Financial Product Safety Commission & The Poll
Watch for an intergalactic battle to come in the second half of this year as the Armies of Consumer Protection take on the Forces of Financial Product Innovation. Legislation has been introduced in Congress (S. 566 is the Senate version; H.R. 1705 in the House) to create a Financial Product Safety Commission that would govern mortgages and other consumer lending products.
These are some of the tasks the Commission would be charged with, under the Senate version:
"1) to minimize unreasonable consumer risk associated with buying and using consumer financial products;
(2) to prevent and eliminate practices that lead consumers to incur unreasonable, inappropriate, or excessive debt, or make it difficult for consumers to repay existing debt, including practices or product features that are abusive, fraudulent, unfair, deceptive, predatory, anticompetitive, or otherwise inconsistent with consumer protection;
(3) to promote practices that assist and encourage consumers to use credit and consumer financial products responsibly, avoid excessive debt, and avoid unnecessary or excessive charges derived from or associated with consumer financial products;
(4) to ensure that providers of consumer financial products provide credit based on the ability of the consumer to repay the debt incurred;
(5) to ensure that consumer credit history is maintained, reported, and used fairly and accurately;
(6) to maintain strong privacy protections for consumer transactions, credit history, and other personal information associated with the use of consumer financial products;
(7) to collect, investigate, resolve, and inform the public about consumer complaints regarding consumer financial products;
(8) to ensure a fair resolution of consumer disputes regarding consumer financial products; and
(9) to take such other steps as are reasonable to protect users of consumer financial product."
The Post's Zachary Goldfarb has reported on the possibility of new regulators and on resistance to the idea from some of the regulators now in charge of regulating financial products. Consumer activists are solidly behind the legislation.
Real Estate Settlement Rules: The Department of Housing and Urban Development is also promising more consumer protection. HUD Secretary Shaun Donovan recently said the agency would make its long-delayed new RESPA rules effective Jan. 1. RESPA stands for the Real Estate Settlement Procedures Act, which governs all those papers you have to sign at a real estate closing. In particular, RESPA is supposed to ensure that people who make a living off a real estate transaction (the title company, closing attorney, real estate agent, termite inspector, home inspector, mortgage lender and others) aren't throwing kickbacks to each other behind the scenes in exchange for business referrals. Donovan said the new RESPA rules would not cover a controversial area -- home builders' requirement that sales incentives, such as a free countertop upgrade, apply only if the buyer uses their preferred mortgage lender or other provider.
Donovan said the revised RESPA rules will save the average home buyer $700.
Weekend reading: In Saturday's Real Estate Section, Alejandro Lazo looks at the role of immigrants in both the housing boom--and the bust.
The Weekend Poll
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