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CUNA to Treasury CUs have interest in GSE reform plans

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WASHINGTON (10/7/10)--The U.S. Treasury should continue to consider the needs of credit unions and other small mortgage lenders as it develops its plans for the future of the secondary home mortgage market, Credit Union National Association (CUNA) President/CEO Bill Cheney told Treasury officials on Wednesday. Cheney last month also met with Treasury representatives and attended a government forum addressing how mortgage disclosure forms can be simplified to give consumers the information needed to make prudent financial choices. The Treasury is expected to release a comprehensive plan for the future of the home mortgage market early next year. The Treasury earlier this year said that any plan that is developed should eliminate the conflict between Freddie Mac's and Fannie Mae's public policy role and the need to enhance shareholder returns. The government’s role in promoting market stability and financially supporting the home market should also be examined, the Treasury said. How any future secondary market enterprises should be regulated will also be reviewed. In a July comment letter, CUNA recommended that the Treasury's pending housing finance plan "ensure that all segments of the financial services industry can take full advantage of the opportunities to sell their loans into the secondary market and to receive services from the Federal Home Loan Banks or other entities." CUNA also urged the Treasury to "recognize that credit unions perform, and can continue to perform, a valuable role in the mortgage lending system" as it develops the new plan. CUNA is developing an advisory council on the GSE issue and will publish its own recommendations for the Treasury’s treatment of the mortgage market later this fall. CUNA General Counsel Eric Richard, Chief Economist Bill Hampel, and Deputy General Counsel Mary Dunn were also in attendance.

Pelosi urges action on possible mortgage malfeasance

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WASHINGTON (10/7/10)--House Speaker Nancy Pelosi (D-Calif.) and a host of other California-based legislators urged Attorney General Eric Holder to “investigate possible violations of law or regulations by financial institutions in their handling of delinquent mortgages, mortgage modifications, and foreclosures.” JPMorgan Chase & Co., Bank of America Corp. and Ally Financial Inc., halted their foreclosure activities in several states this week amid questions over their mortgage processing. As reported on, these three lenders “have curtailed foreclosures or evictions in 23 states where courts have jurisdiction over home seizures,” and many expect the number of investigations into these types of activities to grow in the coming weeks and months. Officials in “at least seven states” are investigating claims of false mortgage documentation and verification. These actions may have been used to “justify hundreds of thousands of foreclosures,” according to Pelosi, in a letter to Holder, Federal Reserve Chairman Ben Bernanke, and Comptroller of the Currency John Walsh, said that thousands of Californians have reported that financial institutions have “failed to respond” to homeowners’ “good faith efforts” to “work out reasonable loan modifications or simply seek forebearance on a foreclosure.” Lenders have also “misplaced requested documents” and have sent “mixed signals about the requirements that need to be met to avoid foreclosures,” the letter added. While credit unions have seen some increases in foreclosure-related activity, the majority of credit unions did not engage in the subprime mortgage market, and their general asset quality remains relatively high. "Credit unions were much more careful in their lending activities and didn't originate toxic mortgages. However, their members do reside in declining markets," Credit Union National Association Senior Economist Mike Schenk said. For the full letter, use the resource link.

Final rule analysis covers mortgage sales transfers notification rule

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WASHINGTON (10/7/10)--The Credit Union National Association this month released a final rule analysis on a Federal Reserve rule that requires consumers to receive notice when their mortgage loan has been sold or transferred. Specifically, under the Fed rule, purchasers or assignees that acquire mortgage loans must provide the required disclosure in writing within 30 days after the loan has been sold, transferred, or assigned. The required disclosure must include the name, address, and telephone number of the new owner, the transfer date of the mortgage, the name, address, and telephone number of an agent or other party authorized to receive a rescission notice or resolve issues concerning the loan payments, if this differs from the owner, and the location where the transfer of ownership is recorded. This disclosure is not required if the transferee assigns its interest in the loan before the end of the 30-day period after the transferee acquires the loan. The purchaser or assignee would also avoid providing the disclosure if a partial interest in the loan is transferred and the party authorized to resolve issues regarding loan payments and to receive rescission notices does not change. The final rule will become effective on Jan. 1. For the full final rule analysis, use the resource link.

Inside Washington (10/06/2010)

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* WASHINGTON (10/7/10)--The Credit Union National Association recently released final rule analysis of a number of regulatory changes affecting credit unions, including one that addresses the reforms approved Sept. 23 by the National Credit Union Administration (NCUA) regarding the corporate credit union system. Others address joint regulatory guidance on reverse mortgages, the NCUA’s final rule for short-term, small amount loans, and the Federal Housing Administration’s risk reduction final rule ... * WASHINGTON (10/7/10)--Sen. Mark Udall (D-Colo.) sent a letter to Elizabeth Warren, President Barack Obama’s assistant who will oversee the Consumer Financial Protection Bureau, asking that consumers have free access to their credit reports. “It is my belief that making free access to consumer credit scores a priority point of emphasis for the bureau will help level the financial playing field for millions of Americans, improve financial literacy and ultimately provide greater stability for the nation’s economy as a whole,” he wrote. Udall authored a bipartisan provision in the Wall Street Reform and Consumer Protection Act that would require lenders to provide consumers with the credit scores used in making a determination to deny or offer credit on less than favorable terms ... * WASHINGTON (10/7/10)--The Small Business Administration (SBA) Wednesday published a package of revised size definitions for three broad commercial sectors affecting businesses in retail trades, accommodations and food service, and other services. The changes, proposed Oct. 21, 2009, aim to broaden small business eligibility and help them gain access to SBA’s financial assistance. Up to 17,000 additional firms will be eligible for SBA programs as a result of the revisions, SBA said. SBA changed size standards for the car dealer industry to 200 employees from a revenue-based standard of $29 million. Size standards also were increased for five food services industries and 18 other industries ...

GAO TARP study suggests lessons for SBLF

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WASHINGTON (10/7/10)--A new Government Accountability Office (GAO) study that takes a look at the U.S. Treasury Department’s execution of the Troubled Asset Relief Program (TARP), used to bailout banks, says there are lessons that the government can learn from the experience and apply to any similar, future programs. The GAO report noted that among the Treasury’s actions under its TARP authority was the establishment of the Capital Purchase Program (CPP) as “its primary initiative” to make capital investments in eligible banks. “If Treasury administers programs containing elements similar to those of CPP, such as the Small Business Lending Fund (SBLF), Treasury should apply lessons learned from the implementation of CPP and enhance procedural controls for addressing the risk of inconsistency in regulators' decisions on withdrawals,” the report noted specifically. The SBLF is the $30 billion fund authorized by the Small Business Jobs and Credit Act that provides low-cost capital to small and mid-sized banks as incentives to increase lending. One thing that the GAO recommends regulators take a look at as they build the framework for the SBLF is how to build in consistency with the way applicants are treated and how TARP repayment decisions were made. “Specifically, the Secretary of the Treasury should direct the program office responsible for implementing SBLF to establish a process for collecting information from bank regulators on all applicants that withdraw from consideration in response to a regulator's recommendation, including the reasons behind the recommendation. "The program office should also evaluate the information to identify trends or patterns that may indicate whether similar applicants were treated inconsistently across different regulators and take action, if necessary, to help ensure a more consistent treatment,” the report said.