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Trades react to interest rate news, alert members about HELOC check fraud

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Friday, August 2, 2024

Trade associations representing all corners of the financial industry are continuing to watch the Federal Reserve’s activity with respect to interest rates with bated breath while also keeping a watchful eye on regulatory proposals and emerging forms of check fraud.

Learn about some of the latest developments on these fronts in the roundup below: 

MBA chief economist shares take on latest FOMC interest rate statement

Following the Federal Open Market Committee’s (FOMC) decision to once again leave the federal funds rate unchanged, Mortgage Bankers Association Chief Economist Mike Fratantoni offered his perspective on the situation, taking note of the committee’s shift in its statement to acknowledge that “inflation is slowing, unemployment is rising, and that there are now more balanced risks to the economy.”

“While the Federal Reserve still hopes for a slower rate of inflation, there is a greater risk now that keeping monetary policy overly tight for too long could lead to unnecessarily higher unemployment,” he said. “The FOMC vote to keep rates steady for now was unanimous, but there have been increasing calls from many Federal Reserve officials to begin cutting rates. We are holding to our call for two rate cuts this year, with the first in September, as we expect that inflation will continue to moderate.

“Mortgage rates are now well below 7 percent, and there has been some modest pickup in refinancing activity in recent weeks. We expect that mortgage rates will continue to drift lower through the remainder of the year, particularly if the Fed does launch a series of rate cuts in September.” 

CBA, BPI claim CFPB violated APA with BNPL proposal

The Consumer Bankers Association (CBA) and Bank Policy Institute (BPI) claimed the Consumer Financial Protection Bureau (CFPB) violated the Administrative Procedure Act when it issued its interpretive rule regulating “Buy Now, Pay Later” (BNPL) providers. The trade groups argue the interpretive rule is substantive enough to require the bureau to submit it through the formal rulemaking process, with the opportunity for the public to provide comments.

“If the CFPB is responsible for enforcing the law, it should also be responsible for following it,” CBA and BPI said upon filing the letter. “We share the same goal as the CFPB: consumers that elect to use BNPL must be protected. A rulemaking process will help lead to a more informed rule that will ultimately help the CFPB best protect consumers.”

The organizations urged the bureau to rescind the proposal and revise it to ensure all BNPL issuers are held to the same standards. Read more details here.

ICBA warns members about uptick in HELOC fraud

Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey issued a warning to community bankers to be wary of the rise of fraudsters using information gained from public mortgage records to create checks drawn on home equity lines of credit (HELOC). She said several ICBA members this week have reported an uptick in check fraud using that data to process checks with equity line of credit. Romero Rainey recommended community bankers work to mitigate this growing source of fraud by not printing the account number on new mortgage documents, reviewing all HELOC checks processed, advising customers to regularly review their HELOC accounts, and reporting incidents to the FBI’s Internet Crime Complaint Center on its website.

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