Homeward Bound 

The need has grown exponentially since the financial crisis of 2008  left Indiana with expanding unemployment ranks and fewer government dollars to spend on social safety net programs for disadvantaged individuals and families. The recent US Department of Housing and Urban Development report Worst Case Housing Needs noted record increases in the number of families most susceptible to becoming homeless.    

Representatives from the Homeward Bound Bloomington walk were featured on WISH TV 8 and in Bloomington's Bloom Magazine. The Bloomington walk took place on Sunday, April 10, and raised nearly $42,000 for 11 local agencies that have seen increased demand for their services since the recession.  

The Wabash Valley walk also took place on April 10 and received impressive media attention, especially for only being in its 3rd year in existence. Local providers and formerly homeless individuals who have become advocates in Terre Haute spoke to the diverse picture of homelessness, noting that rural homeless is very different from that of urban areas. Often in rural areas, homeless individuals and families are out of plain sight, so their needs are not always recognized by their community. Given that fact, the turnout at the Wabash event proves Hoosiers are doing a wonderful job of looking out for those most in need during this difficult time. To read more about the Wabash walk, click here.   

Across the Nation

FDIC's New Risk Retention Rule Exemption Open for Comment   

On March 29, FDIC Chairman Sheila Bair issued a formal statement outlining a new rule change addressing mortgage loan risk retention. As part of the enacted Dodd-Frank Wall Street Reform and Consumer Protection Act, the FDIC was required to examine and issued new rules to fix weaknesses in regulatory structure that allowed risky, exotic loans with exploding adjustable rate mortgages to be securitized into tranches deemed safe by credit rating agencies. 

The Dodd-Frank legislation required securitizers to hold a 5 percent interest in the mortgage bundles, but gives room in the rule-writing authority of regulators to create exemptions. In light of that authority, the FDIC and the Federal Reserve moved ahead with a new rule that exempts banks from the 5 percent risk retention requirement if a mortgage bundle includes loans that had a 20 percent down payment from consumers. There have been many critics of the exemption who claim the rule is too narrow and would force low- to moderate-income borrowers out of the market.  That concern is the focus of the FDIC's 60-day public comment period.  To read more, read our blog post.   

 Consumer Advocates, Mortgage Brokers Disagree Over New Mortgage Rule  

New rules issued by the Federal Reserve banning yield spread premiums (YSP) tied to interest rates are being applauded by consumer groups and denounced by mortgage broker associations. The new rules target a perceived form of predatory lending. 

Consumer groups argue that in the build up to the financial crisis, brokers received big commissions for steering consumers into loans with a higher interest rate, even if they qualified for a lower rate.  Mortgage brokers argue, however, that the YSPs are not abused, rather they are costs consumers never see since banks offer brokers discounted wholesale rates in order to solicit business. On Wednesday, April 6, the U.S. Court of Appeals denied an emergency injunction filed by broker associations to block the rule from taking effect. To read more, click here.  

 Health Care Law's 1099 Requirement Repealed by Congress  

On April 5, 2011, the U.S. Senate voted to repeal the expanded 1099 information reporting requirements that were a component of last year's Affordable Care Act (ACA). The repeal has been sent to President Obama for signature. He is expected to sign the legislation. Currently, businesses must file an Internal Revenue Service (IRS) form 1099 for purchases of services from non-corporate entities. The repealed 1099 provisions would have required small businesses, charities and state and local governments to file a 1099 form to report annual purchases from contractors above $600.  

Since the 1099 provisions were intended to be a revenue raiser, the bill does provide a way to offset some of the revenue that will be lost. The 2010 Affordable Care Act provided for a new refundable tax credit to qualifying taxpayers beginning in 2014. To pay for the repeal, the legislation reduces subsidies that low- and middle-income people will receive to purchase health insurance under the new law. To read more, visit our blog post. 

IRS Cracks Down on Refund Anticipation Loans  

According the NCLC/CFA report, in 2009, 7.2 million RALs were issued. Of those, 87 percent of taxpayers who applied for these loans were low-income and 67 percent of those low-income taxpayers were recipients of Earned Income Tax Credits.  In order to crack down on these products, federal banking and tax regulators began to issue directives in 2010. Some banks are appealing the directives, but with regulators taking such a strong stance, it appears possible that the products will no longer be on the market in the 2012 tax year. To read more, click here.