Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive

Washington

NEW: NCUA approves high-risk mortgage appraisal rules

 Permanent link
WASHINGTON (UPDATED: 3:30 p.m. ET, 1/15/13)--The National Credit Union Administration and federal bank regulators have approved new higher-risk mortgage appraisal requirements.

The regulations will require lenders offering higher-risk mortgages to use licensed or certified appraisers who prepare written reports, based on physical inspections of a home's interior, when they determine the value of a given home.

Mortgage lenders will also be required to provide homebuyers with a free copy of the resulting home appraisal report. If the seller of a given home has purchased the home for less than the current sale price within the last six months, an additional appraisal document will also need to be provided to the homebuyer. The document will need to detail the difference in sale prices, any changes in market conditions, and any improvements that have been made to the property since it was purchased by the current owner. This requirement is an attempt to address fraudulent property flipping.

High-priced mortgages will be considered non-qualified residential mortgages that are secured by a principal dwelling with annual percentage rates that exceed the average prime offer rate by 1.5% for first-lien loans, 2.5% for first-lien jumbo loans, and 3.5% for junior lien loans.

Safe harbors and exemptions will be provided in some cases.

The higher-risk mortgage appraisal requirements will go into effect on Jan. 18, 2014. The Credit Union National Association is analyzing the NCUA regulations and will post a summary soon.

The new mortgage appraisal requirements are mandated by the Dodd-Frank Wall Street Reform Act. They are a joint rulemaking effort between the NCUA, Consumer Financial Protection Bureau (CFPB), Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and other federal financial agencies.

For the full regulation, as approved by the FDIC today, use the resource link.

The CFPB's version of these regulations will likely be released when that agency holds an Atlanta, Ga. mortgage issues hearing on Jan. 17. Pam Davis of Delta Community CU, Atlanta, Ga., and other credit union representatives from that state will join Georgia Credit Union League leaders at that hearing. Davis is set to speak on behalf of her credit union and CUNA during the hearing.

Relief comes three ways with NCUA 'small CU' action: CUNA

 Permanent link
ALEXANDRIA, Va. (1/15/13)--Credit unions will see some real regulatory relief after last week's National Credit Union Administration action to increase the asset-size threshold that defines a "small" credit union. The threshold was raised to $50 million as recommended by the Credit Union National Association, up from $10 million.

"There are at least three areas where this new threshold will make a real difference for covered credit unions struggling with regulatory burdens," CUNA Deputy General Counsel Mary Dunn said Monday.

The threshold increase means that two-thirds of all credit unions are exempt from the following NCUA rules:
  • Interest Rate Risk (IRR) regulations; and
  • Prompt corrective action (PCA) risk-based net worth requirements.
Also, for all future rulemakings, the NCUA must now consider credit union with less than $50 million in assets, rather than $10 million, in determining burdens and possible exemptions.

The NCUA's IRR rule requires credit unions to develop and maintain a written IRR policy and an IRR management program. The agency has also tied National Credit Union Share Insurance Fund coverage to compliance with this IRR rule, in some cases.

Under PCA rules for credit unions, as an institutions capital level deteriorates, its CAMEL rating goes up. When that happens, regulators are required to increase supervision and take actions meant to force management to make improvements.

Dunn said the NCUA's pending emergency liquidity rule is one rule that the agency may need to reconsider. That rule, as currently proposed, would:
  • Require federally insured credit unions (FICUs) with less than $10 million in assets to maintain basic written emergency liquidity policies;
  • Require FICUs with assets of $10 million or more to develop contingency funding plans describing how their credit union would address liquidity shortfalls in emergency situations; and
  • Require FICUs with assets of $100 million or more to have access to a backup federal liquidity source for emergency situations.
The threshold increase will also make assistance from the NCUA's Office of Small Credit Union Initiatives (OSCUI) available to more than 4,600 credit unions--an increase of 2,270. However, the agency has noted that OSCUI grants are still only available to designated low-income credit unions, not all "small" credit unions.

CUNA has also noted that the threshold increase does not impact the agency's determination of which credit unions get streamlined examinations. While that issue is under separate consideration, the $10 million threshold will continue to apply, at least for this year.

Inside Washington (01/15/2013)

 Permanent link
  • WASHINGTON (1/15/13)--The Senate is out of session this week, and the U.S. House will hold a shortened session before breaking on Wednesday. The House Republican Caucus has scheduled its policy retreat on Thursday and Friday of this week. Both chambers are expected to be in session next week following the presidential inauguration, but their agendas are expected to be light until President Barack Obama delivers his State of the Union Address on February 12 ...
  • WASHINGTON (1/15/13)--The U.S. government has filed court papers objecting to a plan by Residential Capital LLC, the bankrupt subprime mortgage lending unit of Ally Financial Inc., to pay up to $33.4 million in annual bonuses to about 3,000 of the company's 3,926 employees (American Banker Jan. 14 ). ResCap has operated under bankruptcy protection since May. Providing employees with annual discretionary payments that have historically been a part of their compensation is a normal component of conducting business, ResCap lawyers maintain. But ResCap's plan to pay bonuses cannot be considered ordinary business because the company sought bankruptcy protection with the goal of winding down its operations, U.S. Trustee Tracy Hope Davis said in court papers filed Thursday in U.S. Bankruptcy Court in Manhattan …

Tell your exam stories now: CUNA survey deadline is today

 Permanent link
WASHINGTON (1/15/13)--Today is the final day for credit unions to detail their experiences with on-site National Credit Union Administration and state regulatory examinations by taking part in the Credit Union National Association's exam survey.

The survey asks credit unions to tell their examinations stories and to describe their satisfaction level with both the federal and state examinations process.

CUNA and state credit union leagues developed and released the short survey to give all credit unions a chance to describe the strengths and weaknesses of the system. The information gleaned from the survey responses will help CUNA and the leagues hone their exam issue advocacy efforts.

Survey replies are confidential, and identifying information from individual credit union respondents will not be seen by individuals outside of CUNA's Market Research Department. Only summary results will be reported.

CUNA members may use the resource link below to access the exam survey.

CUNA turns spotlight on CU concerns at second CFPB mortgage field hearing

 Permanent link
WASHINGTON (1/15/13)--Pam Davis of Delta Community CU, Atlanta, Ga., will bring credit union concerns regarding changing mortgage rules to the forefront during a Thursday Consumer Financial Protection Bureau (CFPB) field hearing.

Davis is one of 20 credit union representatives from across Georgia that are planning to attend the CFPB field hearing this week, alongside Georgia Credit Union League leaders. She will speak on behalf of her credit union and the Credit Union National Association.

CFPB Director Richard Cordray will speak during the event and field hearing attendees will also hear testimony of consumer groups, mortgage industry representatives, and members of the public. The league and credit union officials will also meet directly with CFPB Director Richard Cordray after the field hearing has concluded.

The hearing is scheduled to begin at 11 a.m. ET on Jan. 17 at the Rialto Center for the Arts at Georgia State University. This is the second hearing of its kind held this month. SECU of Maryland President/CEO Rod Staatz told the CFPB that "credit unions remain very concerned that they will be subject to a barrage of requirements even though they did not cause the financial crisis" during a Jan. 10 mortgage issues field hearing in Baltimore, Md. (See Jan. 11 News Now story: SECU's Staatz to CFPB: Contain CU reg burden)

CUNA anticipates that final rules addressing mortgage loan originator compensation, mortgage servicing and higher-priced mortgages may be released by the CFPB this week.

These regulations are among a number of final rules that the CFPB must release by Jan. 21.

Last week, the agency unveiled final rules regarding ability to repay requirements, escrow accounts, and "high-cost" mortgages. (See Jan. 11 News Now story: CFPB QM, ability-to-repay rules are out, CUNA provides summary)

Key rosters on Capitol Hill feature CU supporters

 Permanent link
WASHINGTON (1/15/13)--Committees of prime interest to credit unions continue to solidify their membership rosters for the 113th Congress, and Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan notes a number of these committee members have close ties to credit unions.

"We see a lot of credit union friendly faces taking seats in these committee lineups," Donovan said. "We look forward to working with all members of key committees as the 113th Congress begins its work."

Donovan added, "While we have many credit union supporters in Congress, credit unions continue their hard work to educate all lawmakers about the credit union difference in 2013."

Among the credit union-friendly are:
  • Rep. Dave Camp (R-Mich.), chairman of the powerful House Ways and Means Committee, which writes the country's tax laws. Camp has praised credit unions for their consumer-friendly work, and has endorsed the tax status of credit unions; and
  • House Ways and Means ranking minority member Sander Levin (D-Mich.), who has repeatedly praised credit unions, and called re-examination of credit unions tax-exempt status unnecessary and unwise in the past.
Donovan noted that Senate Finance Committee Chairman Max Baucus (D-Mont.) and ranking member Orrin Hatch (R-Utah) have also had many positive things to say about credit unions. Support is similarly strong in the Senate Banking and House Financial Services Committees, he noted.

The majority of the 16 newly named House Financial Services Committee members received support from state credit union leagues and CUNA's Credit Union Legislative Action Council, and many have worked closely with their respective state leagues. New House Financial Services Committee member Denny Heck (D-Wash.) is one key credit union supporter in the new Financial Services Committee lineup. Heck is a former marketing director for Columbia CU, Vancouver, Wash., and was supported in his 2012 campaign by CUNA and the Northwest Credit Union Association.

Other financial services committee members that have worked closely with their state credit union leagues include:
  • Kyrsten Sinema (D-Ariz.);
  • Ann Wagner (R-Mo.);
  • Bill Foster (D-Ill.);
  • Mick Mulvaney (R-S.C.);
  • Joyce Beatty (D-Ohio); and
  • Dennis Ross (R-Fla.).