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CDRLF CLF CDFI funding proposed for 2013

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WASHINGTON (2/14/12)--The maximum loan limitation of the National Credit Union Administration's (NCUA) Central Liquidity Facility (CLF) will continue at its fiscal 2012 level under the Obama administrations proposed budget for fiscal 2013. The CLF is authorized by the Federal Credit Union Act to lend up to 12 times its paid-in capital.

Under the Obama administrations proposed 2013 budget, funding for the NCUAs Community Development Revolving Loan Fund (CDRLF) program would fall slightly from 2012's funding total. The administration has requested $1.19 million for 2013. A total of $1.25 million in CDRLF funding was approved in the 2012 budget. The CDRLF provides loans and technical assistance to federal and state credit unions that are designated as low-income credit unions, as defined by NCUA regulations.

The CDRLF held 49 total loans to 44 credit unions, totaling $3.5 million in outstanding loans, in its portfolio as of Sept. 30, 2011, and the CDRLF awarded 188 technical assistance grants, totaling just over $1 million, last year. Assets in the CDRLF, including interest earned and appropriations, totaled $17.5 million as of Sept. 30, 2011.

Funding for the U.S. Treasury's Community Development Financial Institutions (CDFI) fund would hold steady in 2013, matching the 2012 budget's funding level of $221 million.

The administration's budget will be the subject of several hearings, as administration officials appear before the Senate Budget Committee, Senate Finance Committee, House Ways and Means Committee, and House Budget Committee hearings this week.

Financial info privacy leads week in D.C.

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WASHINGTON (2/14/12)--H.R. 3871, which would ensure that groups or individuals that supply information to the Consumer Financial Protection Bureau (CFPB) would not waive their right to privacy protections, will be the bill to watch for credit unions this week, and that piece of legislation is expected to come up for a House Financial Services Committee vote on Thursday.

Republican and Democratic lawmakers have recently spoken in support of the bill, and these privacy improvements have also been approved by CFPB Director Richard Cordray. The Credit Union National Association also backs the bill, noting in a letter sent last week that while section 205(j) of the Federal Credit Union Act protects privileged information submitted by credit unions to the National Credit Union Administration, state credit union supervisors, and foreign banking authorities, that section does not cover submissions to the CFPB.

The Reopening American Capital Markets to Emerging Growth Companies Act of 2011 (H.R. 3606), the SEC Regulatory Accountability Act (H.R. 2308), and the Swaps Bailout Prevention Act (H.R. 1838) will also be marked up during that hearing.

A full slate of hearings is set for this week, and the Obama administration's budget will be the subject of many of these hearings. Administration officials will appear before the Senate Budget Committee, Senate Finance Committee, House Ways and Means Committee, and House Budget Committee hearings this week. U.S. Treasury Secretary Timothy Geithner and Office of Management and Budget Acting Director Jeffrey Zients will appear during some of these hearings.

Other noteworthy hearings scheduled for this week include:
  • A Wednesday House Judiciary Committee hearing on President Barack Obama's recent recess appointments;
  • A Wednesday House Financial Services oversight subcommittee hearing on the CFPB budget;
  • A Wednesday Senate Banking financial institutions subcommittee hearing incentive compensation at large financial institutions; and
  • A Thursday Senate Homeland Security Committee hearing on the Cybersecurity Act of 2012.

Banking chair wants CU bank exam practices audit

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WASHINGTON (2/14/12)-- Senate Banking Committee Chairman Tim Johnson (D-S.D.) sent a letter to the inspectors general (IGs) of the National Credit Union Administration (NCUA), two federal banking agencies and the U.S. Treasury Department seeking an audit of the examination  practices of the federal financial institution regulators.

In the letter sent Feb. 10 Johnson wrote, "Recently, I have heard numerous concerns from community banks and credit unions that the financial regulators' examiners are conducting examinations with unclear standards or with inconsistent application of agency policies and procedures.

"Community banks and credit unions indicate that examination concerns create uncertainty in their business operations and hesitation to provide credit to their customers," the letter said, and added,  "While the regulators must ensure the safety and soundness of financial institutions, I believe responsible lending to families and small business owners is one key to our economic recovery."

"To help the (Senate Banking Committee) better understand the supervisory process of the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comprtroller of the Currency, and the (NCUA), I respectfully request that each of your offices conduct an audit of the specific agencies under your purview as appropriate," Joshnson wrote to the IGs.

Johnson's letter was sent less than two weeks after a House subcommittee hearing on The Financial Institution Examination Fairness and Reform Act (H.R. 3461). The Credit Union National Association (CUNA) testified in support of the legislation. It is opposed, as written, by the NCUA and banking agencies.

CUNA President/CEO Bill Cheney said Monday that CUNA is "encouraged by and appreciates" Johnson's letter requesting an audit of bank and credit union examination practices. 

"This is a key concern for credit unions…We are hopeful that this important forum will result in greater attention from NCUA  to credit unions' examination concerns and reasonable supervisory approaches that respect credit unions' rights when they disagree with examiner findings and directives.

"While we support the legislation, which has been introduced in the House of Representatives, the truth of the matter is that it should not take an act of Congress to address the concerns that credit unions have with the examination process. Credit unions have very reasonable expectations regarding that process:  they want more information about how decisions are made, including what regulatory or statutory authority was used to make determinations; they want consistent application of regulations; and, they want an appeals process absent the fear of retaliation.

"All of this can be done under existing law, but current practice too often falls short of these expectations," Cheney said.

He concluded, "Whether through the enactment of the House bill or more intense scrutiny as Chairman Johnson has proposed, we are pleased that Congress is taking the concerns we have raised seriously and we look forward to working with all who share our concern."

NCUA clarifies long-term mortgage mod rules

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ALEXANDRIA, Va. (2/14/12)--Mortgage loans that comply with a 40-year, long-term maturity limit when they are originated will continue to comply with that maturity limit, even if they are renegotiated and their maturity is extended, the National Credit Union Administration (NCUA) has said.

NCUA General Counsel Michael McKenna in a Feb. 10 legal opinion letter said this interpretation of the rule "is consistent with guidance provided under federal residential mortgage loan modification programs."

The NCUA in the letter provided an example of how the policy would work. In that example, the agency cited a 40-year mortgage loan that was originated in 1980 and refinanced in 2010. While the original maturity date of the mortgage was 2020, after refinancing, that maturity date has been extended until 2050. "The loan term is determined from the modification date, not the origination date," the agency said.

McKenna noted "all long-term mortgage loans and loan modifications are, of course, subject to safety and soundness review," and NCUA examiners "may have a basis to object to a particular loan modification for safety and soundness reasons, even if all regulatory requirements are satisfied."

For the full NCUA legal opinion letter, use the resource link.

Senate leaders urged to set NFIP vote

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WASHINGTON (2/14/12)--The National Flood Insurance Program (NFIP) was granted an extension to May 31 just as last year's congressional session ended and Senate leaders now are being urged by two of their colleagues to permanently extend the program, but with modernizations.

Sens. Jon Tester (D-Mont.) and David Vitter (R-La.)  urged the Senate majority leader, Harry Reid (D-Nev.), and minority leader, Mitch McConnell (R-Ky.),  to schedule debate on a  bill passed 406-22 by the House in July and also approved by the Senate Banking Committee with "overwhelming bipartisan support."

"The Senate should take this opportunity to capitalize on the bipartisan effort by the Senate Banking Committee and the House of Representatives to make major improvements to this important program," wrote Tester and Vitter in their Feb. 13 letter.  The senators added that they believe passage of a comprehensive NFIP reauthorization bill is "within reach."

The NFIP was established in 1968 and is intended to protect homes and businesses from financial ruin when flooding occurs.  The program was last authorized in 2004 to extend to 2008.  Since 2008, the program has been extended through a long series of short-term measures.

"In fact, the program expired four times in 2010 resulting in lapses totaling 53 days. It has been estimated that those program lapses resulted in the delay or cancellation of more than 1,400 home closings per day, further damaging our already fragile housing market," the senators wrote.

Both House and Senate bills would extend the flood insurance program for five years. The House bill has a provision, backed by the Credit Union National Association, that would preserve the rights of credit unions to protect their collateral from flood hazards. The provision addresses situations where borrowers have allowed flood insurance to lapse, and clarifies that subsequent flood insurance purchased by a credit union, or other lender, would date back to the date the existing policy lapsed or became insufficient in coverage amount, including any premiums or fees incurred during the 45-day notification period.

The Senate NFIP reform discussion draft, approved by the banking panel, includes a provision--opposed by CUNA--that would require all mortgage lenders to escrow for NFIP premiums. Current law only requires lenders that escrow for taxes and insurance to also escrow for NFIP premiums.

CUNA has warned lawmakers the escrow requirement could drive some small mortgage lenders, including credit unions, out of the mortgage business because there is a significant cost involved with establishing escrow accounts, particularly for community banks, credit unions, and community-based lenders that have small lending volumes.

CFPB launches prototype periodic statement

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WASHINGTON (2/14/12)--The Consumer Financial Protection Bureau (CFPB) has completed one round of testing for its proposed periodic mortgage statement form, and is planning two additional rounds of testing between now and this summer.

The CRFB said its goal "is to create a statement that is easy to understand and that provides information to borrowers about current and past payments."

"We want to include all the important information but not overload the consumer with unnecessary details," the agency added.

The model form includes space for information on the:
  • principal loan amount;
  • current interest rate;
  • late fee structure; and
  • prepayment fee structure.
The form also includes space for mortgage servicer contact information.

A proposed form and related mortgage disclosure rule is expected to be released in the summer. However, the agency said, creditors, assignees, and mortgage servicers "will have some flexibility to tailor the model form to work for their needs and the needs of their customers."

The CFPB is also developing a standardized form for mortgage transaction and closing costs and a combined Truth in Lending Act/Real Estate Settlement Procedures Act (RESPA) document, and the agency is planning to develop new mortgage regulations once the mortgage disclosure form revision project is completed.

The Credit Union National Association continues to be actively involved in roundtable discussions and other forums with CFPB personnel and others as the mortgage revision process moves forward.

Inside Washington (02/13/2012)

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  • WASHINGTON (2/14/12)--Servicers could owe military borrowers millions under the terms of the $25 billion mortgage settlement. JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial will provide substantial financial compensation to servicemembers whose rights under the Servicemembers Civil Relief Act were violated (American Banker Feb. 13). Servicers must make minimum payments of $116,785 to any servicemembers affected since January 2006. The Justice Department seeks to have 100% of the victims identified and compensated, Thomas Perez, the assistant attorney general for the Justice Department's Civil Rights division, said Friday. Perez said he expects the settlement to be in excess of $20 million. Servicemembers also will receive compensation for lost equity and interest, and could receive higher payment for the same violation. Payment also could be made for additional harm, with no limit on the total liability, Perez said …
  • WASHINGTON (2/14/12)--Although a national mortgage settlement has reportedly been reached, its terms have yet to be released, raising doubts about the $25 billion deal. The settlement will not be made public until it is submitted to a court, spokespersons for both the Iowa attorney general's office and the Department of Justice told the American Banker (Feb. 10). The website created for the national settlement features a message that says the settlement document is "coming soon." However, a person familiar with the mortgage servicing pact told the Banker that a settlement term sheet does not yet exist …
  • ALBANY, N.Y. (2/14/12)--After the member business lending Hike the Hill initiative, coordinated by the Credit Union National Association, last week, two New York congressional representatives have signed on as co-sponsors of two separate pieces of legislation. Rep. Gregory Meeks (D) has signed on as an original co-sponsor of the newly introduced supplemental capital bill, H.R. 3993, and Rep. Gary Ackerman (D) added his name to the list of co-sponsors of the Small Business Loan Enhancement Act (H.R. 1418 and S. 509). "The signing on of these two co-sponsors so quickly on the heels of our Hike visits truly shows the effectiveness of grassroots advocacy and the importance of staying involved, informed and active," said William J. Mellin, president/CEO of the Credit Union Association of New York. Participating in the hike were Linda Armyn, senior vice president corporate strategy and governmental affairs, Bethpage FCU, Bethpage, N.Y;  Tansley Sterns, assistant vice president, corporate strategy and governmental affairs, Bethpage FCU; and Lawrence Jones, vice president, commercial lending, Bethpage FCU; Rob Nemeroff, director of marketing and public affairs, Melrose CU, Briarwood, N.Y.; Steven Sobotta, director of marketing, and Samuella Seisay, director of lending, Actors FCU, New York; Michael Tucci, president/owner, and Trevor Tucci, co-owner, Energy Fitness, St. James, N.Y; and William Mellin, president/CEO and Michael Lanotte, senior vice president/general counsel, Credit Union Association of New York …