FTC Releases Report on the Collection Industry

This week, the FTC released Collecting Consumer Debts: The Challenges of Change, a report summarizing information presented and discussed at a 2007 FTC Workshop on the debt collection industry, identifying the changes and modifications to the law the FTC believes is appropriate to provide better consumer protection while simultaneously not unreasonably burdening the debt collection industry. The primary conclusions reached by the FTC include:

• Debt collection laws must be amended to take into account changes in technology with respect to communication and electronic payment. In the long run this could open the door to collectors being able to freely dial cell phone numbers of consumers, use texting technology, email, etc. In other words, the technology can be the ally of both consumers and collectors.

• Debt collectors must have better information to ensure they are attempting to collect the correct amount from the correct consumer. Creditors and collectors alike would need to go to greater lengths to assure that balances are accurate and that sufficient back-up to validate debts would be available.

• Debt collectors should provide better information to consumers explaining their rights under the FDCPA. Websites like ACA’s recent creation of www.askdrdebt.com will help pave the way for this.

• The FTC should have regulatory authority under the FDCPA. This could perhaps open the door for federal preemption of collection laws, finally creating a uniform collection law across all states.

• The statutory damages awarded under the FDCPA should be increased to account for inflation. More to come on this as we learn what they have in mind.

Peggy Twohig, associate director of the FTC's Division of Financial Practices, is scheduled to discuss the commission's reports at ACA's Executive Summit in Washington, D.C., on March 4, 2009. ACA is also organizing a teleseminar featuring an FTC representative speaking about the reports. I’ll be attending this summit to learn more about what the FTC has in mind and will surely keep you up-to-date on the latest. Thanks for placing your trust in TAG!

Federal Regulators Issue Revised Identity Theft Brochure

Updated consumer brochure focuses on the practice of Internet phishing.

At the tail end of 2008, the federal bank, credit union and thrift regulatory agencies announced publication of a revised identity theft brochure "You Have the Power to Stop Identity Theft." The brochure is intended to assist consumers in preventing and resolving incidents of identity theft.

The newly updated brochure focuses on the practice of Internet phishing. Phishing is an illegal process, whereby scammers attempt to acquire sensitive information such as usernames, passwords and credit card details by masquerading as a trustworthy entity in an e-mail sent to consumers. The new brochure will help consumers by describing how phishing works, offering ways to protect against identity theft and detailing steps to follow for victims of identity theft. The brochure also includes contact information about the three major consumer reporting agencies, where to report suspicious e-mails and where to access additional information.

The brochure is available to download from the Web sites of the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, National Credit Union Administration and Office of Thrift Supervision. A copy of this brochure may be viewed here.

Existing Home Sales Increase

National Association of Realtors reports unexpected 6.5 percent jump.

Existing-home sales rose unexpectedly in December, while inventory declined, the National Association of Realtors recently reported. Existing-home sales—including single-family, townhomes, condominiums and co-ops—jumped 6.5 percent to a seasonally adjusted annual rate of 4.74 million units in December from a downwardly revised pace of 4.45 million units in November, but are 3.5 percent below the 4.91 million-unit pace in December 2007.

In 2008 there were 4,912,000 existing-home sales, which was 13.1 percent below the 5,652,000 transactions recorded in 2007. This is the lowest volume since 1997, when there were 4,371,000 sales.

The national median existing-home price for all housing types was $175,400 in December, which is 15.3 percent below December 2007, when the median was $207,000. There remains a significant downward distortion in the current median from a large number of distress sales at discounted prices, currently 45 percent of transactions; the median is where half of the homes sold for more and half sold for less. For all of 2008, the median price was $198,600, down 9.3 percent from $219,000 in 2007.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.29 percent in December from 6.09 percent in November. The rate was 6.10 percent in December 2007, and last week, Freddie Mac reported the 30-year rate was 5.12 percent.

Single-family home sales rose 7.0 percent to a seasonally adjusted annual rate of 4.26 million in December from a level of 3.98 million in November, but are 1.4 percent below a 4.32 million-unit pace in December 2007. For all of 2008, single-family sales fell 11.9 percent to 4,349,000.

The median existing single-family home price was $174,700 in December, down 14.8 percent from a year ago. For all of 2008, the single-family median was $197,100, which is 9.5 percent below 2007.

Existing condominium and co-op sales increased 2.1 percent to a seasonally adjusted annual rate of 480,000 units in December from 470,000 in November, but are 18.4 percent below the 588,000-unit level a year ago. In 2008, condo sales dropped 21.0 percent to 563,000 units.

The median existing condo price was $181,400 in December, down 18.3 percent from December 2007. In 2008, the median condo price was $210,000, which is 7.2 percent below 2007.

-from ACA International

U.S. Consumer Credit Falls Again in December; November Revised Lower

by insideARM staff

With banks freezing credit lines and the economy tanking, consumer credit in the U.S. declined in December 3.1 percent for the third straight month. It’s the longest slide in consumer since 1991.

The Federal Reserve reported late Friday that overall consumer credit outstanding in the U.S. dropped by $6.6 billion in December, or at an annualized rate of 3.1 percent. The Fed’s consumer credit report, called the G.19, does not include debt backed by real estate.

The decline was larger than expected as analysts polled by Reuters forecast a $3 billion drop in consumer borrowing for December.

In November, the Fed upwardly revised the credit contraction to a negative 5.1 percent, or $11 billion. It marks the largest monthly contraction in consumer credit since 1943.

Most of the decline was in revolving credit, most commonly comprised of credit card debt. Revolving credit fell $6.32 billion, or 7.8 percent, to a total of $963.55 billion outstanding in December. In November, revolving credit declined 8.5 percent.

Non-revolving credit -- which includes loans for cars, boats, and education -- fell $287 million, or at a 0.2 percent rate in December after declining 3.1 percent in November.

In the fourth quarter of 2008, total consumer credit in the U.S. contracted at an annual rate of 3.1 percent, with revolving credit declining 5.4 percent and non-revolving credit sliding 1.7 percent.

Total consumer credit outstanding in the U.S. stood at $2.563 trillion at the end of 2008.