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News Now

April 28, 2015

RBC2 comments are in: When might CUs see a draft final?

Washington
ALEXANDRIA, Va. (4/28/15)--CUNA anticipates the National Credit Union Administration will issue a finalized version of its revised risk-based capital proposal (RBC2) in late 2015 at the earliest.

The comment period for the proposal closed at 11:59 (ET) Monday, and more than 1,900 comment letters were filed as of late Monday afternoon, close to the same number as were submitted on the original proposal.
 
"The fact that about as many credit unions will comment on this second proposal as did on the first is an indication of the interest and concern credit unions still have with the issue," said Bill Hampel, CUNA's chief policy officer. "It's also evidence that issuing the proposal for a second comment period was the right thing to do."
 
"The NCUA has a lot of reading to do before producing a final rule.  In our comment letter, we recommended withdrawing the plan because it's just not needed. If the Board decides to proceed, we expect it will take until late this year or early next year to finalize a rule."
 
Hampel added that while RBC2 contains significant improvements, further changes are necessary to better reflect the realities credit unions face under the current system.

"If it's not going to be withdrawn, we listed a number of suggestions for further improvements from RBC21 to RBC2," he said.
 
Two additional major issues CUNA has with RBC2 are:
  • CUNA does not believe there is a need for a new regulation on interest-rate risk management; and
     
  • Significant concern with the proposal's new requirement that, in addition to meeting Prompt Corrective Action net worth and RBC ratios, a credit union's internal capital planning and strategies would become subject to examination and supervision.
"We think that the 7% leverage requirement and the risk-based capital requirements are more than sufficient, for regulatory purposes, for determining capital adequacy," Hampel said. "Any additional supervision on each credit union's capital plans and adequacy is not necessary."

The NCUA told News Now it would report on the final number of comments it received on RBC2 early Tuesday.

aSmarterChoice, NerdWallet co-host fin. lit. month Twitter chat

Washington
WASHINGTON (4/28/15)--Financial Literacy Month activities will continue Wednesday with a Twitter chat hosted by aSmarterChoice and NerdWallet on the future of saving.

The chat is scheduled to run from 3 to 4 p.m. (ET), and credit unions are encouraged to participate.
 
Participants can share their thoughts on ways to encourage more savings among younger populations, how mobile technology will impact savings in the future and ways credit unions can assist their members in planning for the future.
 
Those interested in participating can follow @aSmarterChoice and @NerdWallet , or use the hashtag #FutureofSaving
 
aSmarterChoice.org is a joint project of CUNA and the American Association of Credit Union Leagues. It is aimed at helping create consumer awareness of credit unions and building membership.
 
Financial literacy contributors such as Tarra Jackson ( @MsMadamMoney ), Ashley Jacobs ( @Wisebread ), @AmericaSaves and @TheCentsables will attend the chat.

CUs plant seeds for Apple Watch support

CU System
AUSTIN, Texas (4/28/15)--Time will tell if last week's launch of the Apple Watch marks a new era in consumer electronics. But there are credit unions among the businesses who want to serve consumers through Apple's latest attempt to raise the digital bar.

Two credit unions are among eight financial institutions to be included in Malauzai Software's development of an app for the Apple Watch.  

Malauzai, a provider of mobile and Internet banking apps, completed its latest solution for eight of its credit union and bank clients in just 40 days from inception to completion.

The credit unions included in the development are Alabama Teachers CU, Gadsden, Ala.; and Greater Texas FCU, Austin, Texas, and its Aggieland CU division, Austin, Texas

 "The Apple Watch app provides our credit union with an ideal opportunity to jump ahead of the rest of the market and offer our members the latest technology," said Brandy Conway, Greater Texas FCU vice president of marketing.

"With its similarity to our current mobile banking offering, the wearable app requires no new hardware or software and will provide an intuitive user experience for our members," Conway said. "Now members have another way to conduct banking at their convenience."

The watch banking app is Malauzai's second platform expansion in the past six months that uses its Mobile Only Experience (MOX) philosophy. The SmartwearApp is an extension of the existing mobile-banking application to the watch.

When end users download the updated version of their institution's mobile banking app from the Apple App Store, they have access to the watch app and can sync the device with their iPhone.

Charlotte (N.C.) Metro FCU also released a mobile banking app for Apple Watch. The app delivers account balances, transaction history with running balances and loan payment due information.

In other Apple news, Discover announced an agreement Monday with Apple that will allow Discover cardmembers in the United States to make contactless payments in participating stores through Apple Pay.

Credit-builder loans from CUs boost members' credit files

CU System
MADISON, Wis. (4/28/15)--A recent article on CreditCards.com highlighted how credit unions offer credit-builder loans to help consumers establish or boost their credit profile.
 
Credit-builder loans usually are offered in modest amounts, typically ranging from under $500 to $1,500, to consumers who need credit help, but have their financial situation under control.
 
About one in five credit unions offer credit-building loans to members, Mike Schenk, CUNA vice president of economics and statistics, told CreditCards.com .
 
Achieve FCU, Berlin, Conn., was noted for its standard secured loan, which is secured by a savings balance. The loan features an annual percentage rate (APR) of 12%. The collateral account is frozen, and funds are released incrementally as the loan is paid down.
 
St. Mary's Bank, a Manchester, N.H.-based credit union, offers an unsecured credit-builder loan for a maximum of $500 for 12 to 24 months and a 7.74% APR with payments made by automatic funds transfer. If the member pays off the loan as agreed, the interest is refunded.
 
Greater Iowa CU, Ames, Iowa, requires a borrower to have been a member for at least three months, to have six months at either their current job or residence, and to have no recent checking overdrafts in order to take out a credit-builder loan. Interest rates vary, but tend to be lower for secured loans and slightly higher for unsecured loans, Alan Johnson, Greater Iowa CU senior lender, told CreditCards.com .

HUD requires additional foreclosure prevention from servicers

Washington
WASHINGTON (4/28/15)--Loan servicers will be required to delay mortgage foreclosures and evaluate borrowers for their eligibility for loss-mitigation programs, based on changes to the U.S. Department of Housing and Urban Development's (HUD) Distressed Asset Stabilization Program (DASP).

HUD also announced changes to its Neighborhood Stabilization Outcome (NSO) sales portion of DASP--changes designed to increase nonprofit participation.
 
Since 2010, the FHFA's DASP has allowed for pools of mortgages headed to foreclosure to be sold to qualified bidders. The program is meant to encourage bidders to work with borrowers to help bring the loan out of default.
 
DASP sales are generally broken into a "national sale," featuring loans from a diversified cross-section of the country, and NSOs, which have loans drawn from specifically targeted geographic areas.
 
Previously, loan servicers could foreclose six months after they received the loan. They were encouraged, but not required, to assess a borrower's qualifications for loss mitigation programs.
 
Under the new requirements, loans servicers must delay foreclosure for a year and evaluate all borrowers for the Home Affordable Modification Program, or a similar loss mitigation programs. NSO updates include giving nonprofits a first look at vacant properties, allowing purchasers to re-sell notes to nonprofits and offering a nonprofit-only pool.
 
Loans can be placed in the pool as long as the borrower is at least six months delinquent on their mortgage and the servicer has exhausted all steps in the Federal Housing Administration loss mitigation process.
 
According to HUD, it plans to hold its first DASP sale in June.

Consumers' fin. anxiety reflects last year's levels in Gallup survey

CU System
PRINCETON, N.J. (4/28/15)--Consumers' financial concerns aren't limited to one topic, and half of Americans have the same level of financial anxiety as last year, according to Gallup's annual Financial Worry survey.

The Gallup metric tracks the number--and severity--of financial challenges faced by consumers. Fifty percent of respondents identified themselves as being moderately to highly worried about three or more of the following seven indicators:
  • Not having enough money for retirement;
  • Not being able to pay medical costs or a serious illness/accident;
  • Not being able to maintain the standard of living you enjoy;
  • Not being able to pay medical costs for normal health care;
  • Not having enough to pay your normal monthly bills;
  • Not being able to pay your rent, mortgage or other housing costs; and
  • Not being able to make the minimum payments on your credit cards.
The number ticked up one point from 2014 (49%) but still sits lower than the 56%-61% seen from 2008 to 2012.

Having enough money for retirement is the most common worry, with 60% saying they are very or moderately worried about it. Roughly one-quarter are high worriers, citing six or seven of Gallup's indicators.

Seventy-two percent of households with an annual income of $30,000 or less are worried about three or more of the scenarios. The number of high worriers drops to 6% when household income rises above $75,000.

Although the level of anxiety is stable compared with last year, 52% of Americans reported their financial situation is getting better, according to additional numbers that came from Gallup's annual Economy and Personal Finance survey. Americans reported their financial situation was "getting better" at the highest level since 2004 in the April 9-12 survey.

"Americans' current levels of worry about seven fundamental indicators of financial health suggest they have still not fully recovered from the recession," Gallup noted.

NCUA grant initiatives webinar is today

Washington
ALEXANDRIA, Va. (4/28/15)--A National Credit Union Administration webinar titled "NCUA 2015 Grant and Loan Opportunities" will begin at 2 p.m. (ET) today and is scheduled to last 90 minutes.
 
Dominic Carullo, an economic development specialist with the NCUA's Office of Small Credit Union Initiatives, will be joined by Geetha Valiyil, comptroller of the Office of Small Credit Union Initiatives, and David Fitzgerald, national account director of the Illinois Credit Union League, to discuss the grant application process and the four grant initiatives that NCUA will fund.
 
The initiatives are cybersecurity, building capacity branching, digital growth, and new products and services.
 
In addition to the program details, two credit union executives are expected to share their experiences with NCUA grants. Lynn Gray, CEO of Remington FCU, Ilion, N.Y., and Lowell Stevens, president/CEO of Latah FCU, Moscow, Idaho, will describe their credit unions' experiences with using grant funds to introduce mobile banking applications and remote deposit capture services to their memberships.
 
A Q&A session will follow the webinar presentation. This session was postponed from its originally scheduled date of April 15.
 
Online registration is available here .

CFPB reports trends in servicemember fin. services complaints

Washington
WASHINGTON (4/28/15)--Debt collection, credit reporting and student lending practices top the list of servicemembers' complaints to the Consumer Financial Protection Bureau (CFPB), according to a report released Monday. The bureau's third "Snapshot of Complaints Received from Servicemembers, Veterans and their Families" details data and trends received since July 2011.
 
Click to view larger image Servicemember complaint by product. (Source: CFPB)
The CFPB received more than 17,000 complaints from servicemembers in 2014, which represents a steadily increasing volume, said Holly Petraeus, assistant director for the CFPB's Office of Servicemember Affairs.

Roughly 29,500 complaints from servicemembers have been received by the CFPB from July 21, 2011, through Dec. 31, 2014. 
 
Highlights from the reports include:
  • Debt collection complaints have risen steadily since the bureau's last report, and now make up 39% of total complaints, the largest category within the military community;
     
  • Credit reporting remains a top category of concern, and 72% of those complaints are about incorrect information on credit reports;
     
  • Student loans were another concern, with 49% of those complaints regarding issues with lenders or servicers. The complaints highlight several longstanding trends, including servicemembers saying they were not provided rights guaranteed by the Servicemember Civil Relief Act; and
     
  • Basic account servicing, including account access restrictions and maintenance/penalty fees, is a "significant" area of concern for the CFPB.
The Defense Credit Union Council, which represents the interests of credit unions operating on military bases around the world, has been in touch with member credit unions to ensure they note challenges that servicemembers and families face during deployments and permanent changes of station. Maintaining account access and management is among the credit unions' top priorities.
 
The report also highlights CFPB outreach efforts in 2014, which included connecting with roughly 17,000 servicemembers, veterans and military families through a number of live events, including ones at 34 installations around the world.
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