Legislative Action News, July 17, 2012

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Revealing AMC Fees Optional Under Proposed Disclosure Forms
By Bill Garber

On July 9, the Consumer Financial Protection Bureau released its proposed rule for mortgage disclosure forms designed to help consumers shopping for a home loan. The CFPB also showed the latest versions of its loan estimate form and its closing form.
 
Part of the CFPB’s “Know Before You Owe” mortgage project, the proposed rule includes two forms that borrowers will receive after applying for a mortgage but before closing on their homes. 
 
The ASFMRA and the Appraisal Institute previously had expressed its support for the new forms, but asked that the CFPB separate the appraisal fee from the appraisal management company fee to alleviate any confusion regarding the fees. URL for letter: http://www.appraisalinstitute.org/newsadvocacy/downloads/ltrs_tstmny/2012/AI-ASFMRA-consumer-disclosure-form.pdf
 
However, the proposed five-page closing disclosure form, which includes a breakdown of closing costs , doesn’t require separate disclosure of the AMC fee and the appraisal fee, but rather provides the option to do so. It would be up to a closing agent to separate the fees on the form.  
 
The three-page loan estimate form, which is designed to give consumers an easy way to compare loan estimates from different lenders and includes such information as loan amount, interest rate, projected payments and appraisal fee, also does not require separate mentions of the AMC fee and appraisal fee. 
 
In a statement to the Appraisal Institute, the CFPB said “Our intention was simply to follow Section 1475 of the Dodd-Frank Act, which makes the (AMC fee) disclosure optional.”
 
Once the forms are finalized, lenders will be required to provide the loan estimate form to consumers within three business days of receiving a mortgage application, and the closing disclosure form within three days of closing.
 
The forms already have gone through 10 rounds of testing and tweaking based on thousands of public comments. More changes are possible, with the CFPB asking consumers to comment on the newest versions. The public has until Nov. 6 to review and provide feedback.
 
View and comment on the proposed disclosure forms: http://www.consumerfinance.gov/knowbeforeyouowe/#disclosure

House Agriculture Committee Passes Farm Bill
By Stephen Frerichs

After considering 97 amendments, the House Agriculture Committee passed its version of the farm bill last week by a vote of 35 to 11. To get to passage, the Committee adopted 44 amendments with the remaining 53 amendments either withdrawn or rejected. If you would like to see the 44 amendments that were adopted click here:  http://agriculture.house.gov/hearings/markupDetails.aspx?NewsID=1593

You can find a copy of the nearly 600 page bill (without amendments) at: http://agriculture.house.gov/pdf/legislation/HR6083FARRM.pdf

The Committee bill, as scored by the Congressional Budget Office, would save $35.1 billion over ten years as compared to the Senate bill that saves $23 billion over the same time period.  There are some significant differences between the House proposal and the Senate passed bill. The House bill would cut the Supplemental Nutrition Assistance Program (SNAP or food stamps) by $16 billion over 10 years compared to the Senate’s $4 billion cut.  The size of this cut has caused rifts between House Democrats and Republicans. Many Republicans would like to see larger cuts to SNAP, while Democrats seek smaller cuts.

Another major difference is the commodity title (see related Summary of Major Provisions article) which cuts commodity program spending by $23.6 billion over ten years compared to the Senate cut of $19.4 billion.  Finally, the House bill would add $9.5 billion to the crop insurance baseline, compared to the Senate bill’s addition of $5 billion

The House Agriculture Committee bill contains no changes to Section 1619 of the 2008 Farm Bill. Section 1619 prohibits the Farm Service Agency from sharing information it collects about farms with the public and has caused multiple concerns for members of the ASFMRA.  Both Chairman Lucas (R-OK) and Ranking Member Peterson (D-MN) opposed any changes to Section 1619.  Congressman McIntyre (D-NC) offered an amendment to Section 1619 to “open” up data sharing with 501(c)(5) non-profit agricultural commodity marketing and promotion organizations (NC Sweet Potato Association), but both the Chairman and Ranking member opposed that amendment so it was withdrawn.  Neither the Senate bill, nor the House Committee bill, makes a change to Section 1619.

Next Steps for Farm Bill
By Stephen Frerichs

Following regular order, the next step for the Farm Bill would be for the full House to consider the Committee passed bill on the House floor.  There are 12 “legislative days” remaining in July before the Congress starts an extended August recess to campaign and attend party conventions.  There are roughly the same number of legislative days scheduled in September and none in October due to the election in early November.  So the question is will the House Leadership schedule time to consider the farm bill? As of this writing, the leadership has given no indication that it will schedule time to consider the bill. It will have to make the political calculation about whether the bill will ultimately pass (and it may not given the SNAP controversy) and how much floor time passage would take.

If floor time is not scheduled in July or September that does not mean the farm bill is dead.  The bill could still be considered during a lame-duck session after the election and combined with other “must pass” legislation that the lame-duck session must address.

Summary of Major Provisions of the House Agriculture Committee Farm Bill
By Stephen Frerichs

Commodity Title

Beginning with the 2013 crop, the House Committee commodity title repeals the direct and countercyclical programs, as well as the ACRE program (same as Senate). It replaces those with a new Price Loss Coverage (PLC) program. Or, on a commodity-by-commodity basis, “owners” can elect on a one-time basis to enroll in a Revenue Loss Coverage (RLC) program instead of PLC. The bill continues the loan rate and sugar programs and creates a new dairy program (similar to Senate bill).  Payment limits and the adjusted gross income (AGI) eligibility test are adjusted for the new programs and conservation compliance requirements continue to apply to the commodity title.

The new PLC program is similar to the current counter-cyclical program but with the ability to update yields (one-time in 2013).  The one-time yield update is 90% of the 2008-2012 average yield for the commodity excluding years the commodity wasn’t planted.  If a yield is less than 75% of the county average yield during that time period, 75% of the county yield can be used.  In addition, the target prices are raised (See table below). Eligible acres are planted and prevented planted acres for covered commodities not to exceed base on a farm, where farm will be based on the FSA farm number. Covered commodities are: wheat, corn, grain sorghum, barley, oats, long grain rice, medium grain rice, pulse crops, soybeans, other oilseeds, and peanuts. Note cotton is not a covered commodity (see crop insurance summary).

Comparison of Target Prices

Reference Price

Unit

2008 Farm Bill

2012 House Committee Bill

Wheat

$/bu

4.17

5.50

Rice

$/cwt

10.50

14.00

Corn

$/bu

2.63

3.70

Oats

$/bu

1.79

2.40

Barley

$/bu

2.63

4.95

Sorghum

$/bu

2.63

3.95

Cotton

$/lb

.7125

n/a

Peanuts

$/ton

495

535

Soybeans

$/bu

6.00

8.40

Other Oilseeds

$/cwt

12.68

20.15

Dry Peas

$/cwt

8.32

11.00

Lentils

$/cwt

12.81

19.97

Small Chickpeas

$/cwt

10.36

19.04

Large Chickpeas

$/cwt

12.81

21.54

 The barley reference price for the 2008 Farm Bill used the USDA Feed Barley Price. The 2012 House Committee bill uses the USDA all-barley price.

The RLC is similar to the Senate county based ARC program. It is a revenue program based on county yields and national prices and covers 85% to 75% of benchmark revenue (Senate’s band is 89% to 79%).  Owners make a one-time choice to elect RLC instead of PLC.

The Adjusted Gross Income test in the House Committee bill is $950,000 compared to the Senate’s $750,000.  The House Committee payment limits are $125,000 per person with an additional, separate payment limit for peanuts at $125,000 per person compared to the Senate’s limit of $50,000 per person.

Crop Insurance

The crop insurance title creates three new major insurance plans: Supplemental Coverage (SCO), Stacked Income Protection Coverage (STAX) and a peanut revenue plan of insurance. This is the same as the Senate

The SCO coverage is nearly identical to the Senate version (see Senate description in previous ASFMRA news articles) except that a farmer enrolled in RLC is not eligible to buy SCO. Cotton farmers buying STAX are also not eligible (farm-by-farm basis).

STAX is also nearly identical to the Senate language (see previous ASFMRA articles) except that the House Committee bill includes a “reference price” of $.6861 per pound. The reference price sets a price floor for STAX coverage such that the price used to set the guarantee cannot fall below the reference price.

The Peanut Revenue Insurance language in the House bill is similar to the Senate bill.

Other crop insurance changes include a mandatory re-rating of CAT coverage, the ability to use 70% of T-yields as a plug yield (instead of the current 60%), separate coverage for irrigated and non-irrigated practices at all unit levels (Senate is enterprise unit only), and additional subsidies for beginning farmers.

Conservation

The House conservation title is very similar to the Senate bill. The conservation title consolidates numerous conservation programs and creates 4 major conservation program “legs:” Cost Share, Easements, Partnerships and the Conservation Reserve Program.

The CRP will become smaller under the Senate bill, dwindling to 25 million acres by 2017 from the current authorized level of 32 million acres.  Changes are made to allow for more frequent haying and grazing with reduced rental rates. In addition, a landowner can take a reduced rental rate in the final year of the contract in order to begin land preparations to place the land back into production.

The Wildlife Habitat Incentive Program (WHIP) will be merged with the Environmental Quality Incentive Program (EQIP).  The Conservation Stewardship Program remains as a stand-alone program.

Grassland, farmland and wetland easements (GRP, FRP and WRP) are consolidated into one easement program with two legs: Agricultural Land Easements (ALE) and Wetland Reserve Easements (WRP).  WRP is virtually identical to the existing program. ALE is the combination of GRP and FRP but will look very similar to the existing FRP where all easements are permanent and run through an approved 3rd party entity.

The Regional Partnership Program combines existing Agricultural Water Enhancement and the Cooperative Conservation Programs with the Chesapeake and Great Lakes programs.  The Secretary will have the ability to target areas of conservation priority through partners under this program.

Specialty Crops OK in House Farm Bill; Next Stop: House Rules Committee
From Federal Produce Policy

The Specialty Crop industry retained all the provisions of importance to it in the House Committee on Agriculture’s marathon legislative mark-up of the 2012 Farm Bill that started at 10:00 AM Wednesday and ended at 1:10 AM Thursday.
Read more: http://federalproducepolicy.com/news2012/jul122012-houseagmovesfarmbill.html

Economist: Fed Will be Forced to Take More Stimulus Action Soon
LandOwner Newsletter

Look for the Federal Reserve to take more stimulus action “soon” to support the economy despite the usual tendancy of the Fed remaining inactive in the months preceding a presidential election. That’s the view of long-time LandOwner economic consultant Dr. Vincent Malanga, LaSalle Economics, Inc., Bayside, New York.
Login to Member Resources to download the latest issue and read more: http://portal.asfmra.org/Scripts/4Disapi.dll/4DCGI/cms/review.html?Action=CMS_Document&DocID=27&Time=820983562&SessionID=62057594yhofx712z58m6ib178uofz4n8xa01t8fypx92ywdh85706r0j6bv566f&MenuKey=123

Remember talk about big harvests this year
Kiplinger Agriculture Letter

Remember talk about big harvests this year as farmers seeded 11 million more acres than in ’11? Forget about it. Crops in over half the U.S. are drying up because of oppressive heat and drought while they’re in critical growth and pollination periods. Millions of acres of crops have been irreparably harmed. Copyright 2012. The Washington Kiplinger Editors, Inc.

Many fields will be plowed up, not harvested, in parts of the Corn Belt, Southeast and Great Plains. Such news is fueling the markets’ fear about a looming scarcity of ag commodities. Corn is up 25%, to $7.50/bu., since June 1. Soybeans… up 20%, to $16/bu. Weather will continue to drive prices.
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