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Washington Archive

Washington

NEW: NCUA letter to CUs cites 2013 exam goals

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ALEXANDRIA, Va. (1/31/13, UPDATED 3:50 p.m. ET)--Increased clarity in its guidance to it examiners and more consistency in its examination practices is a key supervisory focus of the National Credit Union Administration this year, said NCUA Chairman Debbie Matz in a Letter to Federally Insured Credit Unions released today.

"As a regulator and insurer, NCUA's goal is a strong, safe credit union system. To that end, NCUA continues to incorporate lessons learned and feedback from credit unions into our

examination approach," Matz said to open her letter to credit union directors and CEOs.

Areas in which NCUA will strive to enhance the clarity of examiners include member business lending (MBL), credit rating, and troubled debt restructurings (TDRs).

Matz said credit unions can expect a supervisory letter to add clarity to the process and expectations for MBL rule waiver requests. The letter will address, in particular, waivers for personal guarantees and blanket waivers versus individual loan waivers for aspects of the MBL rule. The guidance will also focus on appropriate underwriting and credit monitoring systems for MBLs, Matz said.

The agency also will issue follow-on guidance for examiners and credit unions on complying with the final rule, required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, replacing the use of credit ratings with alternative standards to assess the creditworthiness of securities and money-market instruments.

Also, based on the final NCUA rule on TDRs, the NCUA will provide additional guidance for examiners on examining for compliance with the rule's requirements and the credit union's accounting practices

related to TDRs.

Matz indicated that examiners will combine an awareness that federally insured credit unions continue to exhibit positive trends in most key while also continuing to evolve and face various economic and operational challenges.

The letter said examiners will evaluate a credit union's capacity to manage risk in the following areas:

  • Operational risk involving technology and internal controls; and,
  • Balance sheet management, including interest rate and liquidity risk, concentration risk--where a credit union might offer "too much of a good thing," and risk that can be associated with offering less established or complex products.
Use the resource link below to read the NCUA letter.

CUNA, NACHA seek comment on payment, account validation issues

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WASHINGTON (1/31/13)--The Credit Union National Association and the Electronic Payments Association (NACHA) are working together to collect comment on two key issues: credit union online bill payment and automated clearinghouse (ACH) network needs, and electronic account validation from a consumer or business.

To gather information on online bill payment and ACH network issues, CUNA has asked credit unions to answer the following questions:

  • Is your credit union a "biller" (e.g., provides consumer loan, credit card, mortgage loan, or other consumer product)?
  • If yes, is your credit union receiving checks from online banking/bill payment providers for your consumer bill payments?
  • If yes, is your credit union interested in learning more about how to receive ACH credit payments instead of checks for these bill payments?
CUNA has asked credit unions to send their responses to CUNA Regulatory Counsel Dennis Tsang at dtsang@cuna.com . Responses will be accepted until Feb. 4.

NACHA is accepting public comment through an account validation industry survey. The survey requests feedback on the industry's current use of account validation services as well as input on requirements when considering account validation services for ACH payments.

Survey responses are confidential and anonymous and findings will only be shared in aggregate. The survey results will help inform NACHA's ongoing evaluation of potential ACH Network enhancements.

To access the survey, use the resource link. NACHA will accept survey responses until Feb. 12.

Hensarling: First Financial Services hearings will address FHA

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WASHINGTON (1/31/13)--The first House Financial Services Committee hearing of 2013 has now been set: Committee Chairman Rep. Jeb Hensarling (R-Texas) has announced the committee will discuss Federal Housing Administration (FHA) issues on Feb. 6.

The FHA's financial condition and its role in the U.S. housing market will be addressed by housing finance experts, analysts and committee members during the Feb. 6 hearing. The FHA on Wednesday also announced a series of steps to help improve its financial condition.

The hearing will be one of several scheduled throughout the year, Hensarling said in a Wednesday release. FHA Commissioner Carol Galante will testify before the committee on Feb. 13, and more hearings will be held at the full committee and subcommittee levels, the chairman added.

The FHA's single-family insurance fund is facing a projected shortfall of $16.3 billion due to mortgage loan defaults by borrowers. "The FHA is broke--bailout broke. We need a sustainable mortgage finance system that gives hardworking Americans opportunities to buy homes they can actually afford to keep," Hensarling said. He also called for serious reforms to the agency.

The FHA on Wednesday announced some of its own reforms, which aim to improve its financial condition and manage and protect its single-family insurance programs. The changes will also "encourage the return of private capital to the housing market, and make sure FHA remains a vital source of affordable and sustainable mortgage financing for future generations of American homebuyers," Galante said.

The FHA said changes will include:

  • Increasing annual mortgage insurance premiums for most new mortgages by 10 basis points (bp), or by 0.10%;
  • Increasing premiums on mortgages of $625,500 or more by 5 bp, or 0.05%, to the maximum authorized annual mortgage insurance premium;
  • Requiring most FHA borrowers to continue paying annual premiums over the life of loan;
  • Requiring lenders to manually underwrite loans for which borrowers have a decision credit score below 620 and a total debt-to-income ratio greater than 43%; and
  • Consolidating the Standard Fixed-Rate Home Equity Conversion Mortgage (HECM) and Saver Fixed Rate HECM pricing options.
The FHA said it will soon propose increasing the minimum down payment requirement for home purchases of $625,500 or more to 5%.

For more on the hearings and FHA changes, use the resource link.

CFPB mortgage changes detailed in CUNA chart

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WASHINGTON (1/31/13)--Credit unions looking for analysis of the many new mortgage regulations unleashed by the Consumer Financial Protection Bureau this month can turn to a final rule analysis just issued by the Credit Union National Association, which features a chart listing the rules and their key components in a new chart.

The chart, entitled "Mortgage Lending Rules--New CFPB rules finalized in 2013," is divided into three columns:
  • The first column summarizes key requirements in each of the CFPB's mortgage loan final rules;
  • The second column defines the type of mortgage loans covered by each of the final rules; and
  • The third column provides links to the CFPB's final rules and summaries of the rules and will link to CUNA's Final Rule Analyses as they become available.
The chart also provides details concerning the CFPB's proposed Truth in Lending Act/Real Estate Settlement Procedures Act mortgage loan integration rule. That rule is expected to be finalized in September.

"In a sense this is a 'living' chart--it will grow and be updated and so should be reviewed for important additions periodically," CUNA Senior Compliance Counsel Mike McLain said Wednesday.

For the full chart, use the resource link. It can also be found in CUNA's eGuide to Federal laws and Regulations, which is posted on the cuna.org website.

CFPB mortgage regulations were also addressed in a Wednesday Policyworks/CUNA webinar. The webinar addressed the CFPB's ability to repay/qualified mortgage regulations, high-cost mortgage rule and escrow rule.

Policyworks is planning to write up portions of the question and answer section from the webinar, and will post that archived information in mid-February. An archived version of the webinar will be posted soon on cuna.org.

Mortgage servicing, appraisals and mortgage loan originator compensation regulations will be addressed in a followup webinar on Feb. 12.

Reg B appraisal rules subject of new CUNA analysis

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WASHINGTON (1/31/13)--New Consumer Financial Protection Bureau rules that require mortgage lenders to provide applicants with free copies of all appraisals and other home-value estimates are broken down in a new Credit Union National Association final rule analysis.

The appraisal rule, issued under Regulation B, implements changes to the Equal Credit Opportunity Act (ECOA) that were made under was required under the Dodd-Frank Wall Street Reform and Consumer Protection Act. It is intended to ensure that consumers can receive information prior to a loan closing about how the property's value was determined.

The final rule also requires creditors to:

  • Inform consumers within three days of receiving an application for a loan of their right to receive copy of all appraisals; and
  • Provide the copies of appraisal reports and other written home-value estimates to consumers promptly, or three days before closing, whichever is earlier.
The new rule eliminates an exemption for federal credit unions that was included in the Federal Reserve's 1993 rule because the National Credit Union Administration had a similar rule requiring free reports be provided only when requested.

The requirements go into effect on Jan. 18, 2014. They will apply to first-lien mortgages.

This final rule analysis is the first in a series. CUNA also plans to report on the details of other mortgage issues addressed by recent CFPB regulatory releases, including:

  • Mortgage servicing;
  • Mortgage loan originator compensation;
  • Higher-priced mortgage appraisals;
  • Ability-to-repay requirements;
  • Escrow accounts; and
  • "High-cost" mortgages.
For the final rule analysis, use the resource link.