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CUNA: Stable, Reformed Secondary Mortgage Market Vital For CUs And Members

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WASHINGTON (11/6/13)--Qualifying credit union members need to be able to buy or finance their homes in a stable mortgage market, Credit Union National Association Chief Economist Bill Hampel emphasized as he delivered credit union views and their members' needs in Tuesday Senate testimony on housing finance reform.

Click to view larger image CUNA Chief Economist Bill Hampel testifies before the Senate Banking Committee on Tuesday. (CUNA Photo)
Hampel was testifying before the Senate Banking Committee hearing entitled "Housing Finance Reform: Protecting Small Lender Access to the Secondary Mortgage Market."

"As long as credit unions produce one or more eligible mortgages, they should be able to sell them to an issuer of government-backed securities, directly or through an aggregator, at market prices, for cash, without volume penalties, and with the option to retain servicing," Hampel told the Senate panel.

Hampel called on the U.S. Congress to ensure that credit unions "continue to be afforded the opportunity to provide mortgage servicing services to their members in a cost-effective and member-service oriented manner, in order to ensure a completely integrated mortgage experience for credit union members/borrowers."

Standardization at all steps in the mortgage process is important to credit unions, he emphasized.

One topic of Tuesday's hearing was the development of a mutual organization to protect access. In his testimony, Hampel shared some CUNA suggested improvements for this platform, including:
  • Making the mutual securitization platform accessible to lenders of all sizes;
  • Governing the mutual organization cooperatively, with a board elected by members; and
  • Granting the mutual platform a small but limited balance sheet to pool mortgages before sale and to hold some mortgages.
Credit unions may need additional investment authority in order to capitalize their share of the mutual, Hampel said. He also encouraged the committee to amend the federal credit union act to consider all loans made on 1 to 4 residential properties as residential loans, as is currently the case for banks.

He also suggested that Congress grant a one-year extension of compliance deadlines for pending Consumer Financial Protection Bureau mortgage rules. If such a delay cannot be created, Congress should provide credit unions with a buffer of at least six months as they work to come into compliance with qualified mortgage standards. A similar six-month delay should also be applied to legal liability provisions of mortgage regulations, Hampel said.

Written CUNA testimony also outlined some of the principles that should be followed as Congress revamps the housing finance system:
  • There must be a neutral third party in the secondary market, with its sole role as a conduit to the secondary market;
  • The secondary market must be open to lenders of all sizes on an equitable basis;
  • The entities providing secondary market services must be subject to appropriate regulatory and supervisory oversight to ensure safety and soundness;
  • The new system must ensure mortgage loans will continue to be made to qualified borrowers even in troubled economic times;
  • The new housing finance system should emphasize consumer education and counseling as a means to ensure that borrowers receive appropriate mortgage loans;
  • The new system must include consumer access to products that provide for predictable, affordable mortgage payments to qualified borrowers; and
  • The new housing finance system should apply a reasonable conforming loan limit that adequately takes into consideration local real estate costs in higher cost areas.

NCUA Opens 2014 Consulting Nomination Process

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ALEXANDRIA, Va. (11/6/13)--Nominations for the first 2014 round of the National Credit Union Administration's small credit union consulting program are now being accepted.

"Often small and low-income credit unions don't have the resources to hire consultants to improve their operations, but NCUA can help," NCUA Chairman Debbie Matz said. The program, she added, "demonstrates NCUA's commitment to ensuring that [small] credit unions remain viable in the long run."

Through the consulting program, the NCUA's Office of Small Credit Union Initiatives (OSCUI) offers budgeting, marketing, policy development and strategic planning assistance. The experienced economic development specialists that offer this assistance also help credit unions tackle other examination issues.

Credit unions with less than $50 million in total assets, charters that have been approved within the past 10 years, or low-income designations may be approved for the consulting program.

Nominations may be submitted by NCUA examiners or other agency staff, state credit union regulators, or by credit unions themselves. Nominations will be accepted until Nov. 30 at 5 p.m. (ET). Selected credit unions will receive assistance for a six-month period, the NCUA said.

A total of 319 credit unions applied in the 2013 first round of the program. For more information and a nomination form, use the resource link.

Remittance, Mortgage Rule Consumer Resources Offered By NCUA

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ALEXANDRIA, Va. (11/6/13)--New remittance and mortgage lending rules are explained for consumers in a new National Credit Union Administration Consumer Protection Update video and other online content.

"These videos and webpages provide useful information about complying with the new mortgage lending and remittance transfer rules. Anyone at a credit union with responsibility for underwriting or servicing mortgages or making international wire transfers would benefit from watching these videos and reviewing the related material on our the consumer protection website," NCUA Chairman Debbie Matz said.

In the videos, NCUA Office of Consumer Protection Director Gail Laster outlines NCUA's plan for implementing the new rules and explains how these new regulations will better protect consumers.

Similar information has been posted on the NCUA's page.

For more, use the resource link.

Matz Discusses Budget, CUSO Rule, Risk-based Cap With Gentile: Inside Exchange, Part II

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WASHINGTON (11/6/13)--The future of the National Credit Union Administration's budget, risk-based capital and proposed credit union service organization rules are some of the issues covered in part two of NCUA Chairman Debbie Matz's Inside Exchange interview with the Credit Union National Association's Paul Gentile.

Matz said the 2014 budget will contain some increases to address long-awaited pay raises for some employees. Funds will also be raised to retrain staff to implement new rules, regulations and benefits for credit unions. The agency, Matz noted, needs to be able to supervise credit unions and cope with complex issues like cybersecurity, derivatives and commercial real estate loans.

"We need to have the staff on hand that are adequately trained, and that involves additional resources," she said. "I don't see anytime soon that our budget will go down, but we try to keep the increases reasonable."

One area marked for additional upcoming oversight is credit union service organization (CUSO) regulations, Matz reminded in the interview. The agency is developing a CUSO registry so the NCUA will know "who they are, who their principles are, who their members are, and what they do."

On risk-based capital, Matz noted that an upcoming rule is unlikely to impact many credit unions. The rule, she said, is being drafted in a way that will require credit unions with a high amount of risk to hold more capital. "I think most people would think that's a prudent thing to do," she added.

Overall, Matz said, the NCUA's regulatory modernization initiatives are working well. Matz said she is "very confident that the agency has made significant changes to make it easier for credit unions to comply with rules. "And we're going to keep doing it," she said.

In part one of the Inside Exchange interview with the NCUA chairman, CUNA's Gentile and Matz discussed corporate assessments, relations with the Consumer Financial Protection Bureau, examinations, Wall Street lawsuits and other top issues.

Senate Banking Members Keen On Moving Housing Finance Reforms Forward

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WASHINGTON (11/6/13)--At a Thursday Senate Banking Committee hearing on housing finance reform, some panel members indicated they were eager to get things moving to achieve legislative fixes to what many see as a broken system.

Click to view larger image CUNA Chief Economist Bill Hampel, left, speaks with Senate Banking Committee Chairman Tim Johnson (D-S.D.) following Tuesday's hearing. (CUNA Photo)
The hearing was entitled "Housing Finance Reform: Protecting Small Lender Access to the Secondary Mortgage Market." The Credit Union National Association testified. (See related story: CUNA: Stable, Reformed Secondary Mortgage Market Vital For CUs And Members.)

During the hearing's early minutes, Sen. Mike Crapo (Idaho), who is the ranking Republican member of the committee, noted that he and his panel colleagues are "working hard to get a markup near future" for a housing finance reform bill.

He asked the panel of witnesses, representing credit unions, community banks and Federal Home Loan Banks (FHLB), whether they were ready and willing to work together and to work with the committee to hammer out details of a new housing finance system. CUNA witness Bill Hampel assured that credit unions were willing and ready. Hampel is a CUNA senior vice president and its chief economist.

Another committee member, Sen. Elizabeth Warren (D-Mass.), said committee members clearly agreed that small lenders need access to the secondary market so they can write more mortgages and get FHLB advances.

Also, the head of the committee, Sen. Tim Johnson (D-S.D.), called on the U.S. Congress to work together to move forward on reforms. Hampel was the recipient of the chairman's first follow-up question after all prepared testimony was delivered. Hampel responded to Johnson that it is "absolutely essential" that Congress get it right as they rework the mortgage financing market.

Credit unions do need access to secondary market, and that access needs to be done right, Hampel said. The previous system did not work, and contributed to the financial crisis, but there are pieces of the previous system that need to be maintained and brought into the new system, fixing the design flaws as we do so, Hampel added. (Use resource link for CUNA's complete testimony.)

The hearing also focused on the Housing Finance Reform and Taxpayer Protection Act (S. 1217). That bill, introduced by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.), would wind down government-sponsored enterprises Fannie Mae and Freddie Mac and replace them with a new mortgage guarantor.

In a discussion of the bill with Warner, Hampel noted that such a transition of housing finance functions to new entities needs to be "gradual" and "seamless." Warner remarked that he would appreciate seeing more comments on that.

Warner, during Tuesday's hearing, noted there are ways to improve S. 1217, and encouraged Hampel and others that testified to provide specific guidance to committee staff on how the bill could be bettered.