Two-Thirds of Noncash Payments Are Electronic
The Federal Reserve’s 2007 study of noncash payments released today revealed that in 2006 more than two-thirds of all U.S noncash payments were made electronically. From 2003 to 2006, the period covered by the study, all types of electronic payments grew while check payments decreased. The Federal Reserve’s 2004 Payments Study found that the number of electronic payments and check payments were roughly equal in 2003.
About 19 billion more electronic payments were made in 2006 than in 2003. In contrast, the number of checks paid fell by about 7 billion over the same period. Of the 93 billion noncash payments in 2006, about 63 billion were electronic and around 30 billion were checks.
Among the three main types of electronic payments, the annual use of debit cards increased by about 10 billion payments over the survey period to 25.3 billion payments in 2006. Debit cards now surpass credit cards as the most frequently used electronic payment type. Over the same period, automated clearinghouse (ACH) payments grew to 14.6 billion, an increase of almost 6 billion payments. Credit cards grew by almost 3 billion payments to 21.7 billion in 2006.
The highest rate of growth from 2003 to 2006 was in ACH payments, which grew about 19 percent per year. Meanwhile, checks declined by an average of 6.4 percent per year since 2003, indicating the pace at which check payments has been decreasing since the mid-1990s has picked up in recent years.
Iowa Business Growth Company Seminars
Iowa Business Growth Company (IBGC) and the Iowa Bankers Association are sponsoring seminars to highlight products and tools that Iowa bankers can utilize to finance economic development projects in their market. The IBGC presentation will include the following products:
• Wellmark Mezzanine Fund
• 504 Loan Program
• 7(a) Packaging
• New Markets Tax Credit
The seminars will be held on April 1, 2008 (Carroll), April 2, 2008 (Johnston), April 3, 2008 (Coralville). IBGC will provide more information on the seminars at a later date. Visit www.iowabusinessgrowth.com for more details.
States Unveil Mortgage Regulatory Framework
January 2 rang in a new era for mortgage regulation in the United States when the states’ Nationwide Mortgage Licensing System (NMLS) went live.
The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) announced that NMLS, an Internet-based system that will serve as the foundation of a coordinated state mortgage regulatory framework, officially became operational on the first business day of 2008.
“This is the culmination of a four-year effort by state regulators to provide a new and more solid foundation for mortgage supervision and consumer protection,” said CSBS Executive Vice President John Ryan. “NMLS provides the underpinnings of a regulatory framework to address the weaknesses of our current fragmented and complex system of mortgage origination and supervision,” he said.
In the fall of 2004, through CSBS and AARMR, state banking and mortgage regulators came together to create a new regulatory framework for the nation’s residential mortgage lending industry. The primary objectives of this framework are to enhance consumer protection, strengthen supervision, and streamline the regulatory process.
“We were clearly seeing the challenge to our supervisory systems,” said Jeff Vogel, CSBS chairman and Wyoming State Banking Commissioner. “The world of mortgage finance and residential mortgage lending was changing at the speed of light while state and federal regulation struggled to keep pace. Also, the industry had a weak track record on self-regulation,” he said. “We recognized that serious reform was needed.”
The launch of NMLS is just one part of a multi-faceted plan being implemented by CSBS and AARMR to improve regulation and bring about greater uniformity across state lines in mortgage supervision. These efforts include coordinated supervision, improved regulatory practices and consistent standards for testing and training for mortgage originators. To accomplish this, many states have changed or are in the process of changing their laws and regulations.
Plans call for consumers to have access to the system’s public licensing and enforcement information in 2009, enabling them to make a more informed decision when selecting a mortgage loan officer and lender.
NMLS is modeled on the registry used to regulate securities brokers and dealers. Seven states are the initial participants: Idaho, Iowa, Kentucky, Massachusetts, Nebraska, New York and Rhode Island.
Eventually, CSBS expects all 50 states will transition onto the System. CSBS and AARMR project enrollment of more than 500,000 company and professional licensees eventually to be registered through the NMLS repository.
Save the Date: 2008 Capitol Hill Visit
The dates have been set for the 2008 Capitol Hill Visit! From June 10 through June 12, participants will have the opportunity to visit Washington D.C. to see the sights, hear from speakers from the ABA, FDIC, OCC and more as well as meet with Iowa’s legislative delegation. There will be a guest program as well on Wednesday, June 11 that features a more extensive tour of the city. This trip is an excellent opportunity to learn more about the legislative process, meet with our elected officials and hear more about issues directly facing the banking industry in Washington.
From Washington D.C., the group will travel to The Greenbrier Resort in White Sulpher Springs, West Virginia, June 13-15. Visit The Greenbrier’s website at www.thegreenbrier.com to learn more about this fabulous resort and all of the opportunities available. The resort features 50 recreational activities including three championship golf courses.
More information will be available soon. Visit www.iowabankers.com to see a tentative agenda for the trip and watch for more details and registration information. Contact the IBA’s Molly Lydon at 800.532.1423 or email mlydon@iowabankers.com with questions.
Iowa Farmers, Rural Businesses Offered Grants, Loans from USDA
Iowa Secretary of Agriculture Bill Northey and Mark Reisinger, USDA Rural Development State Director in Iowa, have announced a statewide information session will be held Tuesday, January 29 to educate producers and rural businesses about two guaranteed loan and grant programs offered by USDA Rural Development.
Guaranteed loans and grants of up to $500,000 are available to rural businesses or producers looking to create renewable energy or make energy-saving improvements to their facilities or farms. Value Added Producer Grants of up to $300,000 also are available to producers, farmer cooperatives and producer-based businesses for ventures that add value to commodities such as corn, soybeans, and meat.
“Iowans have been very successful at receiving funding through these two programs,” said Mark Reisinger, USDA Rural Development State Director in Iowa. “If you are considering financing a renewable energy or energy efficiency project, or are interested in starting a value-added enterprise on your farm, we encourage you to attend this session.”
Since 2001, 115 businesses in Iowa have been awarded more than $20 million in Value-Added Producer Grants through this nationally competitive program authored by Sen. Chuck Grassley. During the past five years, nearly 230 projects in Iowa have received $37 million in guaranteed loans and grants for renewable energy projects or for making a wide variety of energy- efficiency improvements to facilities.
The training session, scheduled to begin at 9 a.m. and conclude by 12:30 p.m., will be broadcast over the Iowa Communications Network (ICN) and can be seen at 11 locations across the state. Information about Rural Development’s energy and energy efficiency program will be presented from 9 a.m. to 11 a.m. The Value Added Producer Grant program will be discussed starting at 11:30 a.m.
For more details about the information session, or about either the renewable energy, energy efficiency or value-added producer grant programs, please contact the USDA Rural Development State Office at 515-284-4663.
Further information on rural development programs is available at a local USDA Rural Development office or by visiting USDA’s web site at www.rurdev.usda.gov/ia.
Mortgage Lending Facts from the Mortgage Bankers Association
Following are facts released by the Mortgage Bankers Association. Learn more online at www.iowabankers.com.
FACT: The homeownership rate remains near record levels at 68.2 percent.
FACT: Thirty-five percent of homeowners own their home outright; 48 percent are in fixed-rate mortgages. Fifteen percent of homeowners have adjustable-rate mortgages (ARM). Only 5 percent of homeowners are nonprime borrowers with adjustable-rate mortgages.
FACT: Nonprime borrowers have always had higher delinquency and foreclosure rates, and ARM borrowers have higher delinquency rates even when rates are falling. Nonprime borrowers also represent a higher share of ARM borrowers; it stands to reason that nonprime ARMs have a higher delinquency rate.
FACT: Lenders want to lend money to borrowers who are willing and able to pay the loan back. Each time a foreclosure goes all the way to a sale, net economic losses are in the range of $30,000 to $60,000. Everybody loses when a home goes into foreclosure — the borrower gets a black mark on his or her credit, the lender and investor lose and the community loses.
FACT: The marketplace is working. The volume of many nontraditional products is down because investors, rating agencies and lenders have tightened underwriting standards. One side effect, however, has been to trigger a world wide credit market event centered on overleveraged firms within and outside the mortgage market.
Reminder: IBA/IBIS Annual Meetings
The Iowa Bankers Association would like to notify its members that the IBA and Iowa Bankers Insurance and Services Annual Meetings will be held Wednesday, February 6, 2006, from 8:30-9:30 a.m. at Embassy Suites in Des Moines, in conjunction with the IBA Bank Management Conference. All members are encouraged to attend and participate in this review of the year. No registration is required. Please Contact the IBA’s Molly Lydon at 800.532.1423 with any questions.
For more information about the Annual Meetings or to register for the IBA Management Conference, go online to www.iowabankers.com.
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