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CUNA CFPB should simplify Reg Z

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WASHINGTON (2/24/12)--The Consumer Financial Protection Bureau (CFPB) should make simplification of Regulation Z a priority, and consider how the entire mortgage application and consummation process can be improved for borrowers and lenders alike, the Credit Union National Association said in a recent comment letter.

The agency should also examine lending products that are covered by the rule to determine whether current requirements facilitate the ability of consumers to understand what is being offered to them, CUNA added.

Reg Z implements the Truth in Lending Act. CUNA in the letter noted that Reg Z is among the most complex and costly regulations to implement for credit unions, and said many credit unions have asked for more flexible guidance from the CFPB and the National Credit Union Administration on multi-featured open-end lending.

Credit unions are also concerned by portions of Reg Z that address 14-day advance notice requirements and sections that govern when increased penalty rates may be applied to delinquent accounts. There is also confusion regarding when preferential loan rates can be given to employees that take out accounts at their employing financial institution and whether the length of the cycle for issuing periodic statements should match the payment frequency terms of a given loan.

CUNA is currently reviewing Regulation Z with its Consumer Protection Subcommittee and Lending Council, and will provide additional comments and recommendations to the CFPB later this year.

For the full comment letter, use the resource link.

Home prices fell 0.1 in 2001 4Q FHFA reports

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WASHINGTON (2/24/12)--U.S. home prices decreased by 0.1% in the fourth quarter of 2011, the Federal Housing Finance Agency (FHFA) reported.

The 0.1% decrease is based on the FHFAs seasonally adjusted purchase-only house price index (HPI), which the FHFA said is calculated from home sales price information from Fannie Mae- and Freddie Mac-acquired mortgages.

"While FHFA's national index shows a 2 percentage point price decline over the latest four quarters, twelve states and the District of Columbia posted price increases," FHFA Principal Economist Andrew Leventis noted. "When coupled with the fact that about half of all U.S. states saw price increases in the latest quarter, this growth adds to mounting evidence that real estate markets are seeing at least some signs of life," he added.

Home prices decreased by 1.1%, on an adjusted basis, during the quarter, and seasonally adjusted home prices fell 2.4% from the fourth quarter of 2010 to the fourth quarter of 2011, the FHFA said. However, the FHFA's seasonally adjusted monthly index for December was 0.7% higher than the total recorded in November.

Home prices in the West South Central census division, which includes Arkansas, Louisiana, Oklahoma and Texas, were the quarter's strongest, increasing by 1.1%. Home prices showed the sharpest decline in New York, New Jersey and Pennsylvania, falling by 1.2%.

For the full release, use the resource link.

Liquidity rule changes too broad CUNA says

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WASHINGTON (2/24/12)--The Credit Union National Association (CUNA) does not support the National Credit Union Administration's (NCUA) proposed emergency liquidity regulations for federally insured credit unions because CUNA does not agree that a new rule on liquidity is needed.

The CUNA comments were in response to a request for comments from NCUA regarding whether credit unions should be required to maintain access to emergency liquidity. The agency's notice outlines a number of options that credit unions could take to ensure they maintain needed liquidity in times of financial stress.

Under the notice, credit unions could ensure liquidity by:
  • Becoming a member of the NCUA's Central Liquidity Facility (CLF) by subscribing to CLF stock or through a corporate credit union;
  • Obtaining and maintaining "demonstrated access" to the Federal Reserve Discount Window; or
  • Maintaining a certain percentage of their assets in highly liquid U.S. Treasury securities.

CUNA worked with various association groups and collected data, as it routinely does, to respond to the notice in its comment letter. The majority of commenters indicated they do not support a new emergency liquidity regulation.

CUNA does agree that monitoring and managing liquidity by credit unions, particularly larger ones, is very important for a smooth functioning payment and financial system, but added it has reservations about requiring all federally insured credit unions to develop and maintain access to federal sources of liquidity that are approved by NCUA.

"Credit unions should decide for themselves, based on their risks, whether an emergency liquidity source is called for and what the source or sources should be," CUNA Deputy General Counsel Mary Dunn wrote.

If NCUA does move forward with an emergency liquidity proposal, the agency should consider a credit union's level of payment-system risk and net worth, among other things, when it determines which credit unions should be subject to the rule, the CUNA letter continued.

Ninety percent of credit unions that responded to a CUNA comment call on the liquidity proposal said alternative federal sources, such as the Federal Home Loan Banks (FHLBanks), should be acceptable sources of liquidity to meet the needs of the NCUA liquidity proposal, if the agency moved forward.

CUNA strongly supported the use of FHLBanks for liquidity and offered several recommendations to improve the CLF, as well as access to the Federal Reserve's Discount Window for credit unions.

The 12 Federal Home Loan Bank presidents, in their own comment letter, urged the NCUA to add their banks to the agency's list of approved emergency liquidity providers for credit unions.

"Like Treasuries, FHLBank Consolidated Obligations are accepted as safe investments and have garnered support from regulators and market participants for their benefits as a source of liquidity during times of crisis," the presidents wrote.

They also said, "Unlike certain sources of liquidity that are only available during times of emergency, FHLBank (a)dvances serve as a source of liquidity for member institutions, enhancing their funding abilities in all economic cycles," the presidents added.

For the full CUNA comment letter, use the resource link.

Inside Washington (02/23/2012)

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  • WASHINGTON (2/24/12)--The Obama administration on Thursday released a "Consumer Privacy Bill of Rights" that would give internet users more control over their personal information. The bill of rights states that consumers have the right to determine what personal data is collected by online firms, and to ensure that that data is handled securely and responsibly. They are also entitled to access and correct their personal data, and can "expect that organizations will collect, use, and disclose personal data in ways that are consistent" with the context in which they provide the data. Consumers also have the right to "easily understandable information about privacy and security practices," the proposal adds. The administration said these guidelines would be used as new privacy related laws and regulations are crafted. …
  • WASHINGTON (2/24/12)--Officials at the Department of Housing and Urban Development (HUD) offered assurances that U.S. taxpayers will not subsidize the $26 billion mortgage settlement. An article in last Friday's Financial Times argued that there is a taxpayer subsidy because modifications performed under the Treasury's Home Affordable Modification Program (HAMP) are eligible for credit under the settlement. In a blog post Wednesday, HUD said servicers cannot use HAMP incentives to meet their obligations under the settlement. HAMP pays incentives to encourage mortgage modifications, HUD said. While the incentives may include payments for reducing principal, most HAMP modifications do not include principal reduction. The settlement does not give any credit for these HAMP modifications. For the modifications that do include principal reduction, servicers only receive credit for the portion of the principal reduction that they themselves pay for, not for the portion covered by incentives in the program, HUD said …
  • WASHINGTON (2/24/12)--Carol Galante, acting assistant commissioner of the Federal Housing Administration (FHA), Wednesday said Bank of America's $1 billion dollar payment from the mortgage settlement was not a "gift" to bail out the FHA's mortgage insurance fund, but compensation for previous losses (American Banker Feb. 23). Galante did not dispute that the payment essentially kept the FHA's mortgage insurance fund from going in the red. As part of the $26 billion settlement with the five majors servicers, BofA agreed to a pay $l billion to resolve allegations of "fraudulent and wrongful conduct." The FHA plans to announce premium increases next week, said Galante, who spoke at a conference for mortgage servicers hosted by the Mortgage Bankers Association in Orlando, Fla. …
  • WASHINGTON (2/24/12)--Know anyone with a background in consumer protection, financial services, fair lending and civil rights, consumer financial products or services, or community development, who is not a federal lobbyist?  The Consumer Financial Protection Bureau announced Thursday that it is seeking nominations of just such people to become members of its Consumer Advisory Board. That panel of consumer experts will advise the bureau on emerging trends and practices in the financial services and products industry. Details of how to submit a nomination are included in a Federal Register document