By Eugene T. Lowe
July 19, 2010

Following the House passage of the financial regulatory reform on June 30, the Senate followed on July 15 with the adoption of the conference report for the bill. The House passed the conference report by a vote of 237-192 and the Senate by a vote of 60-39. Widely reported in the media, the legislation, the Dodd-Frank Wall Street Reform and Consumer Protection Act, makes significant reform in the way financial institutions are regulated. Most importantly for cities, the bill creates a new consumer protection agency, provides a third of funding for the Neighborhood Stabilization Program (NSP), and responds with additional initiatives to reduce the impact of the mortgage crisis.

The Consumer Financial Protection Bureau will make accurate and reliable information available for consumers on a variety of credit products such as mortgages and credit cards. It will be on the lookout for bad deals and schemes and act quickly to stop them without having to wait on Congress to pass a law. The new agency will also work toward eliminating predatory lending practices. With an independent director appointed by the President and confirmed by the Senate, the consumer protection agency will have a dedicated budget funded by the Federal Reserve System.

Also included in the bill is a third round of funding for the Neighborhood Stabilization Program (NSP) is $1 billion. Similar to the initial funding of the program, the money will be allocated to state and local governments by formula. States will receive a $5 million minimum. The bill also provides for mortgage relief funded at $1 billion for bridge loans to qualified unemployed homeowners with reasonable prospects for re-employment to help cover mortgage payments until they are reemployed. This program is based on Pennsylvania’s Homeowner’s Emergency Mortgage Assistance Program (HEMAP) and introduced in the Wall Street reform legislation by Representative Chaka Fattah (PA). Foreclosure legal assistance is also provided in the bill. HUD will administer a program and make grants to provide legal assistance to low- and moderate-income homeowners and tenants related to home ownership preservation, home foreclosure prevention, and tenancy associated with home foreclosure.