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CUNA warns of burdens of home valuation code

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WASHINGTON (10/9/08)—There could be significant burdens on credit unions and other small lenders associated with parts of a new Home Valuation Code of Conduct (Code) and the Federal Housing Finance Agency should consider making revisions, according to the Credit Union National Association (CUNA). The Code is a result of an agreement earlier this year between the New York Attorney General, the Office of Federal Housing Enterprise Oversight—the precursor agency to the FHFA, Freddie Mac and Fannie Mae. Under the agreement, Freddie Mac and Fannie Mae may purchase loans only from financial institutions that meet new standards designed to ensure independent and reliable appraisals. One of the significant provisions of the Code requires lenders to maintain a telephone and email hotline to address appraisal complaints. This, CUNA warns, will impose significant new burdens on credit unions, the cost of which would have to be borne by credit union members—most unfortunately in the current credit climate as higher costs for mortgage credit. The increased burdens include a need to develop new disclosures and new procedures, and the incumbent need for additional staff training to both implement the new system and to investigate any complaints received. “As not-for-profit financial institutions, credit unions will have no choice but to pass these significant, additional costs on to their members, which will further increase the cost of mortgage credit. This will be especially unfortunate during the current mortgage crisis in which both the cost and availability of mortgage loans have been adversely impacted,” CUNA wrote in an Oct. 8 letter to FHFA Director James Lockhart. CUNA also noted, “The agreement allows Freddie Mac and Fannie Mae to provide exceptions for lenders with assets of $250 million or less, and we request that this be specifically included in the Code.” Earlier CUNA comment letters have requested clarification of the provisions in the Code in which the lender’s loan staff, or others who are connected with the loan staff or compensated based on the successful completion of the loan, will not be permitted to be involved in the selection of the appraiser or communicate with the appraiser. CUNA has also requested clarification of the provisions in the Code that prohibit lenders from using “in-house” appraisals or using an appraiser who is affiliated with the lender or with an entity owned by or which owns the lender. Use the resource link below to read the CUNA letter.

Comment wanted on FHLB director rule

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WASHINGTON (10/9/08)—The Credit Union National Association (CUNA) is seeking credit union comment by Nov. 11 on a new rule that outlines the process for nominating and conducting the election of independent directors for the Federal Home Loan Banks (FHLBs). The new Federal Housing Finance Agency (FHFA) interim final rule was effective Sept. 26, but that agency has asked for comment on specific areas of the plan. Under the Housing and Economic Recovery Act, signed into law in July, certain changes were made to the process for the election of the directors of Home Loan Banks. Until then, the board of directors of each FHLB was comprised of elected directors and those that were appointed by the board and were known as independent directors. The 2008 law now gives the members of the FHLBs the right to elect these independent directors, and the interim final rule outlines the process for nominating and conducting the election of these independent directors. As before, an independent director may not be an officer, director, or employee of any financial institution that is a member of the FHLB. CUNA seeks comment on the interim final rule in such areas as:
* Should the boards of directors of the FHLBs or should the FHFB establish the number of public interest directorships? *Do you have any comments on the requirement that directors may only serve three consecutive full terms, especially in situations in which a director does not serve a full term? * Should an FHLB board of directors be permitted to nominate more candidates for independent directors than there are positions to be filled? Also, independent directors must receive at least twenty percent of the eligible votes. Should this be a requirement? Would a different threshold be more appropriate? Should the threshold be based on the number of votes or the number of eligible votes? * Should the revised experience requirements for “public interest” directors be applied to existing directors?
The Housing and Economic Recovery Act was also responsible for creating the FHFB by combining the responsibilities formerly divided between the now-gone Federal Housing Finance Board and the Office of Federal Housing Enterprise Oversight. Use the resource link below to see the full list of questions for comment.

Inside Washington (10/08/2008)

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WASHINGTON (10/9/08)--On Tuesday, a delegation of staff members from the Credit Union National Association (CUNA) visited the Federal Reserve in Washington, D.C. to meet with Federal Reserve Board Gov. Elizabeth Duke. Duke was recently sworn in as the Federal Reserve Board's newest governor. From left are: CUNA General Counsel Eric Richard, Duke, CUNA President/CEO Dan Mica and CUNA Deputy General Counsel Mary Dunn.(Photo provided by CUNA) ... * WASHINGTON (10/9/08)--The Treasury Department yesterday announced a technical correction that would permit additional money market funds to participate in Treasury's Temporary Money Market Fund Guarantee Program. Funds that have a policy of maintaining a stable net asset value or share price that is greater than $1.00 and had such policy on Sept. 19, 2008 are eligible to participate, provided the fund meets all of the other original requirements. The enrollment deadline for these funds that are now eligible as a result of this technical correction is 11:59 p.m. ET on Oct. 10, 2008. This technical correction does not extend the original deadline for funds that maintain a stable share price of $1.00 and that qualified under the program originally announced on Sept. 29, 2008... * WASHINGTON (10/9/08)--Public comment is being sought by federal bank and thrift regulatory agencies on a joint notice of proposed rulemaking to assign a 10% risk weight to claims on or guaranteed by Fannie Mae and Freddie Mac. Claims include all credit exposures but do not include preferred or common stock. The Federal Reserve Board, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Office of Thrift Supervision, issued the rulemaking. The current risk level is 20% ...

NCUA updates graphics for 250K insurance

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ALEXANDRIA, VA. (10/9/08)--The National Credit Union Administration (NCUA) said yesterday it has updated its collection of printed and online materials that communicate increased federal share insurance to consumers. The changes were made after President George W. Bush signed into law the “Emergency Economic Stabilization Act of 2008” on Oct. 3, which temporarily increases federal deposit insurance coverage. The new law will remain in place through Dec. 31, 2009. It provides for an increase in the minimum National Credit Union Share Insurance Fund (NCUSIF) coverage from $100,000 to $250,000 on member share accounts.
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NCUA said it has updated the “Your Insured Funds” and “How Your Accounts Are Federally Insured” brochures to reflect the increased NCUSIF coverage. Updated versions of the brochures, NCUA insurance signs and labels, FAQs, print ads, and other insurance-related information are available on NCUA’s website in the Share Insurance Tool Kit. Use the resource link below to access. The agency said it is printing updated brochures and revised NCUA insurance signs and decals, and during the next few weeks will “mail a modest number of these items free of charge to all federally insured credit unions.” The Share Insurance Calculator is in the process of being updated, as a joint project with FDIC. NCUA said will notify credit unions when complete. Meanwhile, a freshly-shipped batch of the new posters featuring Uncle Sam, emphasizing that member deposits are backed by the full faith and credit of the U.S. Government already are outdated. “Because the posters were shipped just days before the passage of the Emergency Economic Stabilization Act, they do not reflect the increase in coverage,” said NCUA. Credit union managers have two options to bring the posters up-to-date:
* Strike through the $100,000 on the poster and write in $250,000 in a visually noticeable way; * A downloadable file of the updated poster, with the new $250,000 limit printed, is available on NCUA’s website.
NCUA said it will issue a “Letter to Credit Unions” with similar information. “Should you have questions, please contact your district examiner, regional office, or state supervisory authority,” said the agency. Use the link below to access the NCUA materials.

Mica talks CU strength safety in radio blitz

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WASHINGTON (10/8/08)—Credit Union National Association (CUNA) President/CEO Dan Mica hit the airwaves Tuesday in a radio tour where he emphasized credit union soundness and strength amid today’s credit crisis and reminded listeners that virtually all credit unions have federal deposit insurance. Mica conducted interviews with more than a dozen radio stations in major markets around the country, including CBS Chicago, one of the biggest financial news shows in the country, and Marketwatch radio, which airs nationally. Other cities covered include New York, Boston, Kansas City and Pittsburgh.
Click to view larger image During a radio interview via telephone with Chicago's WBBM AM 780, CUNA President/CEO Dan Mica in his Washington, D.C., office touts credit union safety, soundness, and federal insurance. (Photo provided by CUNA)
A key point Mica stressed is that credit unions have been part of the solution for borrowers in today’s economy, making loans responsibly. He noted that lending has soared at credit unions since the beginning of the year. Mica also pointed out that the new financial rescue bill signed into law last week raises the level of federal deposit insurance at credit unions as well as banks from $100,000 to $250,000. “Consumers must understand that there are no significant differences in the level of federal deposit insurance coverage at a credit union or a bank,” he explained. The radio blitz is part of a concerted effort by CUNA and state credit union leagues to educate consumer about credit union strength and safety. Last week CUNA distributed a pre-recorded radio news release featuring Mica’s comments on that subject that so far has aired on nearly 200 stations.
Audio file: click to hear CUNA's Dan Mica explain credit union safety, soundess, vitality during economic downturn on Chicago's WBBM radio.