Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive

Washington

CUNA: Reducing Mortgage Limits Would Disrupt Housing Recovery

 Permanent link
WASHINGTON (10/10/13)--Reducing the size of mortgages that Fannie Mae and Freddie Mac can finance "would have a very disruptive impact on the availability of affordable housing credit," the ongoing housing recovery and the economy as a whole, the Credit Union National Association said in a joint letter sent to Federal Housing Finance Agency Acting Director Ed DeMarco Wednesday.

The letter follows a recent FHFA announcement that it is considering reducing Fannie Mae and Freddie Mac loan limits. Any change would be implemented on Jan. 1, 2014.

"Not only is lowering loan limits bad for housing, we question to what extent FHFA's authority would allow for such a change considering congressional intent when passing [the Housing and Economic Recovery Act (HERA) of 2008] was certainly opposed to a reduction," the letter said. HERA clearly indicates that the maximum loan limits for loans taken on by Fannie and Freddie shall not drop below the current limit of $417,000, the letter added.

"Lowering the loan limits further restricts liquidity and makes mortgages more expensive for households nationwide. Without affordable financing, families are unable to purchase or refinance homes, and those who wish to sell find it more difficult, all of which will continue to prolong our housing crisis," the cosigners wrote.

The letter was co-signed by the American Escrow Association, American Financial Services Association, American Land Title Association, Asian Real Estate Association of America, Coalition of US Mortgage Insurers, Community Home Lenders Association, Community Mortgage Lenders of America, Leading Builders of America, Mortgage Bankers Association, National Association of Federal Credit Unions, National Association of Hispanic Real Estate Professionals, National Association of Home Builders, National Association of REALTORS® and The Realty Alliance.

NEW: NCUA Approves Northern Eagle FCU Charter

 Permanent link
ALEXANDRIA, Va. (UPDATED: 1:40 P.M. ET, 10/10/13)--Northern Eagle FCU, Minnesota, a multiple common-bond credit union that will serve the 4,900 members and employees of the Bois Forte Band of Chippewa, is now the first new federal credit union of 2013. Approval of the credit union's charter was announced by the National Credit Union Administration today.

Every American deserves access to affordable financial services, but many Native Americans unfortunately lack access to federally insured financial services providers or only have access to predatory lenders," NCUA Chairman Debbie Matz said. "The chartering of Northern Eagle Federal Credit Union addresses a real need," and the credit union "has the potential to play an important role in improving the lives and financial well-being of Northern Minnesota's Chippewa communities," she added.

The low-income designated credit union (LICU), which is sponsored by the Bois Forte Band of Chippewa Reservation Tribal Council, is scheduled to open in December. Members will be able to access regular share accounts, unsecured loans, other secured loans, share drafts, credit repair loans, prepaid debit cards, share certificates, anti-predatory loans, money orders, club accounts, share secured loans, cashier checks, non-member deposits, auto loans and direct deposit within the first year of the credit union's operation. The credit union also plans to offer online banking services, and financial literacy education will also be an area of emphasis.

The LICU designation brings benefits that include the ability to accept supplemental capital and an exemption from the 12.25%-of-assets MBL cap under certain circumstances.

For more on the new credit union, use the resource link.

Federal Regulators To Financial Institutions: Work With Furloughed Employees

 Permanent link
WASHINGTON (10/10/13)--The National Credit Union Administration on Wednesday joined its fellow financial regulators to urge credit unions and other financial institutions to work with customers affected by the federal government shutdown.

"Prudent workout arrangements that are consistent with safe-and-sound lending practices are generally in the long-term best interest of the financial institution, the borrower, and the economy," the agencies said in a release. The release also encouraged consumers impacted by the shutdown to reach out to their lenders immediately if financial hardship occurs.

The release was co-signed by NCUA, the Federal Reserve, Consumer Financial Protection Bureau, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency.

The regulators noted that borrowers affected by the shutdown "may face a temporary hardship in making payments on debts such as mortgages, student loans, car loans, credit cards, and other debt."

Credit unions and other financial institutions should "consider prudent workout arrangements that increase the potential for creditworthy borrowers to meet their obligations."

Many credit unions have already heeded this call, and are helping their members work through this government impasse.

Dozens have reported to News Now on their efforts, and others have been spotlighted in local news coverage. A few examples of the measures credit unions have taken include:
  • Cabrillo CU, San Diego, Calif.'s decision to roll out a 0% loan, with a line of credit equal to an employee's last full paycheck, up to $2,500;
  • Offering advice through the media to the general public about the best way to manage finances during the furloughs;
  • Hawaii State FCU, Honolulu's, offering of penalty-free term share withdrawals and one- to three-month deferment of loan payments;
  • Community CU, Rockledge, Fla.'s, offering of 0% loans and fee waivers on early withdrawals on share certificates; and
  • Coloramo FCU, Grand Junction, Colo.'s, waiving of a $30 Skip-a-Payment fee and offer of up to three months of personal loans in the amount of a member's paycheck.
Use the resource link for more coverage of credit union efforts to support furloughed members.

HMDA Re-submission Schedule, Guidelines Released By CFPB

 Permanent link
WASHINGTON (10/10/13)--New Home Mortgage Disclosure Act (HMDA) Resubmission Schedules and Guidelines, and factors the Consumer Financial Protection Bureau may consider when evaluating whether to pursue a public enforcement action for HMDA violations, are outlined in a new bureau release. There are also tips on how best to run an effective HMDA compliance system.

The resubmission guidelines detail the error thresholds that CFPB examination teams will use to determine when institutions should correct and resubmit their HMDA data.

"CFPB examination teams will use different guidelines when they conduct HMDA reviews at banks and nonbanks that have 100,000 or more mortgage loans to report," the bureau wrote. It noted that low error rates at larger institutions can reflect a larger number of HMDA data errors than similar errors at smaller institutions.

The new resubmission guidelines will apply to HMDA reviews that begin on or after Jan. 18, 2014, the CFPB said.

Employee training, internal audits and data reporting procedures are essential to effective HMDA compliance, the CFPB added.

Factors the CFPB may consider when determining whether or not to take enforcement actions include:
  • The size of the financial institution or nonbank's mortgage lending activity;
  • The institution's HMDA error rate;
  • The history of previous HMDA supervisory activity, including the history of any violations; and
  • Whether the institution self-identified or self-corrected any errors.
These factors may also be considered as the CFPB determines the size of a potential civil penalty, the bureau noted.

A pair of civil penalties for HMDA violations were announced on Wednesday. (See News Now story: CFPB Acts On HMDA Violations.)

CFPB Acts On HMDA Violations

 Permanent link
WASHINGTON (10/10/13)--Mortgage Master Inc. and Washington Federal, a Seattle-based bank,  have been ordered by the Consumer Financial Protection Bureau to pay a combined $459,000 in civil penalties for alleged violations of the Home Mortgage Disclosure Act (HMDA).

The consent order follows a CFPB examination that found that Walpole, Mass., nonbank Mortgage Master "had significant data errors" in 21,015 mortgage loan applications the firm reported in 2011. Further investigation by the CFPB and the Commonwealth of Massachusetts Division of Banks found significant error rates in other HMDA filings, the agency said. A $425,000 civil penalty has been assessed against Mortgage Master.

An examination of Seattle bank Washington Federal found HMDA errors in 5,785 mortgage loan applications that were reported in 2011. The CFPB reported a $34,000 civil penalty has been assessed against Washington Federal.

The CFPB has ordered both firms to correct and resubmit their 2011 HMDA data, and develop and implement an effective HMDA compliance management system to prevent future violations.

Both entities have been taking steps to improve their HMDA compliance management systems and the accuracy of their HMDA mortgage loan information since the HMDA errors were revealed, the CFPB said.

"When financial institutions report inaccurate information, it obstructs the purpose of the Home Mortgage Disclosure Act and makes it more difficult for the CFPB to discover and stop discriminatory lending," said CFPB Director Richard Cordray. The CFPB consent orders will send "a strong signal that no mortgage lending institution--whether bank or nonbank--should be able to mislead the public with erroneous data," Cordray added.

The CFPB on Wednesday also released a new HMDA resubmission schedule and guidelines, and outlined the factors it may consider when evaluating whether to pursue a public enforcement action for HMDA violations. (See News Now story: HMDA Resubmission Schedule, Guidelines Released By CFPB.)

Obama Nominates Janet Yellen For Top Fed Post

 Permanent link
WASHINGTON (10/10/13)--Janet Yellen has been nominated by President Barack Obama to serve as the next Federal Reserve chair. She would replace outgoing Chairman Ben Bernanke when his term ends on Jan. 31.

Her nomination would need U.S. Senate approval. If approved, she would become the first female head of the Fed, or any other central bank.

Obama urged the Senate to confirm Yellen without delay. "I'm absolutely confident that she will be an exceptional chair for the Federal Reserve," he said.

Yellen has served as vice chair of the Board of Governors of the Federal Reserve System since Oct. 4, 2010. She is also in the midst of a Federal Reserve Board membership that will end on Jan. 31, 2024. She has served as president/CEO of the Twelfth District Federal Reserve Bank, at San Francisco.

The potential Fed leader graduated summa cum laude from Brown University in 1967, and received her Ph.D. in economics from Yale University in 1971. She has worked as an assistant professor at Harvard University, a Fed economist, and on the London School of Economics and Political Science faculty.

She also chaired President Bill Clinton's Council of Economic Advisers.

According to a Fed profile, Yellen has written on a wide variety of macroeconomic issues, while specializing in the causes, mechanisms, and implications of unemployment.