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Senators introduce more reg relief for CUs, small banks

Washington
WASHINGTON (7/31/14)--U.S. Sens. Angus King (I-Maine), Deb Fischer (R-Neb.), Mark Warner (D-Va.), and Jon Tester (D-Mont.) unveiled new legislation Wednesday intended to provide immediate regulatory relief for America's credit unions and community banks.
 
Calling these smaller financial institutions the "bedrock of small towns across America," King said they--and the services they provide--are being "hammered by a tidal wave of poorly-tailored regulations."
 
"We owe it to these institutions--and the millions of Americans who depend on them--to provide some measure of relief. America will be the better for it when we do," said the senator from Maine.
 
The bill, introduced yesterday and entitled the RELIEVE Act, would:
  • Provide credit unions parity with Federal Desposit Insurance Corp.-insured institutions when it comes to deposit insurance coverage on Interest on Lawyers Trust Accounts (IOLTAs) and other escrow accounts. An IOLTA bill known as the Credit Union Share Insurance Fund Parity Act (H.R. 3468), which would extend share insurance coverage to all of the underlying owners of funds held by lawyers in trust accounts and realtors in escrow accounts. was approved by voice vote by the House in November 2013;
  •  Improve the definition of "rural" so that more counties will be considered rural for the purposes of the rules of the Consumer Financial Protection Bureau; and increase the annual mortgage origination limit for rural creditors from 500 to 1,000 per year. The rural county designations determined by regulators can impact the types of products credit unions may offer their members in those areas.; and,
  • Require the Federal Reserve to revise the Small Bank Holding Company Policy Statement so that the policy applies to bank holding companies and savings and loans holding companies with pro forma assets of less than $1 billion, an increase from the current threshold of $500 million.
Noting that regulatory relief for credit unions is one of its top advocacy priorities, the Credit Union National Association commended the senators for their clear grasp of the need to ease the burden of rules that hamper credit unions' ability to serve their members.
 
CUNA Vice President of Legislative Affairs Sam Whitfield said CUNA looks forward to working with each of the senators, as well as other members of the Senate, to see this bill move forward to enactment.

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HELOC reporting burden unjustified, CUNA tells CFPB

Washington
WASHINGTON (7/31/14)--With an eye toward reducing regulatory burden on credit unions, the Credit Union National Association has sent a letter to the Consumer Financial Protection Bureau (CFPB) outlining several concerns with the bureau's proposed changes to Home Mortgage Disclosure Act (HDMA) rules. The letter is a preliminary statement from CUNA, a more detailed comment letter will be filed during the official comment period.

CUNA urged the bureau to exempt community financial institutions, including all credit unions covered under Regulation C (which implements the HMDA), from the proposed requirement for reporting Home Equity Lines of Credit (HELOCs), which is currently optional.

The letter questions the justification for the HELOC reporting requirement, noting the difficulties many credit unions will face in order to meet the requirements.

"Many credit unions treat HELOCs more like consumer loans than mortgage loans; credit union HELOCs are frequently managed on computer operating systems and platforms that are outside of the traditional mortgage loan origination systems and are separate from their first mortgage counterparts," the letter reads. "To mandate reporting of all HELOCs for credit unions would be unwarranted and costly. Most important, this would be yet another requirement that would divert credit unions from actual lending or providing other needed member services."

The letter explains that since the Dodd-Frank Wall Street Reform and Consumer Protection Act requires the CFPB to implement new data requirements, CUNA would like to work with the bureau to implement the requirements in a way that will accomplish the objectives without adding more regulatory burden.

Dodd-Frank mandates an additional 17 data fields for HDMA reporting, but the CFPB's proposal would require 37 new data fields. CUNA Associate General Counsel Jared Ihrig called the addition of so many new data fields "unwieldy and unnecessarily burdensome." (News Now July 25).

The comment period for the proposed rule is open until Oct. 22.

Two bills with CU relief approved by House panel

Washington
WASHINGTON (7/31/14)--The House Financial Services Committee passed two more regulatory relief bills that were held over for a recorded vote from Tuesday's hearing. Both bills are supported by the Credit Union National Association, in testimony before the committee several weeks ago, and with a letter to the committee Monday.

The Community Bank Mortgage Servicing Asset Capital Requirements Study Act (H.R. 4042) passed 44-9. The bill would direct federal banking agencies to conduct a study of appropriate capital requirements for mortgage servicing assets for nonsystemic banking institutions. CUNA supported a manager's amendment that would have included the National Credit Union Administration in the study and postponed the agency's risk-based capital proposal, but it was not offered.

However, several members of the committee, including Rep. Blaine Luetkemeyer (R-Mo.), the bill's sponsor, Rep. Jeb Hensarling (R-Texas) and Rep. Denny Heck (D-Wash.) pledged to work together to add credit union parity measures into the bill before it reaches the House floor.

Legislators from both houses are still questioning the NCUA's risk-based capital proposal. Wyoming Sens. Michael Enzi (R), John Barrasso (R) and Sen. Lisa Murkowski (R-Alaska) wrote expressing misgivings about the proposal.

"Credit unions in Wyoming have expressed their apprehension about this rule and fear it will prompt them to change the way they operate in order to raise capital to maintain their current buffers," reads the letter from Enzi and Barrasso. "In fact, one estimate suggests that credit unions in our home state will face increased capital requirements of approximately $12 million to preserve their current capita; buffers and remain well-capitalized."

All three Senators expressed concerns about whether or not the proposal exceeds the authority granted through the Federal Credit Union Act, and noted that increased requirements could reduce availability or affordability of loan products, thereby restricting credit availability to members.

The three legislators became the 20th, 21st and 22nd Senators to write to the agency with concerns about the proposal. In addition, six Representatives have individually written letters, along with 324 members that signed a letter outlining several issues with the proposal. 

The Access to Affordable Mortgages Act (H.R. 5148) passed 31-23, and would amend the Truth in Lending Act to exempt certain higher-risk mortgages from property appraisal requirements. CUNA supports the bill since it would provide regulatory relief to mortgage lenders.

"The bill would allow credit unions that offer mortgage loans secured by covered properties to serve their middle to lower income members better," reads the letter CUNA sent in support of the bill.

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House passes SAFE enhancement, cyber protection acts

Washington
WASHINGTON (7/31/14)--The House passed the SAFE Confidentiality and Privilege Enhancement Act (H.R. 4626) and the National Cybersecurity and Critical Infrastructure Protection Act of 2014 (H.R. 3696) this week. The Credit Union National Association supports both bills.

H.R. 4626 would amend the SAFE Mortgage Licensing Act of 2008 to give state and federal regulatory officials with financial services authority access to any information provided to the Nationwide Mortgage Licensing System and Registry (NMLSR) without the loss of privilege or confidentiality protections provided by federal and state laws. This includes access to information provided to any system established by the Director of the Consumer Financial Protection Bureau.

Currently only those regulatory officials with mortgage oversight authority can access the NMLSR without loss of privilege or confidentiality.

H.R. 3696 would amend the Homeland Security Act of 2002 to require the Secretary of Homeland Security to, among other requirements, strengthen existing mechanisms such as the Financial Services Sector Coordinating Council and the Financial Services Information Sharing and Analysis Center that help the financial services sector identify threats, respond to cyber incidents and coordinate with government partners.  The legislation also seeks to improve the provisioning of security clearances for those involved in cybersecurity information sharing.                

Both bills will move onto the Senate for consideration.

Fixed-asset cap, mid-year budget on today's NCUA agenda

Washington
ALEXANDRIA, Va. (7/31/14)--Elimination of the 5% fixed-asset cap and a mid-year operating budget report highlight today's monthly National Credit Union Administration board meeting. Also on the agenda is a request for community charter expansion, a quarterly performance report on the National Credit Union Share Insurance Fund and a performance report for the NCUA's Guaranteed Notes.

The elimination of the fixed-asset cap represents a step away from micromanaging credit unions' individual business decisions, said NCUA Chair Debbie Matz last week. Fixed-asset issues have also been an area of focus for board member Rick Metsger since he joined the board in 2013.

The Credit Union National Association wrote to the board this week, praising the decision to re-examine the fixed-asset rules. The letter called the proposal a "useful step in simplifying and modernizing procedures for credit unions."

CUNA also requested the agency continue the trend of reducing its mid-year budget in each of the past several years. In addition, the letter calls on NCUA to work with other regulators to reduce credit unions' regulatory burdens.

The board will also hear a request for expansion of the community charter for Call FCU, a $360 million-asset institution based in Richmond, Va.

The meeting is scheduled to begin at 10 a.m. (ET), and videos of meetings are posted several weeks later. The board will not meet in August, the next meeting is scheduled for Sept. 18.

30 days added to CFPB complaint narrative comment period

Washington
WASHINGTON (7/31/14)--The Consumer Financial Protection Bureau received a number requests for a longer comment period on its recent proposal to allow consumers to include narratives along with complaints posted to the bureau's database and the CFPB has pushed the deadline out by one month.
 
Comments on the proposed policy originally were due Aug. 22: The new deadline is Sept. 22, which is 60 days from the date the proposal was published in the Federal Register .
 
When making the proposal public, CFPB Director Richard Cordray said allowing consumers to include narratives with their financial services complaints would provide important context that better explains the significance of the consumer's complaint--beyond the current high-level category buckets, such as "transaction issue" or "advertising and marketing." Cordray said.
 
Under the plan, a consumer's complaint narrative would only be published with the author's informed consent, and that consent could be withdrawn at any time. Companies would be able to publish their own responses that would appear next to the complaint narrative and the CFPB has said it would take "all reasonable steps" to remove personal information from both the complaint narrative and the company's response.
 
Use the resource links for more information.

Growth continues, interest rates could rise, says NCUA economist

Washington
ALEXANDRIA, Va. (7/31/14)--Increased loan demands, delinquency reductions and other positive performance indicators show an economy on the rise, but also bring the potential for higher interest rates, according to the latest economic update released by the National Credit Union Administration. NCUA Chief Economist John Worth discusses implications of a recovering economic on credit union balance sheets in the video.

"The recent economic news, especially about the labor market, has generally been very good. Consumer spending is been solid inflation, which is drawing more scrutiny as the labor market has improved, is being contained," Worth said. "The only soft spot has been uncertainty about the strength of the housing market demand. It reflects both lower [refinance] demand and what looks like a slowdown in investor purchases."

Outstanding consumer installment credit at all lenders was up 6.7% over the year ending in May, which represents the biggest 12-month increase since 2002. In the first quarter, outstanding new car loans rose 14%, and used auto loans amounted to about 20% of all loans.

According to the NCUA, outstanding consumer credit at credit unions continues to outpace lending at other institutions.

This growth may come with a rise in interest rates at the Federal Reserve begins to scale back stimulus activates, Worth said. Federal Reserve policymakers recently projected short-term interest rates will begin rising sometime in 2015 if the economy performs in line with current expectations.

Use the resource link below to view the video.

Court orders BoA to pay $1.3B for Countrywide's risk disguise

Washington
WASHINGTON (7/31/14)--Bank of America is the subject of a court order to pay a penalty in excess of $1.27 million in a case that charges that subprime lender Countrywide disguised risks associated with some of the mortgages it sold to the government-sponsored housing enterprises, Freddie Mac and Fannie Mae. A jury found Countrywide at fault.
 
According to Politico , Countrywide, which was acquired by BofA, was found to be disguising risky loans sold to Fannie and Freddie during 2007 and 2008, the years spanning the height of the country's financial crisis. The July 30 article noted that BofA and federal prosecutors have disagreed over the size of its fine, how many loans were actually sold through the so-called "hustle" scheme, and what amount of losses were realized.

Politico also reported that former Countrywide executive Rebecca Mairone, who was found to be involved in the scheme, separately was ordered to pay a civil penalty of $1 million, according to the order from U.S. District Judge in New York Jed Rakoff.

A BoA spokesperson was quoted as saying that the million-dollar plus penalty is out of line with a "limited" Countrywide program that lasted "several months" and ended before BoA's acquisition.

Other Resources

FHFA Announces Atlanta HARP Outreach Program

Washington
WASHINGTON (7/31/14)--Noting that Atlanta is one of the cities with the highest number of borrowers who could benefit from a federal mortgage refinancing program, the Federal Housing Finance Agency (FHFA) Wednesday announced an outreach event there for Aug. 14. It is intended to reach remaining homeowners who could benefit from the Home Affordable Refinance Program (HARP).
 
Atlantans have a lot of company in not accessing possible refinancing resources. According to a recently released study, close to one in five people who could have benefited by refinancing their mortgage after the financial crisis didn't do it. And $11,500 was the median amount of money they lost by sticking with their old loan, the study found ( Bloomberg Businessweek July 28). The study was authored by Benjamin Keys of the University of Chicago's Harris School of Public Policy, Devin Pope of Chicago's Booth School of Business, and Jaren Pope of Brigham Young University. (See resource link for more on this study.)
 
The FHFA said in its release that the HARP event will highlight the program's benefits and provide tools to help community leaders encourage the more-than 34,000 Atlanta area residents still eligible to participate in the program, which wraps up Dec. 31, 2015. The agency estimates that eligible borrowers could save as much as $2,000 each per year by refinancing.
 
FHFA and the U.S. Department of the Treasury introduced HARP in early 2009 and according to those program administrators more than 3.1 million homeowners have used it to refinance their home loans.
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