I chose a regulation regarding the Making Home Affordable Program Risk-Based Capital Guidelines; Capital Adequacy Guidelines; Capital Maintenance; Capital-Residential Mortgage Loans Modified Pursuant to the Making Home Affordable Program. [Docket ID: OCC-2009-0007] 1. State the administrative agency which controls the regulation. Explain why this agency and your proposed regulation interests you (briefly). Will this proposed regulation affect you or the business in which you are working? If so, how?
Submit a copy of the proposed regulation along with your responses to these five questions. (10 points) * The administrative agencies that control this regulation are The Office of the Comptroller of the Currency (OCC), Department of the Treasury; Board of Governors of the Federal Reserve System; Federal Deposit Insurance Corporation (FDIC); and Office of Thrift Supervision, Department of the Treasury. * The regulation changed the business in which I worked drastically. I worked as a collection manager of a 10 billion dollar sub-prime mortgage portfolio.
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Once US Bank signed up for the Making Home Affordable Program in August 2008, it will affect our daily business until the program concludes on December 31, 2012. The program detailed how our financial institution performed Loan Modifications, conducted foreclosures and assigned risk weight to Home Loans. 2. Describe the proposal/change. (10 points) * The regulation change was proposed as a way to support financial institutions in standardizing and implementing The Making Home Affordable Program.
To provide stability to financial institutions with failing home mortgages, help weight credit risk assessment; and additionally to regulate home foreclosures. 3. Write the public comment that you would submit to this proposal. If the proposed regulation deadline has already passed, write the comment you would have submitted. Explain briefly what you wish to accomplish with your comment. (10 points) * I disagree with the adoption of this proposed regulation. The guidelines set forth in the Making Home Affordable Program are ridged and without room for variation.
Since the program is based on a straight 31% housing ration without consideration to other financial affairs of the home owner, often times, the Making Home Affordable Program rewards undeserving homeowners and prohibits homeowners who actually require and would benefit from a loan modification. * It is my wish that my comment would deter this program from being adopted, or makes the OCC adopt different rules for providing modifications other than the strict 31% housing ratio threshold. 4. Provide the “deadline” by which the public comment must be made. (If the date has already passed, please provide when the deadline was). 5 points) * The deadline for public comment on this regulation was July 30, 2009. 5. a. Once you have submitted your comment, what will you be legally entitled to do later in the promulgation process (if you should choose to do so)? * If a party made a comment regarding the regulation rules during the proposal stage, they can challenge the validity of the proposed adopted rules in court. b. If the proposal passes, identify and explain the five legal theories you could use in an attempt to have the regulation declared invalid and overturned in court. 1.
Arbitrary & Capricious: requires an agency to show evidence to support the proposed rule. 2. Substantial Evidence Test: applied in the review of formal and hybrid rulemaking and requires more convincing evidence exist in support of the regulation than against it. 3. APA Requirements of Notice: a regulation can be set aside if an agency has not complied with the requirements of notice, publication, and public comment and input. 4. Regulation is Unconstitutional: Challenges a regulation on basis of discriminatory requirements such as residence, race or social class. 5.
Ultra Vires: a Latin term meaning “beyond it powers” This theory proposes that the agency goes beyond their authority in enabling the regulation. c. Which of these challenges would be the best way to challenge the regulation you selected for this assignment if you wanted to have the regulation overturned and why? * The Substantial Evidence Test would be the best way to challenge my regulation. Within the mortgage collection industry several large institutions have begun to dispute the fact that The Making Home Affordable Program is actually working. At my company US Bank, the recidivism rate of loan modified thru this program is over 70%.