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Banking department is left hanging

The Mississippi Legislature temporarily adjourned for the second time the 2009 session, still unable to agree on a budget for fiscal year 2010, which starts July 1.

The main hang-up between the House and Senate is the question of how to fund the state’s Medicaid program. The Senate, along with Gov. Haley Barbour, supports a hospital tax. The House does not. It’s a standoff that has marked the past few sessions.

Negotiations resume when lawmakers return May 26.
Left hanging while the Medicaid fight rages on — and on — are the other state agencies and departments whose budgets are less contentious.

One of those waiting is the Mississippi Department of Banking and Consumer Finance (DBCF).

“We’re done other than getting the budget approved,” DBCF commissioner John Allison said of the department’s 2009 legislative agenda.

Allison said he and key legislative budget-writers had agreed upon the final funding number. Even though the DBCF is supported by the license fees of the institutions it regulates, and receives no state or federal dollars, the Department cannot start spending the money in a given fiscal year without appropriations approval from the Legislature.

So for now, Allison and his staff play the waiting game.

“That’s kind of where we are,” the commissioner said.

The main non-budgetary item the DBCF tracked in the 2009 session was a bill aimed at bringing the department into full compliance with the federal Hope for Homeowners Act former President George W. Bush signed into law last summer.

Hope for Homeowners (H4H) is a program administered by the Federal Housing Administration (FHA) whose purpose is to aid homeowners having difficulty making their monthly payments refinance into more affordable mortgages. The program, which was launched Oct. 1, 2008, will sunset Sept. 30, 2011.

For homeowners who refinance under H4H, lenders will be required to “write down” the mortgage to a maximum of 90 percent of the home’s new appraised value.

According to an FHA press release, lenders could benefit from the program’s reduction-in-principal mandate, helping them avoid costly foreclosures.

The current Mississippi law that applied to programs like H4H was not in full compliance with the new rules enacted last summer.

“We had to do some tweaking to our existing mortgage law to be in compliant with a federal mandate that was put in place back last summer,” Allison said.

Senate Bill 2983, the Mississippi S.A.F.E. Mortgage Licensing Act of 2009, provided the necessary tweak. It tightens the requirements potential mortgage lenders have to meet before they are granted a license to issue mortgages in Mississippi, including pre-licensing education.

“We’re probably already 90 percent or higher compliant with that (federal) act,” Allison said. “Our biggest impediment was we had some exemptions to our Mississippi act and under federal law, for all intents and purposes, there are no exemptions. So we had to tweak it. We do have to come back next year because we put a one-year repealer on it, just waiting to see what (the U.S. Department of Housing and Urban Development) is going to do. That’s all we had out there.”

Clay Chandler covers the Mississippi Legislature for the Mississippi Business Journal. E-mail him at clay.chandler@msbusiness.com.

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