-insured mortgage, Home Equity Conversion Mortgage (HECM), and special loan programs outlined in FHA’s forthcoming Mortgagee Letter will not be impacted by the pricing changes announced today.
Taken together, these premium changes will enable FHA to increase revenues at a time that is critical to the ongoing stability of its Mutual Mortgage Insurance (MMI) Fund, contributing more than $1 billion to the Fund, based on current volume projections through Fiscal Year 2013.
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HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all.
HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the
need for quality affordable rental homes: utilize housing as a platform for improving quality of life; build
inclusive and sustainable communities free from discrimination; and transform the way HUD does business.
More information about HUD and its programs is available on the Internet at www.hud.gov and
http://espanol.hud.gov. You can also follow HUD on twitter @HUDnews, on facebook at
www.facebook.com/HUD, or sign up for news alerts on HUD’s News Listserv.
CAMP
SOUTHERN LOS ANGELES CHAPTER
This will be a big help in your business. Read the latest salvo.
FOR IMMEDIATE RELEASE:
February 21, 2012
CONTACT:
Office of Public Affairs
Tel: (202) 435-7170
CONSUMER FINANCIAL PROTECTION BUREAU CONVENES SMALL BUSINESS PANEL FOR KNOW BEFORE YOU OWE MORTGAGE DISCLOSURES
Panel is Bureau’s First Under Small Business Regulatory Enforcement Fairness Act
WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) is announcing today the formation of a Small Business Review Panel as part of its initiative to integrate the mortgage disclosure forms that borrowers receive when applying for and closing on a loan. The review panel will solicit feedback from small businesses that make mortgage loans and conduct mortgage closings.
“This is another step in the CFPB’s wide-ranging efforts to gather the input of the people who will be affected by our rules. The CFPB is dedicated to issuing thoughtful, research-based rules that take into account not only the benefits to consumers but also how businesses of all sizes will be affected,” said CFPB Director Richard Cordray. “We take all feedback seriously.”
The CFPB began its Know Before You Owe initiative to combine mortgage loan disclosure forms in May 2011. The project integrates two federally required mortgage disclosures into a single, simpler form that makes the costs and risks of the loan clearer for borrowers. Combining and simplifying these forms will also reduce burdens on lenders.
For more than thirty-five years, two federal laws (the Truth in Lending Act or “TILA,” and the Real Estate Settlement Procedures Act or “RESPA”) have required lenders and settlement agents to give consumers who take out a mortgage loan different but overlapping disclosure forms regarding the loan’s terms and costs. This duplication has long been recognized as inefficient and confusing for consumers and industry. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB is responsible for solving this problem by combining the disclosures.
However, TILA and RESPA are separate laws with different and sometimes inconsistent requirements. The CFPB will propose rules that integrate the statutory requirements and resolve any inconsistencies. The CFPB’s thorough and innovative approach to the disclosure forms not only clearly conveys the information that the laws mandate but also highlights the information consumers really need to know.
The CFPB is convening the Small Business Review Panel to help with proposals the CFPB is considering. Examples of these include:
· Consumers need to know what information they can rely on. Three days after application, consumers will receive an integrated loan estimate that clearly discloses the terms and costs of the mortgage loan. However, many lenders and mortgage brokers provide consumers with preliminary estimates of loan terms and costs earlier in the process. These estimates are not required by TILA or RESPA. The CFPB is considering whether to require that these preliminary estimates carry a disclaimer informing the consumer that the preliminary estimate is not the Loan Estimate required by law. This is intended to help consumers avoid relying on estimates that may not be reliable.
· Consumers need to be able to rely on their loan estimate. Under current rules, when a lender provides the consumer with an estimate of the cost of its own services under RESPA, the actual cost cannot be higher than the estimate unless there is a valid change of circumstances. The CFPB is considering a proposal to apply the same limitation when the lender estimates the cost of services provided by its affiliates or by companies the lender requires the consumer to use. This is intended to make the Loan Estimate more reliable for consumers.
· Consumers need to know the final terms and costs before they sit down at the closing table. Under current rules, consumers typically receive a disclosure with some of their final loan terms and costs three business days before closing on the loan, but other costs are not finalized until the day of closing. As a result, consumers sometimes do not know how much they will owe until it is too late. The CFPB is considering a proposal that would generally require delivery of the integrated settlement disclosure stating the consumer’s final loan terms and costs at least three business days before closing to reduce the risk that consumers will face unexpectedly higher closing costs at the last minute.
In developing new forms, the CFPB has engaged and continues to engage extensively with consumers and industry – well before proposing its regulation. The CFPB has conducted one-on-one testing of the forms in 9 cities across the country. The CFPB has also posted the forms on its website and received more than 27,000 comments from the public, including industry. Engaging with consumers helps the CFPB understand what they need from the form. Engaging with industry helps the CFPB understand the benefits and costs from the businesses – large and small – that are likely to be directly affected by the new mortgage disclosure.
The CFPB will be sharing the following documents with the Small Business Review Panel:
An overview of the proposals under consideration: http://www.consumerfinance.gov/wp-content/uploads/2012/02/20120221_cfpb_tila-respa-integration-rulemaking-outline-of-proposals-and-alternatives.pdf
A fact sheet summarizing the Small Business Review Panel process:http://www.consumerfinance.gov/wp-content/uploads/2012/02/20120221_cfpb_factsheet-small-business-review-panel-process.pdf
A list of questions and issues on which the CFPB will seek input:http://www.consumerfinance.gov/wp-content/uploads/2012/02/20120221_cfpb_tila-respa-integration-rulemaking-discussion-issues-for-small-entity-representatives.pdf
In this process, the CFPB is following the requirements of the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996. Generally, unless a proposed rule will not have a significant economic impact on a substantial number of small entities, the CFPB will seek input directly from small entities about potential costs of a proposed rule and potentially less-burdensome alternatives before issuing the proposal for public comment.
Under this law, representatives from the CFPB, the Chief Counsel for Advocacy of the Small Business Administration (SBA), and the Office of Management and Budget’s Office of Information and Regulatory Affairs will form a review panel. The panel meets with a group of representatives of small financial service providers selected by the CFPB, in consultation with the SBA. The representatives will provide the panel with feedback on the benefits and burdens of complying with the proposals the CFPB is considering. The representatives may also suggest alternatives that would minimize those burdens.
Within 60 days of convening, the review panel completes a report on the input received from small providers during the panel process. The report also contains the panel’s findings on the potential effects of the proposed regulation on small providers and any significant alternatives that accomplish the objectives of the proposed rule while minimizing such impacts. The CFPB then considers the panel’s report and the comments and advice provided by small providers as it prepares the proposed rule. The CFPB plans to formally release a proposed rule for comment in July.
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The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.ConsumerFinance.gov.
