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McDonald’s Global Comparable Sales Decrease 1.9% In January

OAK BROOK, Ill., Feb. 8, 2013, McDonald’s Corporation today announced that global comparable sales decreased 1.9% in January. Performance by segment was as follows:

  • U.S. up 0.9%
  • Europe down 2.1%
  • Asia/Pacific, Middle East and Africa (APMEA) down 9.5%

“McDonald’s is focused on satisfying the needs of each and every customer visiting our restaurants in search of great-tasting food and beverages, outstanding service and everyday value,” said McDonald’s President and Chief Executive Officer Don Thompson. “While January’s results reflect today’s challenging environment and difficult prior year comparisons, I am confident that our unwavering commitment to delivering an exceptional restaurant experience will enhance our brand’s relevance and drive long-term results.”

January comparable sales increased 0.9% in the U.S. driven by a balanced offering of premium, core and compelling value options, including the addition of the new Grilled Onion Cheddar burger to the Dollar Menu. Results for the month also benefited from convenience and restaurant modernization strategies designed to provide customers with a better overall experience.

In Europe, comparable sales decreased 2.1% as positive results in the U.K. and Russia were offset by performance in Germany, France and other markets. Throughout Europe, McDonald’s remains focused on appealing to a broad range of customer preferences with seasonal food events and enhanced value and breakfast offerings along with extended operating hours.

In APMEA, January’s comparable sales decreased 9.5% due to ongoing weakness in Japan and negative results in China due primarily to the shift in timing of Chinese New Year and, to a lesser extent, the residual effects of consumer sensitivity around the recent supply chain issue in the chicken industry, which more than offset positive results in Australia.

Systemwide sales for the month increased 0.3%, or 0.7% in constant currencies. For the month of February, comparable sales will be negatively impacted by approximately 3 percentage points as prior year results included one extra day due to leap year.

Percent   Increase/(Decrease)

Comparable

Systemwide   Sales

Sales

As

Constant

Month ended January   31,

2013

2012

Reported

Currency

McDonald’s Corporation

(1.9)

6.7

0.3

0.7

Major Segments:

U.S.

0.9

7.8

1.9

1.9

Europe

(2.1)

4.0

3.8

0.6

APMEA

(9.5)

7.3

(8.6)

(5.1)

Definitions

  • Comparable sales represent sales at all restaurants, whether operated by the Company or by franchisees, in operation at least thirteen months including those temporarily closed. Some of the reasons restaurants may be temporarily closed include reimaging or remodeling, rebuilding, road construction and natural disasters. Comparable sales exclude the impact of currency translation. Comparable sales are driven by changes in guest counts and average check, which is affected by changes in pricing and product mix. Management reviews the increase or decrease in comparable sales compared with the same period in the prior year to assess business trends.
  • The number of weekdays and weekend days can impact our reported comparable sales. In January 2013, this calendar shift/trading day adjustment consisted of one less Sunday and Monday, and one more Wednesday and Thursday compared with January 2012. The resulting adjustment varied by area of the world, ranging from approximately -0.9% to 0.8%. In addition, the timing of holidays can impact comparable sales.
  • Information in constant currency is calculated by translating current year results at prior year average exchange rates. Management reviews and analyzes business results excluding the effect of foreign currency translation and bases incentive compensation plans on these results because they believe this better represents the Company’s underlying business trends.
  • Systemwide sales include sales at all restaurants, whether operated by the Company or by franchisees. While franchised sales are not recorded as revenues by the Company, management believes the information is important in understanding the Company’s financial performance because these sales are the basis on which the Company calculates and records franchised revenues and are indicative of the financial health of the franchisee base.

Upcoming Communications

The Company plans to release February 2013 sales on March 8, 2013.

McDonald’s is the world’s leading global foodservice retailer with more than 34,000 locations serving more than 69 million customers in 119 countries each day. More than 80% of McDonald’s restaurants worldwide are owned and operated by independent local men and women.

Forward-Looking Statements

This release contains certain forward-looking statements, which reflect management’s expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties. The factors that could cause actual results to differ materially from our expectations are detailed in the Company’s filings with the Securities and Exchange Commission, such as its annual and quarterly reports and current reports on Form 8-K.

SOURCE:

McDonald’s Corporation

http://www.mcdonalds.com

 

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Aon Hewitt Survey Reveals More U.S. Employers Likely to Add Roth Features to their Defined Contribution Plans in 2013

‘Fiscal Cliff’ Provision Opens Door for Increased Roth 401(k) Adoption

LINCOLNSHIRE, Ill., Feb. 6, 2013, A new survey by Aon Hewitt, the global human resources solutions business of Aon plc (NYSE: AON), reveals an increasing number of U.S. employers are planning to add Roth features to their defined contribution (DC) plans in 2013. This comes on the heels of new legislation that makes it easier for DC investors to convert balances within their savings plan into Roth accounts.

Immediately following the passage of the American Tax Payer Relief Act of 2012—or so-called ‘fiscal cliff’ deal—Aon Hewitt conducted a pulse survey of more than 300 individuals representing large U.S. employers to determine the prevalence of Roth accounts and employers’ likely actions with respect to their plans over the next 12 months. According to Aon Hewitt’s findings, while almost half (49 percent) of respondents currently offer no Roth provisions, 29 percent of those that don’t offer Roth are very or somewhat likely to add this feature in the next 12 months. Of those new adopters, more than three-quarters (76 percent) will add both Roth contribution and in-plan conversion features.

“While employers have steadily been adopting Roth features in recent years, the new law, along with a better understanding of Roth by both participants and companies, will encourage more plan sponsors to add these options in the near-term,” said Patti Balthazor Bjork , director of Retirement Research at Aon Hewitt.

Aon Hewitt’s survey also found that employers that already have a Roth contribution option are likely to allow employees to make in-plan conversions to Roth accounts. Of those respondents that currently allow Roth contributions but do not offer in-plan conversions, more than half (53 percent) are very or somewhat likely to add this feature in the next 12 months.

For companies that already allow Roth contributions and in-plan conversions, more than three-quarters (79 percent) are very or somewhat likely to expand the eligibility for in-plan conversions, allowing them for previously non-distributable amounts.

“The new rules open the door for employers to allow expanded in-plan conversions, but it’s not a requirement,” explained Bjork. “However, it makes the Roth conversions more attractive for employees, so there will likely be increased interest and incentive for employers to offer them.”

Aon Hewitt’s retirement practice advises, designs and administers defined contribution benefits for hundreds of mid-sized and large plans. For more information visit aonhewitt.com.

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Follow Aon Hewitt on Twitter @AonHewitt

About Aon Hewitt
Aon Hewitt is the global leader in human resource solutions. The company partners with organizations to solve their most complex benefits, talent and related financial challenges, and improve business performance. Aon Hewitt designs, implements, communicates and administers a wide range of human capital, retirement, investment management, health care, compensation and talent management strategies. With more than 29,000 professionals in 90 countries, Aon Hewitt makes the world a better place to work for clients and their employees. For more information on Aon Hewitt, please visit www.aonhewitt.com.

About Aon
Aon plc (NYSE: AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 61,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit www.aon.com for more information on Aon and www.aon.com/manchesterunited to learn about Aon’s global partnership and shirt sponsorship with Manchester United.

MacKenzie Lucas , 847-442-2995, mackenzie.lucas@aonhewitt.com
Maurissa Kanter , 847-442-0952, maurissa.kanter@aonhewitt.com

SOURCE: Aon plc

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Italy’s Fashion Moguls Steal The Spotlight

Wealth-X Unveils Top 10 Wealthiest Italians

SINGAPORE, Jan. 24, 2013, Wealth-X, the ultra high net worth (UHNW) business development solution for Global Private Banks, Luxury Brands, Educational Institutions and Non-Profits, has just released a list of the top 10 wealthiest Italians.

Topping the list is Michele Ferrero, owner of renowned chocolate maker Ferrero, with a net worth of US$21.7 billion. Coming in second is Leonardo Del Vecchio, founder and chairman of Luxottica Group, with a net worth of US$18.4 billion. Giorgio Armani, president and CEO of Armani Group, is ranked third with a net worth of US$9.7 billion.

Rank

Name

Position

Company

Net

Worth

(US

$billion)

1

Michele Ferrero

Owner

Ferrero International

21.7

2

Leonardo Del Vecchio

Founder and Chairman

Luxottica Group

18.4

3

Giorgio Armani

President and CEO

Armani Group

9.7

4

Silvio Berlusconi

Founder and Owner

Fininvest

7.8

5

Miuccia Bianchi Prada

Co-Founder and Chairman

Prada

7.3

5

Patrizio Bertelli

Co-Founder and CEO

Prada

7.3

7

Stefano Pessina

Executive Chairman

Alliance Boots

6.1

8

Gianfelice Rocca

Chairman

Techint Group

3.3

8

Paolo Rocca

CEO

Techint Group

3.3

10

Diego Della Valle

Chairman

Tod’s

3.1

The collective wealth of the top 10 wealthiest Italians stands at US$88 billion, which comprises 40% of the combined net worth of the Italian UHNW population. In particular, fashion moguls constitute half the list and represent 52% of the combined net worth of the top 10 wealthiest Italians.

Commenting on the list, Wealth-X CEO, Mykolas D. Rambus said, “The top Italian billionaires are inextricably linked to luxury fashion. We often see that there are strong social and professional connections among global billionaires and the Italians are no exception. Understanding a UHNWI’s social capital is increasingly critical for professionals who wish to successfully engage with this ultra wealthy community.”

For the full list and supplemental analysis, please visit: http://www.wealthx.com/articles/2013/top-10-wealthiest-italians

About Wealth-X

Wealth-X provides detailed intelligence on ultra high net worth (UHNW) individuals globally. The firm’s Wealth-X Professional solution is the standard for banking, marketing and not-for-profit professionals working with the ultra affluent. Wealth-X is headquartered in Singapore with offices in all major financial centres.

For more information about Wealth-X, please visit: www.wealthx.com

SOURCE: Wealth-X

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Hotwire Reveals January 2013 Travel Savings Indicator

Shed the Winter Chill with Deep Discounts in Warmer Weather Destinations like Hawaii, the Florida Keys and Las Vegas.

SAN FRANCISCO, Jan. 23, 2013, Hotwire.com®, a leading discount travel site, today released the January 2013 Hotwire® Travel Savings Indicator, which features the top five cities in North America where hotel, air and car rental rates have dropped the most as compared to the same time last year. Using extensive pricing research to cover the three most popular travel products, the report helps guide travelers to the best destinations for maximizing their travel dollars each month.

“With the major holidays and conventions mostly behind us, mid- to late-January is one of the most affordable times to travel all year,” said Clem Bason, president of the Hotwire Group. “This slower winter season has led travel providers in warmer weather destinations like Hawaii, Daytona Beach, the Florida Keys and Las Vegas to discount more competitively in their bid to win travelers, who in turn can take advantage of the low prices to grab an affordable wintertime escape.”

Hotel Price Drops

Daytona tops the list this month with an eight percent drop followed by another popular Florida destination, the Florida Keys with a six percent drop. While January is typically a busier month for these sunny Floridian beach towns, the mild winter in the Northeast has translated into decreased demand and, in turn, better discounts. And with the weather in the Keys averaging 70 degrees this time of year, the archipelago is perfect for travelers looking to escape the winter chill.

Raleigh, returning after a brief absence from the list, comes in at the number three spot, with a price drop of six percent. More hotels in the city are beginning to offer more rooms at a big discount on Hotwire, which translates to more competition among hoteliers for the lowest prices.

Next is Las Vegas, appearing on the list for the sixth month in a row, though down two spots from December with a price drop of six percent. Travelers can expect lots of last-minute price drops on the weekends throughout early January, as well as some stellar discounts on 5-star luxury properties.

Rounding out the list is Nashville with a two percent drop. Now that the college and pro football seasons have wrapped up and the country music awards are through, the demand is low in Music City, and so are the prices.

When compared to this time last year, the top five hotel price reductions for January 2013 include:

Rank

Hotel Market

Price Drops

Example of a Current Hotwire Deal,

US$/Night

1

Daytona Beach, FL

– 8%

3.5-star

$66

2

Florida Keys

– 6%

3.5-star

$139

3

Raleigh – Durham, NC

– 6%

4-star

$86

4

Las Vegas, NV

– 6%

5-star

$107

5

Nashville, TN

– 3%

4-star

$89

Air Price Drops

This month, beachgoers are in luck because Hawaii is the hottest deal market, with nearly every island seeing a considerable drop in airfare prices. As United, Hawaiian, Delta and Alaskan airlines continue to compete for more passengers, each airline is offering more seats and better deals for visitors headed to the Aloha State. Prices in Honolulu and Kailua Kona – tied for first place – are both down 15 percent, while the prices in fifth-place Kahului are down 12 percent.

Meanwhile, Toronto returns to the list in the number three spot with a 14 percent drop due to its continued competition with U.S. border towns. Along with its hosting of the Toronto International Boat Show and Canadian Bridal show, this Canadian destination backs up its low airfares with lots of early-year activities. Rounding out the list is another Tennessean city – Memphis – down three spots to number four with a 13 percent drop.

When compared to this time last year, the top five airfare price reductions for January 2013 include:

Rank

Air Market

Price Drops

Average Hotwire Airfare

1

Honolulu, Oahu, HI

-15%

$587

2

Kailua Kona, Big Island, HI

-15%

$528

3

Toronto, Ontario

-14%

$384

4

Memphis, TN

-13%

$323

5

Kahului, Maui, HI

-12%

$512

Car Price Drops

In car rental deals, January is seeing newcomers for spots two through five, giving way to fantastic coast to coast savings. Monterey, absent from the list since this past September, took the number one spot with a 19 percent price drop, and with January being California Restaurant Month, it’s a prime time for couples looking to wine and dine their way around Central California’s coast.

Raleigh is another hot deal market this month, as folks traveling to the City of Oaks are not only able to score some great airfare deals, but they can take advantage of car discounts (17 percent drop) as well. Finishing off the list are two Midwest cities, Indianapolis (12 percent) and Columbus (10 percent), as well as a Rocky Mountain favorite, Colorado Springs (11 percent), where some of the country’s best skiing is within easy driving distance.

When compared to this time last year, the top five car rental price reductions for January 2013 include:

Rank

Car Rental Market

Price Drops

Average Hotwire Car Rental Price

1

Monterey, CA

-19%

$24

2

Raleigh, NC

-17%

$19

3

Indianapolis, IN

-12%

$23

4

Colorado Springs, CO

– 11%

$28

5

Columbus, Ohio

– 10%

$23

For over 12 years, Hotwire has worked with hotels, airlines and car rental companies to fill unsold inventory. As a result, Hotwire offers travelers amazing deals, every day of the year, across a variety of markets. Through Hotwire’s deep understanding of the industry and unique relationships, consumers have been able to save millions of dollars on all their travel needs.

About the Hotwire Travel Savings Indicator

The Hotwire Travel Savings Indicator runs results during the second week of each month. Results are calculated by looking at Hotwire booking data for select regions in the current month, and comparing prices in the current month against Hotwire prices in the same month in the prior year. Prices are compared within the same categories (e.g., star rating, class of car) for consistency, and the percent change in price for each region is generated as an overall average of the changes in those categories. The hotel prices in the charts above are examples for a particular Hot Rate® deal within that market. The airfare and car rental prices are average prices based on bookings across all car and seat classes. Actual prices may be higher or lower than the examples that are provided.

About Hotwire

Hotwire.com is a leading discount travel site with low rates on airline tickets, hotel rooms, rental cars, cruises and vacation packages. Launched in 2000, Hotwire, Inc. obtains deep discounts from its travel suppliers to help travelers book unsold airline seats, hotel rooms and rental cars. Hotwire.com is an award-winning website and Hotwire, Inc. is an operating company of Expedia, Inc. CST # 2029030-50. NST: 20003-0209. For more information, visit http://www.hotwire.com. Hotwire.com operates sites in 8 countries worldwide: www.hotwire.com, www.hotwire.com/uk, www.hotwire.com/ie, www.hotwire.com/au, www.hotwire.com/nz, www.hotwire.com/se, www.hotwire.com/no and www.hotwire.com/dk. In addition to Hotwire, The Hotwire Group of websites includes: www.hotwire.com and www.carrentals.com.

Hotwire, Hotwire.com and the Hotwire logo are either registered trademarks or trademarks of Hotwire, Inc. in the U.S. and/or other countries. All other trademarks are the property of their respective owners. © 2013 Hotwire, Inc. All rights reserved. CST # 2053390-50.

Contact:
Andrew Reynolds
Atomic PR
(323) 648-5425
Andrew@atomicpr.com

 

SOURCE: Hotwire.com

 

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PCA: All 50 States Expected to Experience Housing Recovery in 2013

2013 Housing Starts Approach the One Million Mark

SKOKIE, Ill., Jan. 18, 2013, Since 2005, tepid economic growth and high foreclosure rates have depressed home prices, bloating inventories and preventing start activity. In 2013, economists are revising nearly a decade of pessimism and forecasting growth throughout the residential construction industry.

A new report from the Portland Cement Association (PCA) projects total housing starts to reach 954,000 units in 2013, reflecting further improvement on 2012’s nearly 30 percent growth.

“The possibility of one million starts in 2013 should not be dismissed,” PCA Chief Economist Ed Sullivan said. “Although the first half 2013 will be mired in a fiscal cliff hangover, we are decidedly optimistic about second half economic growth, job creation and consumer sentiment – all of which translate into a stronger home sales and starts activity.”

Even stronger growth in homebuilding is predicted to materialize in 2014 with starts surpassing 1.1 million.

In another optimistic turn from previous residential forecasts, PCA expects the recovery to be broad-based and is projecting all 50 states will see increases in single family housing this year. Already underway in the interior U.S., the emergence of accelerating construction growth has begun to appear in some of the hardest hit states during the housing bubble burst. These regions are now likely to lead growth in coming years as the long depressed markets begin to return to housing construction rates consistent with their demographics.

“As the recovery unfolds, regions that once lagged recovery now begin to emerge as growth leaders. The Southwest and Southeast, for example, still have the weakest housing fundamentals on a relative basis to the Interior U.S, but on a construction activity basis, given the extremely depressed bases from which these regions are recovering from, they will likely be the housing growth leaders in coming years,” Sullivan said.

PCA expects multifamily construction to continue to grow at a strong pace as favorable fundamentals fuel the sector. Multifamily starts recorded a 55 percent gain in 2011 and 36 percent growth in 2012. PCA expects an additional growth of 15 percent in 2013 to 277,000 units. Damaged credit due to foreclosure activity and tight mortgage lending standards have combined to create robust apartment demand.

About PCA
The Portland Cement Association represents cement companies in the United States and Canada. It conducts market development, engineering, research, education, and public affairs programs. More information on PCA programs is available at www.cement.org.

To obtain a copy of PCA’s analysis of the housing sector, contact Patti Flesher at pflesher@cement.org.

SOURCE: Portland Cement Association

 

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Startups Advise Obama: Focus on Taxes and Talent as Second Term Begins

CEOs and Executives from Startup Companies Nationwide Offered Advice to Support the Innovation Economy in Silicon Valley Bank’s Annual Startup Outlook Survey

SANTA CLARA, CA, Jan. 18, 2013, With the second inauguration of President Obama pending, Silicon Valley Bank, financial partner to innovation companies worldwide, asked startup companies across America: “What piece of advice would you give to President Obama with regards to supporting the innovation economy?” Simplifying taxes and focusing on building a strong talent pool made up nearly half of all responses, which came from 600 comments by CEOs and executives of startup companies across the US. The question was part of Silicon Valley Bank’s fourth annual survey of startup companies nationwide.

See infographic.

“Startup companies are looking for simplicity and relevant talent above all,” said Greg Becker , CEO of Silicon Valley Bank. “They said things like, ‘cut the red tape,’ ‘simplify the tax code’ and ‘improve US science and math education to best-in-world outcomes.'”

“Our clients – high growth innovation companies – create jobs and outperform the broader economy. We should be doing everything we can as a country to make it easy for them to grow.”

High growth small companies, while small in number, have an outsized impact on the U.S. economy. They consume roughly 0.1-0.2% of U.S. GDP in invested capital, but turn into companies that create roughly 11 percent of U.S. private sector employment and 21 percent of U.S. GDP – or roughly twelve million jobs and over $3 trillion in annual revenues.

The most common advice, offered by nearly one-third of startup managers who participated in the survey, was in regard to taxes. Nearly 20 percent of the respondents believed the government should focus on developing a deep talent pool through a combination of approaches including immigration reform and better science and math education. A running theme in the comments was also the desire for government to work together on a bi-partisan basis.

Advice for the president fell into a few major categories:

  • Overhaul Tax System – 28% “Keep it simple” “Focus on ways to stimulate growth”
  • Build Talent Pool – 18% “Make it easy to hire the best & brightest from around the world”
  • Ease Regulation – 12% “US is the hardest country in the world to do business”
  • Promote Investment – 11% “Make investment in growth companies easier”
  • Champion Innovation – 10% “Make it very, very simple and cheap for the little guy to win!”
  • Give Us Space – 9% “Minimize Federal government involvement” “Leave us alone”
  • Other – 13% “Be more bi-partisan – both the President and Congress”

Silicon Valley Bank conducted its annual Startup Outlook survey in December 2012. More than 750 executives of startup companies, defined as those in the innovation sector with less than $100 million in annual revenue, responded. The company will be releasing additional data and reports based on the survey in the coming months. View all news related to the results of the Startup Outlook survey at http://www.svb.com/startup-outlook-report/ and follow the conversation on Twitter at @SVB_Financial #StartupOutlook.

About Silicon Valley Bank
Silicon Valley Bank is the premier bank for technology, life science, cleantech, venture capital, private equity and premium wine businesses. SVB provides industry knowledge and connections, financing, treasury management, corporate investment and international banking services to its clients worldwide through 27 U.S. offices and six international operations. (Nasdaq: SIVB) www.svb.com.

Silicon Valley Bank is the California bank subsidiary and the commercial banking operation of SVB Financial Group. Banking services are provided by Silicon Valley Bank, a member of the FDIC and the Federal Reserve System. SVB Financial Group is also a member of the Federal Reserve System.

SOURCE: Silicon Valley Bank

RELATED LINKS: http://www.svb.com

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Consumer Financial Protection Bureau issues rules to strengthen protections for high-cost mortgages

Bureau Also Expands Time Frame for Required Escrow Accounts

WASHINGTON, D.C., Jan. 10, 2013, Today the Consumer Financial Protection Bureau (CFPB) issued final rules to strengthen consumer protections for high-cost mortgages and to provide consumers with information about homeownership counseling. The Bureau also finalized a rule that requires escrow accounts be established for a minimum of five years for certain higher-priced mortgage loans.

“Addressing problems in the mortgage market is critical to helping our economy recover,” said CFPB Director Richard Cordray. “Today’s changes will better help consumers to understand the real costs of owning a home while protecting them from harmful practices that can trap them into high-cost mortgages.”

The Home Ownership and Equity Protection Act (HOEPA) was enacted in 1994 to address abuses in home-equity lending and refinances. Since then, HOEPA has deterred high-rate and high-fee lending in those markets. In recent years, high-cost mortgages have made up only about 0.2 percent of those types of loans.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) expanded HOEPA to cover home purchase loans and home equity lines of credit (“HELOCs”); revised HOEPA’s rate- and fee-thresholds for coverage; added a new coverage test based on a transaction’s prepayment penalties; and provided new limitations on risky loan features, as well as other new protections for high-cost mortgages. The CFPB has finalized rules to implement the Dodd-Frank Act’s amendments to HOEPA.

For loans that are high-cost mortgages, today’s final rule:

  • Bans potentially risky features: For mortgages that qualify as high-cost, the rule      generally bans balloon payments (a large, lump sum payment usually due at      the end of the loan) with some exceptions, such as for certain types of      loans made by creditors serving rural or underserved areas, and bans      penalties for paying the loan early.
  • Bans and limits certain fees and practices: The CFPB’s rule bans fees for modifying loans, caps      late fees at four percent of the payment that is past due, generally      prohibits closing costs from being rolled into the loan amount, and      restricts the charging of fees when consumers ask for a payoff statement      (a document that tells borrowers how much they need to pay off the loan).      The rule also prohibits certain bad practices, such as encouraging a      consumer to default on an existing loan to be refinanced by a high-cost      mortgage.
  • Requires housing counseling: The rule requires consumers to receive housing      counseling before taking out a high-cost mortgage.

In addition to strengthening the protections for high-cost mortgages, the Bureau today is implementing a requirement of the Dodd-Frank Act that lenders provide a list of homeownership counseling organizations to consumers shortly after they apply for a mortgage so consumers know where to get help when deciding what loan is best for them.

The Bureau is also implementing other changes made by the Dodd-Frank Act concerning escrow accounts. An escrow account is an account that a lender may set up to pay certain recurring property-related expenses on a consumer’s behalf, such as property taxes and homeowner’s insurance. Escrow accounts help to ensure that consumers have enough money to pay those bills when they come because the lender breaks the expenses down into monthly installments and adds them to the monthly mortgage payment. Through an escrow account, consumers can better see the true cost of owning a home with insurance and tax costs laid out with each mortgage payment and are better assured that those costs are paid in a timely manner.

Under current regulations, creditors are required to establish escrow accounts for certain higher-priced mortgage loans for a minimum of one year. Today’s final rule implements changes from the Dodd-Frank Act that generally extend the required duration of an escrow account on such mortgage loans from a minimum of one year to a minimum of five years. To preserve access to credit, the rule exempts loans made by certain creditors that operate predominantly in rural or underserved areas, as long as certain other criteria are met.

The rules will be available later today at: http://www.consumerfinance.gov/regulations

 

A consumer guide to the final HOEPA rule can be found at: http://files.consumerfinance.gov/f/201301_cfpb_high-cost-mortgage-rule_what-it-means-for-consumers.pdf

 

A consumer guide to the final Escrows rule can be found at: http://files.consumerfinance.gov/f/201301_cfpb_escrow-requirements-rule_what-it-means-for-consumers.pdf

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