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Final UIGEA rules unveiled by Treasury Fed

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WASHINGTON (11/13/08)-- The U.S. Department of the Treasury and the Federal Reserve Board Wednesday announced the release of a joint final rule to implement the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006. UIGEA prohibits gambling businesses from knowingly accepting payments in connection with unlawful Internet gambling, including payments made through credit cards, electronic funds transfers, and checks. Under the Internet gambling law, financial institutions must establish and implement policies and procedures to identify and block restricted transactions, or rely on those established by the payments system. According to an agency release, the final rule provides “non-exclusive examples of such policies and procedures and sets out the regulatory enforcement framework.” Compliance with the rule is required by Dec. 1, 2009. Earlier this week, House Financial Services Committee Chairman Barney Frank (D-Mass.) wrote to Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke to urge them to delay implementation of what he called "deeply flawed" UIGEA rules. (News Now Nov. 11) The Credit Union National Association (CUNA) has voiced concerns, both to the implementing agencies and to Congress, that provisions of the law could swamp credit unions and other financial institutions with compliance burdens. CUNA opposed the agencies' draft implementation of the law, saying it lacked clarity and sufficient definition of terms. “While we have not had an opportunity to review the full 66-page document in detail, the agencies have stated in their explanation to the final regulation that the federal government will not establish a list of businesses known to be involved in unlawful Internet gambling,” noted Kathy Thompson, CUNA’s SVP for Compliance. Thompason added that, in fact, the Fed and the Treasury Department "go to great length" to explain why it’s not possible for them to determine what entities are engaged in unlawful Internet gambling. “Without an ‘OFAC-type’ list where the government -- not private businesses -- ascertains who is engaging in unlawful activities, I do not see how credit unions and other financial institutions can reasonably be expected to develop a cost-effective compliance program. “With everything else going on in the financial world today, this doesn’t seem the time to burden credit unions with implementation of a law of questionable value,” Thompson said.

New RESPA rules unveiled

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WASHINGTON (11/13/08)—The U.S. Department of Housing and Urban Development (HUD) Wednesday announced final rules implementing its overhaul of Real Estate Settlement Procedures Act (RESPA) provisions. The changes, years in the making, are meant to simplify and improve disclosure requirements for mortgage settlement costs. Jeffrey Bloch, senior assistant general counsel of the Credit Union National Association (CUNA), said there are a few beneficial changes in the final rule from an earlier proposal, which will be good news to credit unions. Dropped from the final, Bloch said, is a cumbersome requirement that would have made settlement agents read a “closing script” of disclosures to a borrower at the closing table. CUNA strongly opposed this provision for a number of reasons, including the presumption that all individuals would prefer to receive the information in this manner. CUNA also was concerned that some might be insulted by a process in which information is read to them, with the possible implication that they are incapable of reading it for themselves. Also different from the proposal, the final RESPA rule will give lenders and settlement service providers 30 days to correct potential RESPA violations. Originally, HUD proposed a 14-day period. CUNA supported a longer timeframe. “Also, the Good Faith Estimate (GFE) is now three pages instead of the proposed four pages. In our comment letter, we opposed going from the current 1 page to 4 pages as this would be more confusing to borrowers. We welcome this slight improvement in the final rule,” Bloch said. Lenders will not be required to use the new GFE until 1/1/10. The final rule is expected to be published in the Federal Register Friday. CUNA will continue its review of the final rule and provide more analysis after close scrutiny of the details. Use the resource links below for more information on the RESPA rules.

Inside Washington (11/12/2008)

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* WASHINGTON (11/13/08)--Federal Deposit Insurance Corp. (FDIC) Chairman Sheila Bair expressed concerns regarding a loan modification plan unveiled Tuesday by industry representatives and federal regulators. Bair said the plan is not enough to achieve modifications of troubled mortgages and questions remain about the plan’s implementation. Specifically, uncertainties lie with “allowing extended amortization prior to interest-rate reductions, whether payment increases are capped for a loan’s life, the use of higher interest-rate caps, and reporting to determine compliance and results” (American Banker Nov. 12). The plan would help delinquent borrowers who are at least three months past due by providing them with modifications from Fannie Mae and Freddie Mac requirements. The modifications would drop borrowers’ mortgage-debt-to-income ratio to 38% on loans with a loan-to-value ratio of 90%. The plan was proposed by Fannie Mae and Freddie Mac, the Treasury, the Federal Housing Finance Agency and the Hope Now coalition ...

CUNA offers design help in mortgage registration plan

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WASHINGTON (11/13/08)—The Credit Union National Association (CUNA) has requested to be included in the design process as federal regulators proceed to hammer out details of a national licensing and registry program for mortgage originators. The program is required under the Housing and Economic Recovery Act, signed into law in July. It requires employees of state- and federally chartered credit unions, and others, who originate mortgages to annually register with the National Mortgage Licensing System and Registry as a "registered loan originator." The law requires the National Credit Union Administration and the federal banking agencies via the Federal Financial Institutions Examination Council (FFIEC) to develop and maintain the registry system in conjunction with the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators. The FFIEC agencies have one year to put this program into place. In a letter to the NCUA, CUNA wrote Wednesday, “We have been actively involved in both providing information to our members about the new mortgage registration system and soliciting their views and concerns with regard to both the burdens and the areas in which further clarification is needed.” Therefore, the letter said, CUNA could assist federal regulators in understanding credit union concerns about the registry and licensing program prior to such a program being finalized. The CUNA letter went on to fully describe six main areas of concern. Use the resource link below to read the complete letter.

New urgency for CU-backed TARP says CUNA

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WASHINGTON (11/13/08)--After the U.S. Treasury Department yesterday said its Troubled Asset Relief Program would no longer seek to buy distressed mortgage-backed assets, the Credit Union National Association (CUNA) reiterated its call on the National Credit Union Administration (NCUA) to create its own credit union-funded troubled-asset relief program through the National Credit Union Share Insurance Fund. After Wednesday’s announcement by Treasury Secretary Henry Paulson, CUNA President/CEO Dan Mica expressed concern about the Treasury’s change of direction in not using the $700 billion of congressionally mandated funds for purchase of troubled assets from U.S. financial institutions--including credit unions. “Although the Economic Emergency Stabilization Act explicitly includes America’s credit unions, the implementation of the program thus far has not included credit unions, and the Treasury’s announcement makes it unclear how credit unions will be included,” said Mica. The CUNA leader pointed out that it has been CUNA’s position that credit unions not be disadvantaged by the government’s response to the nation’s financial crisis. Credit unions could have been covered under provisions of the original troubled asset purchase plan. But, because of the credit union capital structure, to date credit unions have not been eligible for the capital infusion. “An asset purchase program would have helped to establish values for some of these troubled assets in today’s dysfunctional markets,” said Mica. “We must be assured that the interests and needs of our 8,000 cooperatively owned financial institutions are addressed so they may help their 90 million members deal with this financial crisis,” said Mica. “At the least, we urge the Treasury to consider a set aside of funds to be used by Main Street financial institutions--such as credit unions.” Mica said CUNA prefers that credit unions be able to turn to the NCUA for assistance, so that credit union funds can “help credit unions solve their own problems, with backup funding from Treasury if necessary.” “We again urge NCUA to implement a program for credit unions--by credit unions--that accomplishes the intent of the Emergency Economic Stabilization Act for the movement,” he said. During the Oct. 30 NCUA budget review meeting, CUNA urged the agency to consider such a program exclusively for credit unions. Use the resource link below to access the related story.

Six blocked from future CU activity

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ALEXANDRIA, Va. (11/13/08)--The National Credit Union Administration (NCUA) has issued orders prohibiting six individuals from participating in the affairs of any federally insured financial institution. The NCUA posted the following list of actions on its Web site:
* Thomas Gerald Hayes, former executive president of ELGA CU, Burton, Mich., was convicted of embezzlement and sentenced to 21 months in prison, four years of supervised probation and ordered to pay $130,301 in restitution to the credit union; * Sherril C. Millien, a former teller at Rockland Employees FCU, Spring Valley, N.Y., was convicted of grand larceny and sentenced to serve 6 months in prison, five years of supervised probation and ordered to pay $45,000 in restitution to the credit union; * Randal Scott Replogle, former ATM representative at Blair FCU, Altoona Regional Health System FCU and Huntingdon FCU, Altoona, Pa., was convicted of property theft and sentenced to serve 60 months of supervised probation and ordered to pay a $500 fine; * Lucinda Sterling, former vice president of the liquidated Nor-Car FCU, Easton, Pa., consented to entry of a Prohibition Order to avoid the time and cost of litigation, (Editor’s Note: In June 2006, Betty Jean Barachie, 39, of Kunkletown, Pa., was sentenced to 27 months in prison after pleading guilty to embezzling more than $1.5 million from Nor-Car, causing the credit union to be placed into receivership.) * Amy M. Taylor, former manager of Hurd Employees CU, Greenville, Tenn., was charged with theft, entered a pre-trial diversion program, and was ordered to submit to two years of supervised probation and to pay restitution of $14,000 to the credit union; and * A Notice of Prohibition was issued against Josette L. Williamson, convicted of petit larceny against WIT FCU, Rochester, N.Y., and ordered to perform 120 hours of community service.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million. Use the resource link below to find NCUA prohibition orders online.

NACHA plan needs small changes says CUNA

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WASHINGTON (11/13/08)—Although recommending a few tweaks, the Credit Union National Association (CUNA) came out in support of a NACHA proposal to clarify its requirements for authorizations and returns. Specifically, NACHA is proposing to clarify the requirements for obtaining authorization of an automated clearinghouse (ACH) payment and amend its rules regarding the process by which receiving depository financial institutions (RDFIs) handle claims of unauthorized debits. Additionally, NACHA want to modify the ACH codes used to classify a return (return reason codes) to more effectively identify the reason an unauthorized debit is returned. In its Nov. 7 comment letter, CUNA said it supports NACHA’s proposal to clarify the requirements for obtaining a receiver’s authorization for an ACH payment by stating that an unclear, deceptive or otherwise invalid authorization is not valid. However, CUNA argued, the terms “unclear” and “deceptive” are subjective and should be clarified in the rules. CUNA also supported NACHA’s recommendation to eliminate all references to the phrase “penalty of perjury” with regard to a receiver’s written statement that a debit was unauthorized. Such a phrase may raise concerns that notarization may be required in certain jurisdictions, the CUNA letter warned. Use the resource link below to read the entirety of CUNA’s comments.

Mica Attend GAC in year of major changes

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WASHINGTON (11/13/08)--2009 will be a year of major changes, and credit unions should plan to attend the Credit Union National Association's 2009 Governmental Affairs Conference (GAC) to stay abreast of those changes, says CUNA President/CEO Dan Mica in a special video invitation.
In the video, Mica outlines why it's important to attend the GAC, which will be held Feb. 22-26, 2009, at the Washington Convention Center in Washington, D.C. (Push the play button to view the video.) He notes changes in economic policies, tax policies, regulations, Congress, the White House, the Treasury and NCUA as all having a possible impact on credit unions and their members. In addition credit unions will celebrate their 100th anniversary, and CUNA and the Federal Credit Union Act will turn 75. The GAC headliners include:
* Steve Forbes, editor-in-chief of Forbes magazine, providing economic commentary on America's Economic Outlook and Opportunities; * Pundits Paul Begala, CNN political analyst, and Tucker Carlson, MSNBC senior correspondent, facing off over current developments in national news, politics and world issues; * "Lt. Dan Band," formed by Chicago composer Kimo Williams and Gary Sinese, star of "CSI New York," the hit CBS TV show. The band is named after Sinese's character in the 1994 blockbuster film, "Forrest Gump." The concert kicks off the GAC on Feb. 22 and is presented by the CUNA Councils.
For more information, use the link.