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News Now: August 19, 2014

CUs' down-payment programs help members achieve dreams

CU System
LINTHICUM, Md. (8/19/14)--Using down-payment assistance programs, credit unions across the country are helping members, particularly first-time homebuyers, finally achieve their dreams of homeownership.

In many cases, recent trends have shown, a clean bill of credit health and a strong income may not be enough to purchase a home, in large part because of the rising costs of plunking down a down payment.

Between 2007 and 2013, the average down payment on the most affordable properties climbed nearly $4,000 to $9,840 ( News Now Aug. 18).

But credit unions such as State Employees CU (SECU), Linthicum, Md., with $2.8 billion in assets, are stepping up to help those previously able to qualify for a loan, but unable to come up with funds necessary for a down payment.

Through SECU's "100% Mortgage Financing Program," for as little as $1,000 a member can purchase a home ( Herald-Mail Aug. 11).

"This is a product intended to help the local community," Kevin Kesecker, SECU vice president of lending, told the Herald-Mail. "The intent is to overcome the hurdle of a down payment."

Mountain America CU, West Jordan, Utah, with $3.9 billion in assets, has rolled out a similar program recently to help members buy their first homes.

The credit union's "First-Time Home Buyer Loan Program," features 100% financing; down payments of as little as $1,000; one, low payment; no income limitations; and no private mortgage insurance requirements, among other benefits.

Members who utilize the program also can have monthly payments taken directly from their checking or savings accounts.

Michigan Community CU, Jackson, Mich., meanwhile, was recently approved to provide loans through the Federal Home Loan Bank of Indianapolis' Homeownership Opportunities Program. The $123 million-asset credit union can now help first-time homebuyers at or below 80% of the area's median income with their down payments, plus their closing costs.

Beth Ploof, mortgage originator for Michigan Community CU, said that because the program will allow more people to purchase homes, it also will help improve the local economy.

"These funds are a life-changer in the best way," said the first credit union member to receive help on her down payment through the program, Alise.

Alaska primary will name Nov. opponent for Sen. Begich

WASHINGTON (8/19/14)--Today's Republican primary in Alaska will see three candidates vie for a spot in November's general election; Mead Treadwell, current lieutenant governor; Dan Sullivan, former state attorney general; and Joe Miller, a lawyer and former U.S. Magistrate judge.

The race is being watched closely by credit unions because the winner will run against incumbent Sen. Mark Begich (D). Begich was first elected in 2008 and is a longtime credit union supporter.

In July 2013 he wrote to the Senate Finance Committee supporting credit unions' tax status, saying it "should be retained in any tax reform effort, to ensure continued access to affordable credit for consumers, homebuyers and small businesses alike, all of which contribute substantially to economic growth."

Speaking at this year's Credit Union National Association Governmental Affairs Conference, Begich pledged his support for a bill that would raise the member business lending (MBL) cap from its current 12.25% of assets. He is also one of 32 senators to write to the National Credit Union Administration with concerns about its risk-based capital proposal.

Trey Hawkins, vice president of political affairs for CUNA, called Begich "one of the strongest credit union supporters in the Senate."

The Credit Union Legislative Action Council (CULAC), CUNA's federal PAC, has participated in more than 400 U.S. House and Senate races this year. CULAC has raised more than $3.5 million this election cycle, and its contributions are split almost evenly between the two major parties, with 50.01% going to Democrats, 49.85% going to Republicans and 0.14% going to independent candidates.

Along with the Begich race, a number of November races feature credit union-supported candidates in close races, including incumbents Sen. Mark Udall (D-Colo.) and Sen. Mitch McConnell (R-Ky.).

Udall has advocated for credit unions in many areas, including preserving their tax status, increasing the MBL cap, and weighing in with concerns regarding the federal risk-based capital proposal. McConnell was backed in his May primary by the Kentucky Credit Union League and will be throughout the campaign.

Another closely watched race will be in California's 31st District. The race features Democratic candidate Pete Aguilar, a former vice president of Arrowhead CU, based in San Bernardino, Calif. with $820 million in assets.

CULAC contributed a $197,189.03 independent expenditure for direct mail and digital advertising for Aguilar, both in English and Spanish, in addition to a $10,000 contribution to Aguilar's campaign.

Other Resources

Minn. CEO Cummins offers SuperValu breach advice

CU System
ST. PAUL, Minn. (8/19/14)--When reports surfaced that a major data-breach had hit the SuperValu grocery chain, which operates hundreds of grocery stores throughout the Midwest, media outlets called on a credit union leader to seek insight into how this will affect financial institutions.

While the scope of the breach may not be as great as other high-profile attacks, Minnesota Credit Union Network President/CEO Mark Cummins told the Minneapolis/St. Paul Business Journal (Aug. 15), financial institutions will still feel an impact.

"SuperValu and Cub Foods in particular are well-known brands that many credit union folks shop at," Cummins told the Business Journal .

And the cost of replacing credit and debit cards for credit unions can run between $5 and $10, Cummins said, adding the Target breach cost credit unions in Minnesota about $750,000.   

SuperValu reported last week that more than 200 locations had been infiltrated through its payments-processing systems between June 22 and July 17 of this year, and an investigation into the matter is under way.

The Credit Union National Association continues to urge Congress to address data security as it relates to merchants, who aren't held to the same standards as credit unions and other financial institutions.

Minnesota, meanwhile, isn't the only state that would be affected by a breach of SuperValu stores.

Illinois Educators CU, Springfield, Ill., with $50 million in assets, sent out a notification to members that the credit union is aware of the breach, which may have affected Illinois-based stores such as Shop 'n Save and Jewel-Osco, and that it will closely monitor any new information that materializes.

"We strongly advise members who may have shopped at any of the affected stores with their IECU debit or credit cards to closely monitor their accounts," an IECU press release said.

Additionally, the Los Angeles Times reported Friday that the grocery store chain Albertsons was attacked recently as well, affecting approximately 180 stores in Southern California, in addition to many others in several other states.

The Boise, Idaho-based chain also operates stores in Idaho, Montana, North Dakota, Nevada, Oregon, Washington, Wyoming and southern Utah. Albertsons said the breach occurred between June 22 and July 17.

Food security improved in Ethiopia with World Council program

CU System
MADISON, Wis. (8/19/14)--More than 44,600 farmers in three Ethiopian regions increased crop yields and incomes with the support of a development program from the World Council of Credit Unions.
Click to view larger image After receiving chickens through the World Council of Credit Union's program, more than 3,800 model farmers in Ethiopia generated higher household incomes through increased egg production. (World Council of Credit Unions Photo)
The World Council worked with farmers and 165 rural savings and credit cooperatives (RuSACCOs) in Tigray, Oromia and Amhara to expand financing for agriculture and to promote savings.
Farmers learned how to transition to commercial food production from subsistence farming, learning soil and water conservation techniques along the way.
They also were trained on planting techniques and crop diversification that produced higher quality and more nutritious food.
By the end of the program, savings per RuSACCO member increased 89%, and loans per member increased by 167%.
Primary crops were introduced to diversified vegetable and grain crops that increased farmers' incomes by 129%. Secondary crop production--up by 150%--allowed farmers to continue to grow food for their families despite severe drought conditions.
The 2009-2014 program was funded by the monetization of 23,000 tons of wheat through the U.S. Department of Agriculture's Food for Progress program.

Webinars scheduled for TILA/RESPA integration

WASHINGTON (8/19/14)--With less than a year remaining until the new Truth in Lending Act/Real Estate Settlement Procedures Act (TILA/RESPA) rule goes into effect, several organizations are holding educational workshops to provide information about the rule and its implementation. The rule, which has a mandatory compliance date of Aug. 1, 2015, consolidates existing mortgage disclosures required under TILA/RESPA into two integrated forms.

CUNA Mutual Group will host a free webinar at noon (ET) today, the first in a series, designed to help credit unions understand the new rule, its impacts and how to comply.

Compliance experts will explain how the new rule may require changes to the mortgage lending process, as well as require system changes to complete the new required disclosures for mortgages and closed-end home equity lending.

"Overall, TILA/RESPA will directly affect the people, processes and technology credit unions use to support their lending operations because the regulations require loan disclosures to change dynamically to reflect each borrower's unique loan features," said Jon Bundy, regulatory compliance manager for CUNA Mutual Group. "Specifically, the rule will impact credit unions' relationships with their system providers, and most importantly, their members and their own staff."

The Consumer Financial Protection Bureau (CFPB) will host a webinar, the bureau's second in a continuing series, Aug. 26. This event is meant to address specific questions related to rule interpretation and implementation challenges that have been raised to the bureau.

Questions have been submitted by creditors, mortgage brokers, settlement agents, software developers and other stakeholders. According to the CFPB, future sessions will continue to address specific questions and challenges.

The CFPB's previous webinar was June 17, and the bureau will continue to host similar sessions throughout the implementation process. A recording of the June 17 webinar is available on the bureau's TILA/RESPA Integrated Disclosure rule homepage (see resource link).

The Aug. 26 webinar is scheduled to begin at 2 p.m. (ET).

The Credit Union National Association continues to meet frequently with the CFPB concerning rule implementation resources and efforts, and also to reiterate ongoing concerns with TILA/RESPA implementation requirements and associated regulatory burdens for credit unions.

CUNA is also working on a collection of resources designed to guide credit union compliance with the new rules, which should be online in the coming weeks.

Use the resource links below for more information.

Eight new ideas hatched from Filene innovation incubator

CU System
MADISON, Wis. (8/19/14)--Credit unions have started exploring the latest ideas to come from the Filene Research Institute's i3 group.
The i3 group focuses on ideas, innovation and implementation--as its name signifies--in the credit union marketplace. The eight newest ideas from the group cover relationships--with employees, with borrowers, with teens, with third parties and with new credit unions. They are:
  • Knowledge transfer doesn't apply just to credit union operations. Employees' First leverages the collective experiences of credit union employees for life's challenges such as a death in the family, buying a house or student loans. The Employees' First initial study found, the more knowledge employees had of a topic--perhaps even firsthand--the more comfortable they felt in providing guidance.
  • When member inquiries are pouring in about a slow web site or stalled mobile banking, member-facing staff may not know what is causing the problem. The information technology department may just be learning of an issue with a vendor. That's where Status Track comes in. It gives members and staff a snapshot of what is going on--green for all systems go; yellow representing regularly scheduled maintenance or partial service interruption; and red indicating a system outage.
  • MyDime gives members the power to structure a loan that fits their budget. The app, aimed at users age 18-34, takes the member through the steps needed to set up the loan and, ultimately, fund and sign for the loan. As the member walks through the process, he also can see how the loan will affect his credit score.
  • Young adults with a thin credit history--either little or no credit usage--could turn to the Independence Card. Aimed at 18- and 19-year-olds, the Independence Card incents young members to use credit responsibly by offering redeemable rewards and a step-up credit card upon hitting age 20.
  • Reviews of third-party vendors would populate CU Crowd Speak, a project that would allow credit unions to share experience with service providers in a Yelp-type environment.
  • Dream Ride seeks to weave the many parts of the car-buying experience--choosing a car, finding out gas and insurance costs, locating a dealer, getting a loan--into one app.
  • Credit unions can help connect their member small businesses with the community with Members Market, which increases the profile of local businesses to the credit union's membership.
  • Reducing the challenges of switching pre-authorized payments when opening a new account, Switch Ninja automated the transfer of billing information. A test run by Canada's Valley First CU resulted in less "switch pain" for both staff and members.
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