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Administration enhances foreclosure-help program

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WASHINGTON (10/25/11)--The Federal Housing Finance Agency (FHFA), the federal regulator with oversight responsibility for Fannie Mae and Freddie Mac, announced changes Monday to the Home Affordable Refinance Program (HARP) to attract more underwater borrowers who could benefit from refinancing their home mortgages.

News reports, such as one from ABC News blog, reported that President Obama announced the proposal from a Las Vegas home's front porch. Nevada has one the highest foreclosure rates in the country.

HARP was launched in 2009 to let troubled homeowners bypass a requirement that they have at least 20% equity in their home to be able to refinance their mortgages at lower rates.  However, the program has been, some say, severely under utilized because many cannot qualify for help.

The program enhancements announced yesterday were developed at FHFA's direction with input from lenders, mortgage insurers and other industry participants. Program changes include:

  • Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;

  •  Removing the 125% loan-to-value ceiling for fixed-rate mortgages backed by Fannie and Freddie;

  • Waiving certain representations and warranties made by lenders on loans owned or guaranteed by Fannie Mae and Freddie Mac;

  • Eliminating the need for a new property appraisal where there is a reliable automated valuation model estimate provided; and

  • Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to Fannie and Freddie on or before May 31, 2009.

The FHFA, in a release, said one important element of the changes to HARP is the elimination of certain risk-based fees, which should encourage borrowers to utilize HARP to refinance into shorter-term mortgages.

"Borrowers who owe more on their house than the house is worth will be able to reduce the balance owed much faster if they take advantage of today's low interest rates by shortening the term of their mortgage," explained the agency.

Fannie Mae and Freddie Mac plan to issue guidance with operational details about the HARP changes to mortgage lenders and servicers by Nov.  15.

ABC iWorld Newsi reports growing consumer interest in CUs

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WASHINGTON (10/25/11) -- The move to credit unions by consumers upset with bank fees received more national media attention in a segment last night on ABC's World News.

The ABC segment noted the new wave of consumer dissatisfaction with big banks builds on sentiment that goes back to the Huffington Post's Move Your Money campaign several years ago, but now is fueled by anger sparked by Bank of America's decision in late September to charge a new $5 a month debit card fee.  B of A's move has many grumbling about banks. 

One viewer angry over new banks card fees emailed to ABC news, "We bail them out and they raise rates—priceless."  However, correspondent David Muir noted,  "Many of you took it a step further…."

Another viewer wrote, "My secret's very simple—a credit card from a credit union.  It turns out thousands of Americans are doing the same thing—trading their banks on Wall Street for ones on Main Street."

The segment explained how many of the more than 7,000 credit unions around the country are seeing "an explosion in new members" since Bank of American's debit fee announcement, and new Facebook pages have sprung up urging consumers to switch.   ABC interviewed disgruntled bank customers, such as Karen Jackson of Miami, who closed her Chase account and transferred her money to Miami-Dade Credit Union.

"We couldn't take it anymore," she told ABC.  And, the segment added, "there are thousands more like her."

The ABC World News segment referred viewers to its web site where it posted "9 Tips Before You Switch to a Credit Union" using information provided by the Credit Union National Association (CUNA).  Those suggestions included using the CUNA's new consumer web site,, to learn more about credit unions and find a credit union you are eligible to join. 

Citing CUNA data, the tips also noted consumers save more than $6 billion annually in lower fees and better rates by using credit unions rather than banks.

Cheney touts CUs in Credit Line interview

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WASHINGTON (10/25/11)--Credit Union National Association (CUNA) President/CEO Bill Cheney in a Los Angeles radio interview this past weekend underscored the value and service credit unions provide today's consumers, encouraged potential credit union members to examine their own financial options, and suggested they search for local credit union options on, CUNA's site that helps consumers find a credit union they are eligible to join.

The CUNA CEO appeared on The Credit Line, which airs on Los Angeles' KFWB 980 AM. The Credit Line is a weekly call-in show hosted by chairman Adam Levin and L.A.-based radio personality Jeff Levy.

Asked about the approach of Bank Transfer Day (Nov. 5), Cheney urged listeners not to wait until then, and to start making the move to a credit union now. New members will find credit union pricing is better, and they will be treated differently than they have been at banks, Cheney said. Bank Transfer Day, started by a 27-year-old artist in California, is urging consumers to switch from big banks to credit unions on Nov. 5. So far more than 400,000 people have been made aware of Bank Transfer Day through Facebook, and Bank Transfer Day has also received widespread media coverage.

Cheney also covered many of the basics of credit union structure, services and products, saying that credit unions can focus purely on their members, "and members have a say in how the credit union is managed." Loan rates and fees are often lower at credit unions, with credit union credit card rates averaging 2 percentage points below the rates charged by banks, Cheney added.

Listen to The Credit Line:

Although there aren't any credit unions that are the size of Bank of America, the shared credit union ATM network means credit union members can access their accounts, free of charge, from a greater number of ATMs, Cheney said.  The CO-OP Network, he noted, has more than 28,000 surcharge-free ATMs.

NCUA advises examiners ahead of Bank Transfer Day

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ALEXANDRIA, Va. (10/25/11)—Credit unions will be interested to know that the National Credit Union Administration (NCUA) has advised its examiners on alternative ways to view how the sudden inflow of deposits and members caused by the planned Nov. 5 Bank Transfer Day could impact credit union finances.

Saying that the new funds and member "may temporarily depress a credit union's net worth ratio," the agency also noted that credit union call reports allow credit unions "to calculate their net worth ratio in different ways, using 'point-in-time' assets or using a rolling average of assets." The NCUA added that the rolling average of assets accounting approach "was put into place to be more equitable to credit unions who may experience a large payroll deposit on the last day of a quarter or have seasonal fluctuations such as teachers credit unions."

The NCUA said credit unions may only get temporary relief from the net worth effects of these new transfers. "Since this is a rolling average, the longer the deposits stay, the less relief these alternative calculations will provide," the NCUA said.

However, the NCUA added, many of these new members may stay with their new credit unions. If the new members, and their money, remains in the credit union several months from now, "capital retention plans should be updated to include this new factor," the NCUA said.

The guidance was released to NCUA examiners ahead of the coming Bank Transfer Day (Nov. 5). However, many are not waiting for Nov. 5 to make their transfers, as many credit unions have seen sharp increases in membership applications following Bank of America's announcement that they would charge a $5 per month fee for debit card accounts.

A poll commissioned by found that 78% of debit card holders surveyed said they will switch banks to avoid monthly fees charged when they use their debit cards to make purchases, and credit unions are receiving plenty of positive press ahead of Bank Transfer Day. For more coverage, use the resource link.

Inside Washington (10/24/2011)

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  • WASHINGTON (10/25/11)--The Federal Reserve Board Friday for the first-time used special powers in shutting down a Colorado bank on Friday. The central bank appointed the Federal Deposit Insurance Corporation (FDIC) as receiver for Community Banks of Colorado, of Greenwood Village, Colo., a state-chartered bank and member of the Federal Reserve System. The Fed had never before used its authority to close a state-chartered bank, a role normally reserved for state-regulators. As of June 30, the bank had approximately $1.4 billion in assets. The appointment was made after the Federal Reserve Board determined that the bank had been "critically undercapitalized" since July 29, and appointment of the FDIC as receiver was necessary to carry out the purpose of the prompt corrective action (PCA) statute to reduce long-term loss to the FDIC's deposit insurance fund. The PCA statute required the Federal Reserve, as the bank's federal supervisor, to appoint the FDIC as receiver not later than 90 days after the bank became critically undercapitalized, or to take other supervisory action, with the FDIC's concurrence, that would cause the least possible long-term loss to the deposit insurance fund. Pursuant to statute, the Federal Reserve also consulted with the Colorado State Banking Commissioner …
  • WASHINGTON (10/25/11)--With his advocacy for tough examinations and community banks, and criticism of "too big to fail," Thomas Hoenig, President Barack Obama's nominee for vice chairman of the Federal Deposit Insurance Corp., is a good fit for the position, according to observers (American Banker Oct. 24). Hoenig stepped down as head of the Federal Reserve Bank of Kansas City on Oct. 1. In that role he was critical of big bank bailouts and recent steps by the Fed to prop up the economy. He cast dissenting votes on the central bank's Federal Open Market Committee and has questioned the ability of the Dodd-Frank Wall Street Reform and Consumer Protection Act to address how systemically important financial institutions will wind down in the event of a financial crisis. Observers said Hoenig's track record indicates he would at times disagree with his new colleagues at the FDIC, including acting FDIC Chairman Martin Gruenberg.  As vice chairman, Gruenberg was usually aligned with former FDIC chief Sheila Bair …
  • WASHINGTON (10/25/11)—The Community Development Financial Institutions (CDFI) Fund Monday announced the appointment of Dennis Nolan to serve as its deputy director, effective immediately.  Nolan is now responsible for heading up policy development, operating procedures, internal controls, and short- and long-range strategic planning at the CDFI Fund, as well as coordinating, evaluating and enhancing the fund's programs. Prior to joining the CDFI Fund, Nolan was deputy chief financial officer at the Millennium Challenge Corporation (MCC), an independent U.S. foreign-aid agency focused on the fight against global poverty.  Nolan has also held financial management positions at the Environmental Protection Agency, where he was responsible for all aspects of EPA's financial management program, and the Federal Deposit Insurance Corporation, in such positions special assistant to the CFO and special assistant to the director of the Division of Finance …