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Washington Archive

Washington

House panel looks to end Obama mortgage-aid programs

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WASHINGTON (2/25/11)—The House Financial Services Committee on March 3 will begin markup of legislation that would end funding of the Home Affordable Modification Program (HAMP), the Neighborhood Stabilization Program (NSP), the Federal Housing Administration (FHA) Refinance Program, and the Emergency Homeowner Relief Fund. The panel’s subcommittee on insurance, housing and community opportunity will hold a hearing on the four mortgage programs on March 2. HAMP, which has the largest amount of funding of the four programs, aims to aid homeowners facing foreclosure by reducing monthly payments to sustainable levels. Despite record levels of new foreclosures--2.9 million in 2010 and a projected 3 million in 2011-- only 522,000 homes were still undergoing permanent modifications via HAMP as of late December. More than 792,000 trial modifications have been cancelled, and 152,000 trial modifications have yet to be upgraded to permanent status. A 2010 Treasury report found that HAMP was having difficulties in part because mortgages are more complicated than a one-to-one relationship between borrower and lender. However, the Treasury has also said that HAMP permanent modifications perform well over time, with lower delinquency rates than those reported by the industry at large. The administration has earmarked $29 billion for HAMP, $7 billion for the NSP and $8 billion for the FHA Refinance Program. The NSP provides grants to state and local governments that wish to purchase foreclosed or abandoned homes to prevent neighboring homes from incurring significant losses in resale value. The Emergency Mortgage Relief Program authorized the Department of Housing and Urban Development to make emergency mortgage relief payments to homeowners facing foreclosure for up to 12 months, with a possible extension of another 12 months, according to the release. The FHA Refinance Program seeks to aid mortgageholders who owe more than their home is currently worth. The committee release noted that only 35 individuals had applied for assistance through the FHA program as of Dec. 13.

CUNAs Cheney to testify on Dodd-Frank Act impact

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WASHINGTON (2/25/11)--Credit Union National Association (CUNA) President/CEO Bill Cheney is scheduled to testify Wednesday before a House Financial Services subcommittee, which is studying the impact of the Dodd-Frank Act on small financial institutions and small businesses. The Dodd-Frank financial regulatory reform package, which was signed into law last year, contains numerous changes to current financial laws, but little in the over 2000 pages of new laws directly impacts credit unions. CUNA has noted that while credit unions are still going to experience burdens related to the regulations, there are not many "wholesale" changes. CUNA continues to work with the Fed to shield credit unions from any unneeded regulatory burdens. Bank and other regulators are supposed to develop around 170 new rules and regulatory amendments by July, some early as April. Credit unions will be subject to far fewer rules but CUNA has nonetheless made it a priority to minimize the burden to credit unions of any new regulation, including those under Dodd-Frank. Many rules that are the responsibility of a single agency have already been adopted, but those involving multiple agencies remain a concern, according to observers. Some have suggested that regulators could extend the rulemaking process beyond the current July deadline if a substantive proposal is released soon. The Senate Banking Committee last week held its own hearing on Dodd-Frank implementation. That committee examined regulators' implementation progress at the half-year mark, and substantial concern was expressed by lawmakers regarding the Federal Reserve's proposed implementation of an interchange fee cap. Several lawmakers have called for a delay in interchange implementation, and CUNA has suggested that the Federal Reserve work with Congress to delay implementation by up to two years to allow greater time to consider the interchange changes potential impact. The House Financial Services Committee has planned hearings on government-sponsored enterprise reform, the National Flood Insurance Program, oversight of the Consumer Financial Protection Bureau, monetary policy, and other issues during March. The committee has also scheduled a March 2 hearing and a March 3 markup session that will address the Obama Administration’s various home market and mortgage assistance programs.(See related story: House panel looks to end Obama mortgage-aid programs.)

CU burden must be measured in NCUA insurance proposal

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WASHINGTON (2/25/11)--The National Credit Union Administration should clarify differences between its own proposal and the Federal Deposit Insurance Corporation’s (FDIC) final regulation for noninterestbearing accounts and should provide credit unions with additional examples of both interest-bearing and non-interest bearing accounts, the Credit Union National Association said in a recent comment letter. The NCUA, as required by the Dodd-Frank financial reform package, has released a proposed rule that defines noninterest-bearing accounts as traditional, noninterest-bearing checking or share draft accounts that allow for an unlimited number of deposits and withdrawals. The proposal also allows some reserve sweeps to be considered noninterest-bearing transaction accounts. CUNA in its letter said that this proposal is consistent with the new Dodd-Frank requirement. However, CUNA said that the NCUA should work to minimize any further regulatory burdens caused by the proposal. The NCUA should also clearly state on its website that the new temporary unlimited share insurance for noninterest-bearing transaction accounts will be separate from other share insurance coverage. For the full comment letter, use the resource link.

Auto enrollment in ID theft prevention could be UDAP

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ALEXANDRIA, Va. (2/25/11)—Automatically enrolling new members with free checking accounts into for-pay identity theft prevention programs, “while only using an opt-out option, appears to be an unfair or deceptive practice and may present problems” under National Credit Union Administration (NCUA) regulations, the NCUA said in a recently released legal opinion. A credit union should not assess account-related charges “unless it is clearly within its contractual rights and has met all the relevant requirements of applicable laws,” the NCUA Associate General Counsel Hattie Ulan added. The letter was in response to an inquiry by Schwartz & Ballen LLP partner Gilbert Schwartz. The credit union’s proposed practice of enrolling members into id theft programs “without their request or express consent” and charging those members an optional monthly fee of $1, while providing them with the option of opting out, could be considered a violation of the Federal Trade Commission’s unfair and deceptive acts and practices (UDAP) provisions. The NCUA said that UDAP states that a financial practice is deceptive if there is a material representation or omission of information “that is likely to mislead a consumer acting reasonably under the circumstances.” Attaching a for-pay service to a so-called “free” checking account would also likely violate portions of the Truth in Savings Act and the NCUA’s own rules on the accuracy of advertising. Overall, credit unions that offer identity theft protection services from third party vendors “should structure or modify their policies, practices, and advertising to avoid or eliminate these types of potential violations,” the NCUA said. For the full legal opinion, use the resource link.