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HMDA exemption threshold up by 1M in 2012

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WASHINGTON (2/16/12)--Credit unions and other financial institutions with total assets of less than $41 million as of Dec. 31, 2011 will not need to collect and report Home Mortgage Disclosure Act (HMDA) data in 2012, the Consumer Financial Protection Bureau (CFPB) said on Wednesday.

Under HMDA in 2012, financial institutions with total assets of more than $41 million that have home or branch offices in defined metropolitan statistical areas must collect certain mortgage loan data and report it to federal regulators. The HMDA reporting threshold stood at $40 million in 2011.

HMDA thresholds are traditionally published in December of each year, but the CFPB did not set the 2012 threshold late last year. The Credit Union National Association (CUNA) raised this point with CFPB officials in early January, and asked that clarification concerning the 2012 threshold be provided as soon as possible.

The CFPB has issued an interim final rule on HMDA, and that rule became effective on Dec. 30, 2011. The interim final rule is substantially similar to the Federal Reserve's Regulation C, and CUNA will file an official comment letter with the CFPB on this interim final rule later this week.

The Dodd-Frank Act amended HMDA to require covered financial institutions to report the age of mortgagors and mortgage applicants, any points and fees payable at origination in connection with a mortgage, the difference between the annual percentage rate associated with a loan and a benchmark rate or rates for all loans, and the terms of a given mortgage loan, among other items.

According to the CFPB, these additional amendments required by the Dodd-Frank Act will be covered in future rulemakings by the agency, and are not made a part of the previously issued interim final rule or today's final rule.

CUNA asks regulators for more open-end loan guidance

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WASHINGTON (2/16/12)--The Credit Union National Association (CUNA), along with CUNA Mutual Group, has urged the Consumer Financial Protection Bureau (CFPB) and the National Credit Union Administration (NCUA) to revisit the regulation of multi-featured open-end lending (MFOEL) plans, and possibly provide additional guidance on these plans, saying that elements of current regulations are confusing some credit unions.

Multi-featured, open-end lending has been used by credit unions as a tool to assist in establishing long-term borrowing relationships with their members, and has served as a convenient way for consumers to obtain advances at the point of a transaction.

The Federal Reserve in 2010 changed the rules for MFOEL plans, saying that occasional or routine verification of certain credit information is permissible, but such verification may not be done as a condition of granting a particular advance for MFOEL plans to be treated as open-ended.

The NCUA issued guidance in 2010 to help federal credit unions comply with the Fed's Reg Z changes, but CUNA said confusion still abounds for credit unions concerning the concept of "occasionally or routinely" verifying certain credit information as well as the verification of credit information in connection with a consumer's request for certain advances under a MFOEL plan.

In a letter to CFPB Director Richard Cordray and NCUA Chairman Debbie Matz, CUNA and CUNA Mutual Group said that additional verification that allows for safe and sound lending practices should meet the requirements of the Truth in Lending Act and "serve credit union members well."

The letter also noted that credit unions are confused as to whether or not so-called hybrid or blended MFOEL plans, which combine elements of open- and closed-end loans, would comply with existing Reg Z rules. Financial institutions have used a combination of prior open-end loan agreements and closed-end loan disclosures in connection with these types of plans, but there is concern that this approach may not satisfy current regulatory requirements. CUNA and CUNA Mutual have asked for clarification on this issue, and also suggested the CFPB and NCUA give credit unions the time needed to comply with any regulatory changes or guidance that may result.

CUNA earlier this month met with Cordray on MFOELs and other issues, and the CFPB director at that time acknowledged that he was unaware of the issue until it was raised by CUNA senior staff. Cordray at that time had no immediate answer to the problem, but said he would have discussions with credit unions and the NCUA to determine what, if anything, should be done.

For the full CUNA/CUNA Mutual letter, use the resource link.

Remittance changes long overdue CFPB says

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WASHINGTON (2/16/12)--Recently approved remittance transfer changes "are long overdue," and will "benefit the financial industry if the result is greater trust in the marketplace," Consumer Financial Protection Bureau (CFPB) Director Richard Cordray said on Wednesday.

Cordray spoke before the League of United Latin American Citizens annual legislative conference in Washington. "Up to this point, few protections existed for those sending international money transfers. Hidden fees and fluctuating exchange rates meant that consumers did not know how much money would be received on the other end," he said.

"If we can succeed in making these transactions more transparent, we will attract more customers who can compare options and achieve lower costs and reduced risk... our remittance rule should facilitate confidence in international money transfers by making them work better and with more certainty," Cordray added.

New remittance rules issued by the CFPB earlier this year require remittance transfer providers to disclose the exchange rate and all fees associated with a transfer so consumers know exactly how much money will be received on the other end. Remittance transfer providers will also be required to investigate disputes and fix mistakes.

The rule will become effective in February 2013.

The remittances regulation would affect most U.S. credit unions that provide consumers with international electronic funds transfer services because it broadly defines the term "remittances" to include virtually all cross-border electronic funds transfers initiated by consumers in the U.S., other than most transfers involving credit, debit, and prepaid cards.

Under an accompanying rule, credit unions that provide 25 or fewer international consumer-initiated electronic funds transfers per year are exempted from all aspects of the rule. However, credit unions performing more than 25 of these transactions a year would be subject to the rule if they provide international funds transfer services "in the ordinary course of business" under a facts and circumstances test.

The Credit Union National Association (CUNA) and the World Council of Credit Unions (WOCCU) are concerned that a number of credit unions that provide 'remittances' as defined by the rule will face challenges in complying with the new regulation, and CUNA has asked the CFPB to provide as much regulatory relief as possible through the accompanying 'safe harbor' standards.

In a meeting last week with CUNA President/CEO Bill Cheney, Cordray said the agency will certainly consider ways to address concerns of smaller institutions that provide remittances and encouraged CUNA to provide its recommendations to the agency, both in its comment letter on the proposal and in discussions with agency staff.

About 109 U.S. credit unions participate in WOCCU's IRNet, a remittance service operated by WOCCU Services Group. The service, which works primarily with Hispanic clients, transmits remittances to eight countries and has taken part in over $2.9 billion in total transactions since its inception.

Inside Washington (02/15/2012)

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  • WASHINGTON (2/16/12)--The Department of Housing and Urban Development (HUD) has withdrawn a proposal that would have allowed Farm Credit lenders to participate in the Federal Home Administration (FHA) home mortgage programs (American Banker Feb. 15). In a notice published in the Federal Register Monday that announced the withdrawal, HUD said that responses to the proposed rule were almost evenly split between supporters and opponents. Those in favor of the proposal said there is a need for credit in the rural farm system and that allowing Farm Credit lenders to offer FHA loans would help satisfy demand. Opponents say that community banks are meeting that need and if the scope of the FHA program broadened, it would increase government's role in the market, contrary to policymaker's intentions …
  • WASHINGTON (2/16/12)--An executive summary of the national mortgage settlement terms posted at provides highlights of the deal announced last week. The settlement requires the five banks to allocate a total of $17 billion in assistance to borrowers who have the intent and ability to stay in their homes while making reasonable payments on their mortgage loans. At least 60% of the $17 billion must be allocated to reduce the principal balance of home loans for borrowers who are in default or at risk of default on their loan payments. To assist homeowners who are not delinquent on their payments but cannot refinance to lower rates because of negative equity, the banks must offer refinance programs totaling at least $3 billion. The new standards will prevent mortgage servicers from engaging in robo-signing and other improper foreclosure practices. The standards will require banks to offer loss mitigation alternatives to borrowers before pursuing foreclosure …
  • WASHINGTON (2/16/12)--The Federal Reserve Board on Tuesday announced its approval of Capital One's proposal to acquire ING Bank. The newly formed organization would not pose a systemic risk to the financial system and would provide benefits such as greater convenience, increased competition, or gains in efficiency, the Fed said. The benefits outweigh the possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, unsound banking practices, or risk to the stability of the U.S. banking or financial system, the Fed said. The proposal would allow Capital One to offer more types products and services, such as fixed-rate, 30-year mortgage loans, full-access checking accounts, automobile loans, small-business loans, commercial loans, and credit card and other consumer loans--none of which are provided by ING, according to the Fed …
  • ST. PAUL, Minn. (2/16/12)--Representatives from Minnesota credit unions and the Minnesota Credit Union
    Click to view larger image Click for larger view
    Network (MnCUN) travelled to Washington, D.C., on Feb. 6-8 for the first-ever small business Hike the Hill event, coordinated by the Credit Union National Association. The delegation from Minnesota joined 75 other small business and credit union representatives from across the country to encourage federal legislators to support two bills that propose raising the credit union member business lending cap from 12.25% to 27.5%. In Minnesota, lifting the cap would amount to the creation of 2,000 jobs and would make an additional $150 million available to lend to the state's small businesses. In the photo, representatives from Minnesota credit unions and MnCUN met with Rep. John Kline (R) (Photo provided by Minnesota Credit Union Network) …
  • WASHINGTON (2/16/12)--The Federal Deposit Insurance Corporation (FDIC) Wednesday reported a new phishing scam that is using the agency's name in an attempt to defraud accountholders. The emails generally inform accountholders that their ACH and Wire transaction abilities have been temporarily withheld because their "security version" has expired. The emails then provide a link through which accountholders can download and install "updated installations." This e-mail and link are fraudulent, and recipients should consider the intent of this e-mail as an attempt to collect personal or confidential information, or to load malicious software onto end users' computers, the FDIC said…
  • WASHINGTON (2/16/12)--The Consumer Financial Protection Bureau (CFPB) this week published information on service contract actions the agency took in 2011. The CFPB said the information is "organized by function to show how contracted resources were used by the agency to support its mission." The document was published in the Federal Register