Interest rates

The state has proposed a law to cap the interest rate on certain consumer loans, but nonbanks aim to skirt it by seeking a rent-a-charter.

Federal and state policymakers wagged their fingers this week at high-cost lenders that might be looking to team with banks to evade a 36% ceiling on interest rates.

Concerns over banks’ level of preparation have led to worries about disruptions in the lending market, and some financial institutions warn that a new interest rate benchmark could cause lenders to pull back on credit.

Moody’s said the Fed’s cuts – the first in a decade by the central bank – will boost real estate and consumer ABS collateral by helping lenders uphold underwriting standards and provide affordable debt options to borrowers.

The Mortgage Bankers Association created a template for originators to notify new borrowers when their adjustable-rate mortgage switches to a different index once publication of the London interbank offered rate discontinues.

Although Libor will will not be phased out until at least 2021, Randal Quarles said making the switch early is "consistent with prudent risk management."

The state's financial regulator says Fast Money Loan charged consumers interest rates and fees above the state's usury cap, and operated unlicensed storefronts.

While the London interbank offered rate won't go dark until 2021, the commercial real estate finance industry should start preparing for the transition now, says the Mortgage Bankers Association.

An effort to increase awareness of the transition to a new benchmark rate, and nudge banks to start preparing, is expected to intensify in 2019.

The new policy, meant to assist borrowers in Puerto Rico and the U.S. Virgin Islands, will let servicers evaluate borrowers using pre-disaster payment information.

Judges say a CashCall loan may have fit the state’s definition of an “unconscionable” interest rate.

Virginia National will set aside up to $950,000 to cover losses after ReliaMax, a firm that issues surety bonds for student loans, was placed into liquidation.

Growing competition may prompt commercial mortgage-backed securities issuers to accept higher loan-to-value ratios in their deals.

Capital One Financial will stop originating mortgage and home-equity loans after competition made it difficult for the businesses to be profitable.

The accord is the latest development in investigations by governments across the globe into banks’ manipulation of benchmark interest rates.

The alternative reference rates committee announced in June its recommendation of a broad Treasuries repo financing rate as an eventual replacement for U.S. dollar Libor, which is derived from polling data.

A Fed committee studying Libor’s replacement has dwelled heavily on the potential impact to the derivatives market. Loans may become a bigger part of the conversation later this year, but the panel plans to leave a lot of the specifics up to lenders.

While leveraged loans may use prime as a fallback, getting unanimous consent from collateralized loan obligation investors to use an alternative benchmark could be a challenge.