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CUNA QM Concerns Reflected In Congressional CFPB Letter

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WASHINGTON (11/7/13)--The Credit Union National Association has clearly articulated to members of the U.S. Congress credit unions' compliance concerns related to new mortgage rules, and those concerns were reflected this week in a letter cosigned by 118 U.S. House members.

The letter addresses the Consumer Financial Protection Bureau's six rules for mortgage products and services, required by the Dodd-Frank Act, set to go into effect in January 2014. The rules include the bureau's Ability-to-Repay and Qualified Mortgage standards.

In their letter to the CFPB, the lawmakers urged the bureau to "defer implementation" of pending mortgage rules until Jan. 1, 2015 "in order to ensure financial institutions are able to transition their systems to be in full compliance with the rules."

"We have heard concerns from many community financial institutions that they simply will not be able to meet the January 2014 deadline to have their systems online and in place," the letter stated, noting that the rule presents more than 4,000 pages of directives.

"This task is especially difficult for community financial institutions that may only have one or two compliance officers," and are still working to update their mortgage lending software, the lawmakers wrote.

An inability by financial institutions to comply by the January deadline, however, could result in "significant distortions in the mortgage market affecting the availability of credit for consumers," the letter warned.

CUNA most recently called for a delayed effective date, or other regulatory remedies, in a Tuesday Senate Banking Committee hearing entitled "Housing Finance Reform: Protecting Small Lender Access to the Secondary Mortgage Market."

During that hearing, CUNA Chief Economist Bill Hampel suggested that Congress grant a one-year extension of compliance deadlines for the pending CFPB 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, he said.

A similar six-month delay should also be applied to legal liability provisions of mortgage regulations, Hampel added.

Payday Loan Complaints Now Accepted By CFPB

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WASHINGTON (11/7/13)--Consumers can now submit complaints about unexpected fees or interest, unauthorized or incorrect charges and other issues related to payday loans to the Consumer Financial Protection Bureau.

The CFPB said consumer payday loan complaints can also address:
  • Payments that are not being credited to a taken out loan;
  • Problems contacting the lender;
  • Receiving a loan that was not applied for; or
  • Not receiving money after a loan application is filed and accepted.
The complaints will be forwarded to the offending party in an attempt to resolve the issue. The complaints, CFPB said, will also help the bureau identify business practices that may pose risks to consumers. The CFPB will use the information provided in the complaints as it works to supervise companies, enforce federal consumer finance laws, and write rules and regulations.

The CFPB on Wednesday also reminded servicemembers and their families that the Military Lending Act prevents lenders from charging an annual percentage rate of 36% or higher on payday loans, auto title loans, tax-refund anticipation loans and other types of consumer loans.

New materials addressing payday loan issues have also been posted on the AskCFPB portion of the bureau's homepage.

A CFPB study found that most payday loans are for several hundred dollars and have finance charges of $15 or $20 for each $100 borrowed. A typical two-week term can equate to an annual percentage rate ranging from 391% to 521%, the CFPB noted.

The Credit Union National Association has commended the CFPB's efforts to ensure payday lenders will be subject to appropriate standards and accountability, but said these efforts must focus on unregulated abusers. CUNA has also called on the CFPB to avoid crafting one-size-fits-all regulations that would harm credit unions as it addresses payday loan issues.

Some credit unions offer members payday loan alternatives. Under federal rules, credit unions are generally limited to an annual percentage rate of no more than 18%, although there is some flexibility under the National Credit Union Administration's short-term, small amount loan program.

That program permits federal credit unions to charge an interest rate that is a maximum of 10 percentage points above the established usury ceiling at that time. Currently, this amounts to an interest rate ceiling of 28%.

Most credit unions offering payday loan alternatives also limit fees, provide member financial counseling and encourage members to open savings accounts.

CDFI Announces 2014 Trainings For Minority Depository Institutions

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WASHINGTON (11/7/13)--The Community Development Financial Institutions (CDFI) Fund Wednesday released the 2014 training schedule for its Preserving and Expanding CDFI Minority Depository Institutions program. The program provides advanced training and technical assistance for CDFI MDIs, and MDIs working toward becoming certified as a CDFI.
From January through September 2014, the CDFI Fund's series will offer two, free training sessions, five webinars, and individual technical assistance to CDFI MDIs across the country.
The in-person training sessions will focus on topics such as:
  • Addressing asset quality;
  • Optimizing portfolios;
  • Improving revenue strategies;
  • Accessing capital market solutions;
  • Telling the story of an organization's impact;
  • Enhancing operational performance; and,
  • Developing a strategic plan. 
The sessions are intended to have two-fold benefit serving both as an organizational development experience, as well as providing an opportunity for CDFI MDIs to convene with their peer group to discuss strategies to strengthen and expand their institutions, and to explore cutting-edge tools, business models, and market innovations. 
The sessions are slated for Atlanta, Ga. on Jan. 22-23 and New York City on Feb. 4-5. Use the resource link for registration information.
Deloitte Financial Advisory Services LLP and its partners will deliver the trainings. Training attendees will be eligible to receive free, direct, technical assistance provided by professionals within Deloitte FAS and its partners. The technical assistance is intended to provide support for the implementation of the concepts explored at the training.
Also, the five, free 2014 webinars will be developed based on commentary from the participants of the live trainings. More information on the webinar topics and dates will be provided when available on the CDFI Fund's website.

Senate May Be Poised To Release Tax Reform Drafts

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WASHINGTON (11/7/13)--Sen. Max Baucus (D-Mont.), who heads the Senate Finance Committee and is a key figure in the country's current tax policy debates, said he is planning to release the first in a series of tax reform discussion drafts very soon, Politico recently reported.

"Tax policy writers on Capitol Hill have made it clear since the summer that they intend to be ready to tackle a tax reform vote early this fall," Ryan Donovan said about the news. "This is the start on the Senate side."

Two Baucus aides told the publication that the first discussion draft could address reform of the international tax system. Baucus, along with the U.S. House's key tax policy figure, House Ways and Means Chairman Dave Camp (R-Mich.), have taken a "blank slate" approach to reform legislation. That approach removes all tax expenditures from the code and would add back in those that make the grade.

In the midst of this tax reform effort, credit unions and their members are using Credit Union National Association and state credit union leagues' resources, social media sites including Facebook, and micro-video site Vine, to tell their legislators, "Don't Tax My Credit Union!"

Credit union and member tax advocacy efforts have remained strong. Almost 1.2 million separate congressional contacts have been made since mid-May to support credit unions in the tax talks.

"Credit unions, credit union members--all credit union supporters--must continue to advocate for the current credit union federal tax status, which exempts them only from federal income tax," Donovan said. Credit unions are assigned that tax status because they are not-for-profit, member-owned cooperatives.

"Congress must continue to hear--so lawmakers truly understand--that a new tax on credit unions would be a tax on their 97 million members," Donovan said.

CUNA research indicates that credit unions generally offer higher returns on savings, lower rates on loans, and most importantly, low or no fees--and that these benefits combine to result in more than $8 billion in direct financial benefits each year to American consumers.

CFPB Considering Collection Protections That Could Include FIs

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WASHINGTON (11/7/13)--The Consumer Financial Protection Bureau has asked the public for help as it considers developing consumer protection rules for the debt collection market.

The Credit Union National Association has been weighing in with the CFPB to minimize the direct or indirect impact on credit unions or credit union service organizations of any rules or guidance that the agency develops and we will continue to urge the agency to focus on problem cases rather than create broad new rules that affect good and bad actors, CUNA Deputy General Counsel Mary Dunn said.

In an Advance Notice of Proposed Rulemaking (ANPR) released Wednesday, the bureau asked for data on:
  • The accuracy of information used by debt collectors;
  • How to ensure consumers know their rights; and
  • The communication tactics collectors employ to recover debts.
"Collection of consumer debts serves an important role in the proper functioning of consumer credit markets. But certain debt collection practices have long been a source of frustration for many consumers, generating a heavy volume of consumer complaints at all levels of government--including at the Consumer Bureau," CFPB Director Richard Cordray said. "Today's action will allow us to hear from the public as we consider what rules are needed…We want to ensure that all players in the industry are working with correct information, that consumers are fully informed, and that consumers are treated fairly and with dignity," he added.

The ANPR will be published soon in the Federal Register, and the bureau will accept comments for 90 days.

The bureau in a release said it has not decided whether it will release regulations to address debt collection issues. However, it said it has the authority to craft regulations under The Fair Debt Collection Practices Act and the Dodd-Frank Act. Dodd-Frank gives the CFPB the authority to issue regulations concerning unfair, deceptive, and abusive acts or practices and to establish disclosures to assist consumers in understanding the costs, benefits, and risks associated with consumer financial products and services, the CFPB said.

The bureau is looking at all debt collection practices, even by creditors for their own loans, Dunn said.

Credit unions that collect their own debts have never been subject to the Fair Debt Collection Practices Act, CUNA Senior Vice President for Compliance Kathy Thompson explained Wednesday. However, she said, credit unions that collect debts for others--and credit union service organizations that offer debt collection services--are subject to the FDCPA. And, she noted, the FDCPA does not have any implementing regulations.

"If the CFPB decides to apply any debt collection restrictions directly to credit unions, it would have to do so either by having Congress amend the FDCPA or act through its authority to regulate unfair, deceptive or abusive practices," Thompson clarified.

The CFPB started collecting consumer debt collection complaints earlier this year, and the bureau said companies have responded to more than 5,000 debt collection complaints that were forwarded on to them by the CFPB. These consumer complaints will be added to the CFPB's public Consumer Complaint Database.

For more, use the resource links.