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Inside Washington (12/29/2011)

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  • WASHINGTON (12/30/11)--In an attempt to keep sales of foreclosed properties flowing as much as possible, the Federal Housing Administration (FHA) has suspended a 2003 rule that prohibits investors from using FHA mortgages to "flip"--or purchase and quickly resell--single-family houses at inflated prices. This will be the third time the rule has been suspended.  The Department of Housing and Urban Development (HUD)  issued the antiflipping rule protect FHA borrowers but suspended it in early 2010 and then for all of 2011 because it determined the rule was holding up sales of foreclosed  properties …
  • WASHINGTON (12/30/11)--Serious delinquencies on loans insured by the Federal Housing Administration (FHA) rose to 9.3% in November, a growth of one percentage point over the 8.3% rate in July, said FHA's Single-Family Outlook. Roughly 689,350 of loans were 90 days or more late, compared with 589,000 overdue loans in July (American Banker Dec. 29). To date, the delinquencies have been attributed to legacy loans originated during 2006-2008--before the housing boom went bust. However, now FHA says the rates are affected by massive fiscal 2009 and fiscal 2010 books of business and a slowdown in FHA lending. That means for the next two years higher delinquency rates will be reported. Loans made in 2009 and 2010 are reportedly performing well when compared with those from 2007 and 2008. …

Jan. 19 is 2012s first Financial Capability open meeting

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WASHINGTON (12/30/11)--The President's Advisory Council on Financial Capability has scheduled its first open meeting of 2012 for Jan. 19 at 10 a.m. (ET).

The council agenda is expected to include the following topics:

  • A report from the council's subcommittees on financial access, research and evaluation, partnerships, and youth) on their progress on various projects;
  • A review of membership and composition of the subcommittees; and
  • Reports from outside experts about practices and innovations regarding financial capability in the workplace.
The council is composed of two ex officio federal officials and 11 non-governmental members appointed by the president  and with relevant backgrounds such as financial services, consumer protection, financial access and education. Current members include Roland "Arty" Arteaga, president/CEO of the Defense Credit Union Council.

New PZC software can enhance CU advocacy efforts

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WASHINGTON (12/30/11)--The Credit Union National Association's (CUNA) Project Zip Code (PZC) has played a pivotal role in recent credit union advocacy efforts, and a new version of CUNA's PZC software can give credit unions a great advantage as they work to advocate for their credit unions and their members in discussions with legislators and candidates for office.

PZC is a secure program that matches credit union members by legislative district and county based upon their zip code. The program has identified over 78 million credit union members.

The latest version of Project Zip Code software, just unveiled this month, matches credit union membership data to the current 112th  U.S. congressional districts and state legislative districts. New legislative districts being created due to the 2010 census are also covered. The 113th congressional and state districts are also being updated.

"Credit unions are always growing, districts are changing, and members are moving across the county--or the country--even though they keep their credit union membership," said Credit Union National Association (CUNA) Senior Vice President of Political Affairs Richard Gose, and those changes are reflected in the latest version of CUNA's Project Zip Code program.

"Every time credit union advocates meet with their elected officials the Project Zip Code numbers have an important role to play," CUNA Grassroots Manager Kristen Prather said.

"Because of Project Zip Code we are able to go into a congressional office and tell the elected officials how many credit union members they represent with very clear numbers. The more credit unions that participate in Project Zip Code, the more accurate our membership counts to members of Congress will be."

As the Project Zip Code program has grown, the number of members per legislative district has grown and leaves an even greater impression on legislators, she added.

Project Zip Code also protects the privacy of credit union members, as only membership totals per legislative district and county, and not information on individual members, is transmitted from credit unions to the Project Zip Code database.

The benefits of Project Zip Code are not only political, however, as CUNA adds that credit unions can use the program to better track their membership and to plan future ATM and branching expansion.

CUNA identifies busy regulatory arena for 2012

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WASHINGTON (12/30/11)--As the credit union world heads into 2012, the Credit Union National Association's (CUNA) Regulatory Advocacy department has created a chart that lists a variety of agencies' pending proposals that would affect credit unions.

As busy as 2011 has been, indications are that 2012 will be just as full of regulatory actions.  CUNA and the state leagues remain committed to improving the regulatory environment for credit unions, and that will continue to be the top regulatory advocacy priority into 2012.

So what happened in 2011? (Click on chart image to access chart.)
Click to download the chart Click to download the chart
 At the National Credit Union Administration (NCUA) alone there were 18 new regulatory initiatives, which was five more than the year prior.

With some of the more restrictive of those, such as ones on credit union service organizations (CUSOs), interest rate risk management (IRR), and loan participations, CUNA notes that the agency seems poised to replace the principle that credit unions should manage their own risks with a new principle: Protect the National Credit Union Share Insurance Fund no matter what--even if that means eliminating risks.

However, CUNA will continue its ongoing efforts to work with NCUA Chairman Debbie Matz and senior NCUA staff to detail credit union concerns with the CUSO and IRR proposals as well as with other agency staff on a request for comments on using derivatives to mitigate interest rate risk.

CUNA is also identifying concerns with proposals issued in December on loan participations, the flagging Reg-Flex program, and on emergency sources of liquidity.

At the new Consumer Financial Protection Bureau (CFPB) there are a number of significant projects underway that could affect credit unions either directly or indirectly.

CUNA Senior Vice President and Deputy General Counsel Mary Dunn explains in her final Regulatory Advocacy Monthly Report of the year (see resource link) that credit unions will not necessarily see a number of onerous new rules from the CFPB that impose numerous new requirements on credit unions. However,  she says, the agency does have some significant projects underway and proposals out for comment that CUNA is watching closely and raising concerns and questions with the CFPB.

One of CFPB's key pending projects is its request for comment on how to streamline the regulations that were transferred to its authority from other agencies under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Other CFPB projects and proposals include (see chart for detail):

  • Remittance transfers (initiated by the Fed);
  • Ability to repay (mortgages, initiated by the Fed);
  • Regulation CC, Expedited Funds (shared authority with the Fed);
  • Private student lending regulation;
  • Credit card complaints for large issuers (more than $ 10 billion in assets);
  • Deposit/share account insurance disclosures for non-federally insured financial institutions;
  • Know Before You Owe (certain disclosures for TILA and RESPA simplified; disclosures for credit cards; and disclosures for student loans); and
  • Rules that were transferred to the agency, such as the Home Mortgage Disclosure Act, RESPA, Equal Credit Opportunity, Truth-in-Lending and others.
For other agencies and initiatives actively being monitored by CUNA, please refer to the chart above and resource link below.