Loans Expert

Gov. Jim Doyle single-handedly banned auto title loans in Wisconsin on Tuesday.

The governor signed a bill that will regulate payday lending for the first time after years of unchecked growth by the industry. But he creatively used his partial veto power to rewrite the law, banning auto title loans and making other changes to protect consumers from what he called “predatory lending practices.”

Lawmakers approved the plan last month, but decided not to ban the short-term loans that are secured by a car title after key senators objected in the final weeks of the session. Instead, the bill that cleared the Senate and Assembly called for limiting auto title loans to one per customer for no more than 50 percent of the car’s value, excluding fees.

Demand for loans to buy U.S. homes shriveled to a 13-year low last week, following the expiration of federal tax credits, while near-record low mortgage rates stoked refinancing, the Mortgage Bankers Association said on Wednesday.

Mortgage purchase applications sank 27.1 percent to the lowest level since May 1997 in the absence of the popular government support, the group said. U.S. housing groped for footing after more than a year of homebuyer tax credits worth up to $8,000 expired on April 30.

Requests for home purchase loans have fallen almost 20 percent over the past month despite low borrowing costs.

JPMorgan Chase & Co will no longer offer independent U.S. tax preparers financing for tax-refund loans, a company spokesman said.

The move by the second-largest U.S. bank follows recent criticism of such loans by consumer groups concerned that high U.S. unemployment is forcing more people to borrow short-term at high rates.

JPMorgan’s tax-refund financing business is not strategically important, the spokesman said, and the move will not have a material impact on its earnings.

The New York-based bank’s exit from the business could be a boon for companies like H&R Block, which receive financing for refund loans from HSBC Holdings. The move could help H&R Block attract customers away from independent tax preparers next year.

Bankrupt student loan holders may have access to a new safety net if they have private loans, thanks to a bill introduced to the United States House of Representatives earlier this month.

The “Private Student Loan Bankruptcy Fairness Act of 2010” was introduced in the House April 15 and if passed, would make it easier for students to terminate their private student loan debt if they declare bankruptcy.

“This bill will help to ensure that people who seek higher education to better their futures are not dissuaded from doing so by the threat of financial ruin,” bill sponsor Rep. Steve Cohen, D-Tenn, said in his address of a committee when the bill was introduced.

The nation’s auto dealers are to head to the U.S. Senate on Monday, ready to play man-to-man defense to stop a bill that would for the first time put their lending business under a single federal watchdog.

Even though the regulatory plan has the support of the Obama administration and key Democrats, past showdowns suggest it’s never wise to bet against the car dealers.

Sen. Chris Dodd, D-Conn., is a key supporter of the consumer financial protection agency proposed in the financial reform bill set to hit the Senate floor soon.

The back-and-forth efforts in the state Legislature to regulate payday loans continues.

The Assembly on Wednesday morning approved the Senate version of a bill regulating payday lenders in Wisconsin. However, the measure will have to return to the Senate after an amendment from state Representative Gordon Hintz (D-Oshkosh) was added to regulate auto title loans as well.

Hintz says the change will close a loophole the Senate bill that could hurt just as many people as payday loans. The amendment would limit the size of auto title loans, require notice when a vehicle is being repossessed, and requires additional profits from the sale of a seized vehicle to be returned to the original owner.

Banks that received federal assistance during the financial crisis reduced lending more aggressively and gave bigger pay raises to employees than institutions that didn’t get aid, a American University review found.
The reduction of credit during the worst of the recession raises questions about whether the $247 billion assistance program achieved one of its primary goals: to stimulate the economy by reviving the flow of credit to businesses and individuals.

American University Investigative Reporting Project used federal bank data to conduct the first comprehensive analysis comparing the behavior of 940 banks in the Troubled Asset Relief Program (TARP) and 7,400 banks outside it. Key findings about TARP’s first year:

General Motors Co. has repaid $8.1 billion in loans it got from the U.S. and Canadian governments, a move it says is a sign the automaker is on the road to recovery.
Chief executive officer Ed Whitacre announced the repayments Wednesday at GM’s Fairfax Assembly Plant in Kansas City, Kan., and also said the company was investing a total of $257 million in that factory and the Detroit-Hamtramck plant. The payments were made Tuesday.

The White House pointed to GM’s repayment of the loan and Chrysler Group L.L.C.’s posting of an operating profit in the first quarter of 2010 as concrete signs that the bailout of the U.S. automakers was working.

The Obama loan modification plan has recently been modified to help Americans keep their home while helping banks hold down the default rate. The more homes on the market for sale the lower home prices will fall.

So far the Home Affordable Modification Program (HAMP) has not yet performed as hoped, but this may change over the next year. Created by the Financial Stability Act of 2009, it was designed to stop the foreclosure of 7 to 8 million struggling homeowners.

More lenders are signing up for this government sponsored program. So far there are more than 110 participants (lenders).

General Motors CEO Ed Whitacre is to announce Wednesday that the automaker will soon pay off $5.8 billion in loans from the U.S. and Canadian governments well ahead of a June 30 deadline, a move it has promised since last year.

Whitacre is to announce the payment at GM’s plant in Kansas City, Kan., and then fly to Washington to meet with House Speaker Nancy Pelosi and Michigan’s congressional delegation, people familiar with the plans said Monday.