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NCUA: Minority-Owned CUs Equal 12% of FICUs, Hold 3.5% Of Assets

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ALEXANDRIA, Va. (11/18/13)--The 805 credit unions that met minority depository institution criteria as of June 30 held $36.9 billion in assets, and are owned by 4.8 million members, the National Credit Union Administration said in its Minority Depository Institutions (MDI) Congressional Report.

The minority credit unions represent 12% of all federally insured credit unions, and hold 3.5% of the total assets in all federally insured credit unions.

Overall, minority depository institutions are financially sound, the NCUA report revealed. Most MDI credit unions have satisfactory CAMEL composite ratings and at least adequate net worth ratios, the NCUA said. On average, their net worth is 11.1%. Nearly all (95%) of minority depository institutions are well-capitalized, with net worth ratios of 7% or more.

Just over 80% of minority depository institutions hold $50 million or less in assets, and 8% hold $50 million to $100 million in assets. Another 8% hold $100 million to $500 million in assets. Due to the minority depository institutions' small asset sizes, most are challenged by the lack of sufficient resources, which demonstrates their need for technical assistance, the NCUA said.

The NCUA has developed a proposed MDI Preservation Program, under which credit unions with high percentages (50% and above) of minority members and management would be eligible to receive minority credit union status from the agency. This status would grant them access to NCUA Office of Small Credit Union Initiatives resources, including grant program eligibility. The NCUA is currently reviewing credit union comments on the proposal.

For the full NCUA report, use the resource link.

Fryzel At AACUL: NCUA Must 'Right-size' CU Risk-Based Capital Rules

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PALM BEACH, Fla. (11/18/13)--National Credit Union Administration board member Michael Fryzel said the agency should take "neither an overly stringent nor an overly permissive approach" as it crafts risk-based capital rules. "I advocate 'right sizing' NCUA's risk-based rules," he said.

Fryzel made his remarks before more than 110 attendees at the American Association of Credit Union Leagues' (AACUL) 2013 Winter Meeting. "Risk-based capital, properly formulated, should match up with the real-world activities of a credit union," Fryzel said. "Greater net worth might be necessary, depending on the type of activities that credit unions pursue as they serve their members," he added.

The agency is developing a new risk-based capital framework. The agency has said this framework will protect credit unions and consumers from losses, and replace the "outdated and insufficient" one-size-fits-all capital requirement.

The NCUA plan could result in higher capital levels for credit unions with high concentrations of risky assets. The current 7% leverage capital standard, which is required by the Federal Credit Union Act, would remain the floor. However, the agency has said credit unions with assets of $50 million and above could be subject to improved risk-based capital requirements to better correlate required capital levels to risk.

"A credit union's function is serving customers' financial needs, which by definition carries risk," Fryzel said on Friday. "I want NCUA to recognize that risk, not as an extraordinary characteristic that should be avoided, but as part of doing business as a provider of financial services in the 21st century. I want to see standards that are as minimal as possible and as much as necessary. I will be keeping this vision in mind as NCUA considers changes to the industry's risk-based capital rules," he added.

NCUA Chairman Debbie Matz, in a recent Inside Exchange interview with the Credit Union National Association's Paul Gentile, discussed the upcoming risk-based capital rule as one of her broad-ranging topics in the interview.  She told Gentile that the new rule, if adopted, is unlikely to impact many credit unions. (See Nov. 6 News Now story: Matz Discusses Budget, CUSO Rule, Risk-based Cap With Gentile: Inside Exchange, Part II.)

For more of Fryzel's remarks, use the resource link.

Comments On Mortgage Borrower Counseling Rule Due Nov. 22

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WASHINGTON (11/18/13)--A Nov. 22 deadline is fast approaching for credit unions and other parties interested in commenting on the Consumer Financial Protection Bureau's interim final rule, which, among other things, will require that consumers receive counseling before obtaining high-cost mortgages.
The interim final rule is one that has already been approved and is scheduled to take effect on Jan. 10, 2014. However, the CFPB is seeking comments from stakeholders on how they will be affected by the changes. Further changes could be adopted to the interim rule before January.
The interim rule also makes servicers provide periodic account statements and rate adjustment notices to mortgage borrowers, as well as engage in early intervention when borrowers become delinquent. It clarifies the specific disclosures that must be provided before counseling for high-cost mortgages can occur, and describes proper compliance regarding servicing requirements when a consumer is in bankruptcy or sends a cease communication request under the Fair Debt Collection Practices Act.
The interim rule also makes technical corrections to provisions of other rules. See the resource link for more detail.


CUNA Works To Help CUs Stay Remittance Providers

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WASHINGTON (11/18/13)--The Consumer Financial Protection Bureau's remittance regulations are now effective, and in the aftermath of regulatory implementation, the Credit Union National Association continues to advocate for credit union interests.
"CUNA recently provided additional information to the CFPB on credit unions that plan to stop or reduce remittance transfers, and CUNA appreciates credit unions that have continued to work with us," CUNA Deputy General Counsel Mary Dunn said.
Over the past two years, CUNA's International Remittances Working Group has met with CFPB Director Richard Cordray and agency staff, and CUNA staff have had numerous meetings and telephone conversations with CFPB officials to urge more flexibility for credit unions on remittance issues.

"While CUNA and credit unions supported additional flexibility and the delayed compliance date from the April 2013 remittance final rule, we continue to share concerns we hear from credit unions," Dunn said.
CUNA continues to work with providers to see if they can help credit unions with continuing remittances. CUNA Strategic Services Provider MoneyGram is available to help credit unions provide international transfers that are in compliance with the CFPB rule.
"MoneyGram money transfer services are already trusted by financial institutions around the world who can leverage MoneyGram's network of more than 334,000 locations in nearly 200 countries, including one of the largest network of agents in Mexico and Central America. Start-up is fast via the MoneyGram online Affiliate Program," MoneyGram International Vice President of Banking Solutions Rex Northen noted.
Under the CFPB rule, remittance transfer providers are required to give prepayment and receipt disclosures to the consumer-sender that include the exchange rate, certain fees and taxes associated with a transfer, and the amount of money that will be received on the other end of the transfer. Remittance transfer providers will also be required to investigate disputes and correct errors.
A CUNA survey of credit union remittance concerns released in August revealed:
  • About 35% of respondent credit unions will have to increase service fees;
  • Eight percent plan to reduce international wire or automated clearinghouse services;
  • Nearly one-in-four (23%) will discontinue international wire or ACH completely; and
  • About 6% of respondents will discontinue all types of international remittances.
Other issues highlighted by the survey results include working with correspondent institutions and vendors to implement the disclosures in time, as well as training staff.

The Federal Reserve Banks have also provided additional compliance resources through FedGlobal ACH. This program can help credit unions and others comply with the CFPB requirements.

CFPB Plans Fines For Alleged Mortgage Loan Kickback Schemer

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WASHINGTON (11/16/13)--Republic Mortgage Insurance Corp. (RMIC) has agreed to the terms of a proposed Consumer Financial Protection Bureau consent order and will stop providing illegal kickbacks to mortgage lenders in exchange for business, and pay $100,000 in penalties.

RMIC, which is based in Winston Salem, N.C., has reportedly entered into these arrangements to span more than 10 years, according to the bureau.

The CFPB filing against RMIC alleges that company violated federal consumer financial law by engaging in widespread kickback arrangements with lenders across the country. RMIC provided kickbacks to mortgage lenders by purchasing captive reinsurance that was essentially worthless but was designed to make a profit for the lenders, the bureau claimed. According to the CFPB, the kickbacks were in exchange for referrals of private mortgage insurance business from the lenders.

"Kickbacks for mortgage insurance referrals are illegal, and can drive up costs for consumers seeking to buy a home," said CFPB Director Richard Cordray.

Under the order, RMIC will not enter into any new captive mortgage reinsurance arrangements with affiliates of mortgage lenders, or obtain captive reinsurance on any new mortgages, for a 10-year period. The CFPB will also monitor the companies to ensure compliance with the terms of the orders.

The CFPB earlier this year ordered four mortgage insurers to stop similar illegal payment schemes, and to pay a combined $15.4 million in penalties.

For the full CFPB release, use the resource link.

Cheney Report: Even Banks Call CU Tax Status 'Apple Pie'

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WASHINGTON (11/18/13)--The American Bankers Association (ABA) and Independent Community Bankers Association (ICBA) continue to fight tooth and nail to add to the tax load of credit unions. However, at least one banker has publicly conceded the credit union tax status is like America's "apple pie," Credit Union National Association President/CEO Bill Cheney reported in this week's edition of The Cheney Report.

The Report quotes Capital Bank of New Jersey President/CEO David Hanrahan Sr., who, as reported in American Banker, recently told an ABA conference that fighting the credit union tax status "is like trying to outlaw apple pie. "

While we appreciate this comment from a banker, he isn't drafting tax reform and the ABA and ICBA continue to relentlessly urge lawmakers to remove the tax exemption, Cheney wrote. "The only way to ensure this 'apple pie' quote becomes reality is to continue our strong advocacy on protecting the exemption," he said.

Cheney encouraged credit unions and their members to continue to use CUNA and state credit union league resources, social media sites including Facebook, and micro-video site Vine, to tell their legislators, "Don't Tax My Credit Union!"

In this week's Unite for Good update, Cheney shared the united effort of 20 southern California credit unions. Those credit unions banded together to back the CU SoCal Helping Hands charity, raising $14,000 in donations for the Children's Hospital of Orange County's (CHOC) 23rd Annual Walk in the Park at the Disneyland Resort in Anaheim.

The credit union efforts, which united a group of 825 walkers for the event, will help support the regional pediatric healthcare system serving children and families in Southern California.

CUNA continues to collect stories that showcase how credit unions are helping reach CUNA's shared, strategic vision in which Americans choose credit unions as their best financial partner on
This week's Cheney Report also includes:
  • A preview of this week's National Credit Union Administration board meeting agenda;
  • CUNA comments to regulators on increasing mortgage rule compliance leeway for credit unions;
  • Information on how credit unions are working to fight elder financial abuse; and
  • Last week's House Financial Services Committee approval of standalone credit union regulatory relief measure, the first to pass through that committee in nearly 15 years.
Use the resource link to read the latest in The Cheney Report.