On Thursday the House of  Representatives approved a bill to restrict credit card practices and eliminate sudden increases in interest rates and late fees.  The legislation, the Credit Card Holders' Bill of Rights, passed by a bipartisan vote of 357-70 following lobbying by President Barack Obama and members of his administration. The measure prohibits so-called double-cycle billing and retroactive rate hikes and would prevent companies from giving credit cards to anyone under 18.  Additionally, customers get 45 days' notice before their interest rates are increased.

 

The House measure incorporates Federal Reserve regulations due to take effect in July 2010 but goes further by adding restrictions for credit cards for college students as well as other changes. Payments made by card holders that exceed the minimum monthly level would have to be applied first to the portion of the remaining balance with the highest interest rate, and then to any other balances in descending order.

*Consumers would have to be notified 30 days before their accounts are closed.
*Double-cycle billing eliminates the interest-free period for consumers who move from paying the full balance monthly to carrying a balance.
*Opponents tried vainly on the House floor to temper a fast-moving bill with amendments that would have given credit card issuers some openings to raise rates within the proposed restrain

 

The Obama Administration recently released its Foreclosure Prevention Program, aimed at arresting the current foreclosure crisis.  The administration has targeted $75 billion for the plan which is expected to assist 5 million homeowners. 

 

The plan includes cash payments for mortgage holders who choose not to foreclose on borrowers.  It also includes payments to mortgage servicers (not actual lenders) for successful modifications. ($1000 up front and $1000 each year that the modification is effective up to 3 years).  Borrowers can expect reduced rates, some as low as 2%.  Also included in the plan are refinancing and modification incentives.  
 
One of the most significant measures includes changes in bankruptcy laws to allow judges to restructure home loans in court.  However, this only applies to owner occupied homes (no investment properties).  Included in this modification option is a new formula for calculating monthly payments. Mortgages will be restructured so that home payments account for no more than 31% of the borrower's gross monthly income.  Unfortunately, only loans insured or owned by Fannie Mae and Freddie Mac will be part of the program.  Sadly, this segment of the bill did not pass.

 

 

Thank you to all our clients and friends of the firm that attended our St. Patrick's Day Party.  The weather cooperated and we had a great turnout.  We hope you all had a great time.  Plans are under way for a 4th of July BBQ and Happy Hour.  Details to follow.

 

 

As you may recall, last month we decided to skip our regular content and send out an April Fools Newsletter.  We hope you all enjoyed it and it brought a smile to your face.  Thanks for all your comments in connection with our April Fools Email.  To that end, I am happy to report that Jeri is enjoying her time on The Hills, we have complied with the Bar's dress code and the NCAA looks to relent on their mascot attack.