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Guarantee Fee Delay Backed by CUNA

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WASHINGTON (1/9/14)--Credit Union National Association President/CEO Bill Cheney on Wednesday lauded new Federal Housing Finance Agency Director Mel Watt's decision to delay planned guarantee fee increases.

CUNA in recent weeks urged the FHFA not to go forward with these fee increases.

Under former acting Director Ed DeMarco, the FHFA had planned to increase base guarantee fees for all mortgages by 10 basis points, update the up-front guarantee fee grid to better align pricing with the credit risk characteristics of the borrower, and eliminate the up-front 25 basis point adverse market fee, except in the four states whose foreclosure carrying costs are more than two standard deviations greater than the national average.

The FHFA said these fee structure changes would result in average guarantee fee increases of approximately 11 basis points based on loan purchases of Fannie Mae and Freddie Mac in the third quarter of 2013.

"Over the last several years the FHFA has continued to allow guarantee fees to steadily increase, making home lending unnecessarily expensive for lenders and borrows. For the benefit of many American homebuyers, we hope that moving forward the FHFA will help curtail these fee increases," Cheney said.

Watt in a Wednesday release said he will thoroughly evaluate the proposed fee changes as expeditiously as possible, and would give not less than 120 days' notice after completing the evaluation before implementing any changes. Watt said he wants to fully understand the impact fee changes could have on mortgage credit availability, and how these changes might interact with the new qualified mortgage standards, before deciding whether to move forward with any adjustments.

Cordray Comments on CUs Ahead of Mortgage Rule Release

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WASHINGTON (1/9/14)--Consumer Financial protection Bureau Director Richard Cordray again confirmed that credit unions will be permitted to make non-qualified mortgage (QM) loans, and reiterated that the bureau will reexamine its regulations to determine their impact on financial institutions, in comments made ahead of this week's new mortgage rule effective date.

In remarks reported in The Daily Caller, Cordray noted that QMs cover the vast majority of mortgage loans, but do not represent all of the mortgage market. Credit union mortgages have seen strong results over time, he added.

Cordray also sought to allay fears about burdens created by the impending regulations in a USA Today editorial. The bureau, he said, will not require loads of red tape: "Lenders will likely ask a potential home buyer for proof of things such as income or assets--the kinds of things responsible lenders like our good community banks and credit unions have been asking for all along," Cordray wrote.

And, as reported in American Banker, Cordray told attendees at a National Association of Realtors discussion that the CFPB will listen to the concerns of credit unions, financial institutions, realtors and others after the new mortgage rules become effective. The CFPB will react to changes in the market, he said.

Housing Reform Still a Concern in 2014, CUNA Notes

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WASHINGTON (1/9/14)--Healthcare reform, regulatory issues, foreign policy and appropriations are among House Majority Leader Eric Cantor's (R-Va.) list of January priorities for Republican U.S. House members. While housing finance reform was not mentioned in a recent Cantor memo to Republican colleagues, Sam Whitfield, Credit Union National Association vice president of legislative affairs, said this does not mean that issue has been moved to the back burner.

The Senate Banking Committee held weekly hearings on the topic late last year, and is still working to craft plans for a future housing finance market. House Financial Services Committee Chairman Jeb Hensarling (R-Texas) also continued to press for Federal Housing Agency reforms as recently as last month, and he continues to promote his bill, the "Protecting American Taxpayers and Homeowner (PATH) Act of 2013" (H.R. 2767). The PATH Act would phase out government-sponsored enterprises Fannie Mae and Freddie Mac within five years, end the federal government guarantee and reduce government involvement in the housing finance system, and give consumers more choices in determining which mortgage product best suits their needs.

CUNA continues to advocate for credit unions as housing reform moves forward. CUNA has repeatedly said that credit unions appreciate the need to reform the current housing finance system, but any reforms must not hinder the ability of credit unions to meet their members' housing finance needs in a member-friendly cooperative way. CUNA has also said that the transition from the current system to any new housing finance system must be reasonable and orderly, and the transition deadline needs to be flexible.

Other CUNA suggestions for a future mortgage market include:
  • There must be a neutral third party in the secondary market, with its sole role as a conduit to the secondary market;
  • The secondary market must be open to lenders of all sizes on an equitable basis;
  • The new housing finance system should emphasize consumer education and counseling as a means to ensure that borrowers receive appropriate mortgage loans;
  • The new system must include consumer access to products that provide for predictable, affordable mortgage payments to qualified borrowers; and
  • The new housing finance system should apply a reasonable conforming loan limit that adequately takes into consideration local real estate costs in higher cost areas.
Credit unions must also remain vigilant as tax reform discussions resume this month.

CUNA is watching out for the release of more tax reform discussion drafts in the coming weeks, and continues to encourage credit unions and their members to use CUNA and state credit union league resources, social media sites including Facebook, and micro-video site Vine, to tell their legislators, "Don't Tax My Credit Union!"

Obama Sends McWatters NCUA Nom to Senate

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WASHINGTON (1/9/14)--Mark McWatters' nomination to serve on the National Credit Union Administration board has been sent to the U.S. Senate by President Obama.

"This is a pro forma step in the process that formally puts the nomination in the hands of the Senate. Now, the Banking Committee will begin their vetting process in advance of an eventual hearing," Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said.

Obama announced his intent to nominate McWatters in mid-December. McWatters' nomination is subject to a nomination hearing by the U.S. Senate Banking Committee and a confirmation vote by the Senate.

If confirmed, McWatters would replace board member Michael Fryzel, whose term ended Aug. 2 last year, but he is allowed to continue serving until another board member is confirmed.

NCUA, CFPB to Hold Joint Town Hall Webinar

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ALEXANDRIA, Va. (1/9/14)--National Credit Union Administration Chairman Debbie Matz and Consumer Financial Protection Bureau Director Richard Cordray will join forces for a Feb. 12 town hall webinar.

The 3 p.m. (ET) webinar will feature a broad discussion of federal financial consumer protection regulation. "This webinar will be a great opportunity for credit union leaders and compliance officials to engage their regulators and get answers to important questions, especially on CFPB's new mortgage rules," Matz said. The CFPB's Qualified Mortgage and Ability-to-Repay rules go into effect this Friday.

Use the resource link below for registration information. During the webinar, participants will be able to type in questions about any topic relating to the credit union industry or the work of CFPB.

Participants may also submit questions to the agency in advance of the session at WebinarQuestions@ncua.gov. The subject line of the email should read "NCUA-CFPB Town Hall."

Just this week, the NCUA issued a Letter to Credit Unions (14-CU-01) that pledged the agency's field staff will take into account a credit union's good-faith efforts to comply with the new qualified mortgage regulations as they conduct their early-stage examinations. Use the second resource link to access the guidance.

N.Y. Rep. McCarthy To Retire

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WASHINGTON (1/9/14)--New York Rep. Carolyn McCarthy (D), who has represented Long Island's 4th Congressional District since 1996, will reportedly not seek reelection this year. She plans to retire at the end of her current term.

McCarthy is a chief co-sponsor of Credit Union Small Business Jobs Creation Act (H.R. 688), which would increase the credit union member business lending cap to 27.5% of assets, from the current 12.25%-of-assets level. She was also a key player in the 2010 passage of the Dodd-Frank Wall Street Reform Act.

Speaking at the Credit Union National Association's 2012 Governmental Affairs Conference, McCarthy supported credit unions work to support their communities, help small businesses and "get the economy going."

The congresswoman is a Financial Services Committee member, is the ranking Democrat on the international monetary policy and trade subcommittee, and also serves on the financial institutions and consumer credit subcommittee.

CUNA, Partners Oppose G-Fees' Use As Revenue Makeweight

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WASHINGTON (1/9/14)--Credit risk guarantee fees charged by government-sponsored enterprises Fannie Mae and Freddie Mac must not be used to offset the cost of the Emergency Unemployment Compensation Extension Act (S. 1845), or any other longer-term solution that could emerge in either chamber, the Credit Union National Association said in a Wednesday letter to members of the U.S. Congress.

In the letter, CUNA and others noted that guarantee fees (g-fees) are a critical risk management tool used by Fannie Mae and Freddie Mac to protect against losses from faulty loans. Increasing guarantee fees for other purposes effectively taxes potential homebuyers and consumers wishing to refinance their mortgages, the letter added.

"Though we are seeing signs of improvement in the real estate sector, we must avoid taking any steps that could keep housing consumers on the sidelines and hinder that recovery," the letter said.

The letter was cosigned by the American Bankers Association, American Land Title Association, Community Mortgage Lenders of America, Housing Policy Council, Mortgage Bankers Association, National Association of Federal Credit Unions, National Association of Home Builders and the National Association of REALTORS®.