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CU comment sought on HUD mortgage appeals changes

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WASHINGTON (2/7/12)--The Credit Union National Association (CUNA) is seeking credit union comment on a Department of Housing and Urban Development (HUD) proposal that would eliminate the process for requesting alternative Federal Housing Administration (FHA) maximum mortgage amounts.

HUD currently limits the maximum principal obligation on FHA-insured single-family mortgages to either 115% of the median house price for a single-family home in a surrounding metropolitan area, or 65% of the national conforming limit. However, HUD allows this obligation to be challenged through an appeals process if any party involved in the mortgage "believes that a mortgage limit established by the [HUD Secretary] does not accurately reflect the median house prices in the area."

This HUD rule was implemented in the early 1980s, when HUD did not have comprehensive data for home sales transactions.

Under these current HUD rules, appeals could only be made in ten of the 3,234 counties in the U.S. and related territories, and HUD has not seen a mortgage-related appeal since 2008.

Overall, HUD has said this appeals process is outdated and unnecessary, and creates unneeded costs for the agency. HUD has said removing the appeals regulation would not have any impact on the calculation of area loan limits now or in the future.

CUNA has encouraged credit unions that have used the appeals process in the past, or that anticipate taking advantage of the appeals process in the future, to consider circumstances that would lead them to make an appeal before they provide their comment.

CUNA is accepting comments until March 1. For the full comment call, use the resource link.

IRS proposal provides retirement plan flexibility CUNA

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WASHINGTON (2/7/12)--The Credit Union National Association (CUNA) has said it supports the Internal Revenue Service's (IRS) efforts to clarify the process for determining whether a retirement plan an entity offers is a governmental plan, but also suggested ways the proposal could be improved in a recent comment letter.

The IRS is working to establish rules that would provide general guidance relating to the determination of whether a retirement plan is a governmental plan within the meaning of section 414(d) of the Internal Revenue Code, as there currently are no regulations interpreting this section of tax code, CUNA said.

Under the IRS proposal, a governmental retirement plan would be a plan that is established and maintained for its employees by the government, an agency of the government, or a "governmental instrumentality."

CUNA said federal credit unions have an interest in this issue because certain federal credit unions offer retirement plans to their employees that are considered non-governmental plans.

The IRS would determine which retirement plans do and do not meet these standards through a facts and circumstances test. That test asks whether an entity offering a given retirement plan performs or assists in a governmental function, is exempt from federal, state, and local tax, or receives financial assistance from the government, among other questions.

CUNA generally agreed with the proposed facts and circumstances test, as outlined, saying "it is the correct approach to outline a number of varying factors since the characteristics of employer-entities vary so widely." CUNA added that the proposed test "appears to recognize that a one-size-fits-all approach is inappropriate," but suggested that some of the terminology in the test questions could be sharpened and suggested the IRS add a question addressing how a given entity's trustees or operating board are selected to the test.

The IRS should also clearly state that the list of factors included in the proposed facts and circumstances test is not meant to serve as a checklist, CUNA added.

The ANPR also includes an example to illustrate the application of the facts and circumstances test to a federal credit union. In the example, the IRS concludes that FCUs are not governmental instrumentalities for purposes of section 414(d) based on the facts and circumstances test. CUNA said it supports this example, but suggested the IRS clarify portions of the explanation to demonstrate which factors from the facts and circumstances test led the IRS to make this determination.

For the full comment letter, use the resource link.

Hill press conference launches small biz Hike

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WASHINGTON (2/7/12)--The Credit Union National Association's (CUNA) first-ever small business/credit union "Hike the Hill" event begins today with a briefing and reception in Washington, D.C.  Also, the goal of the Hike--to have small business representatives help demonstrate the link between small business' needs for credit and credit unions' desire to help fill that need--will be spotlighted in a Wednesday press conference on Capitol Hill.

That press conference, which will be hosted by Rep. Ed Royce (R-Calif.), will take place in the Rayburn building of the U.S. Capitol at 11:00 a.m. (ET). Several small business owners, and representatives from small business trade groups and business think-tanks, will participate alongside credit union representatives at the press conference.

The small-business "Hike" is a two-pronged advocacy effort. Visits with federal lawmakers are planned for today and Feb. 8. Meanwhile, additional small business s and credit union representatives will be conducted state and district level advocacy activities.

A total of 75 small business and credit union representatives from 15 states are expected to visit their lawmakers in their House and Senate offices during the hike.

The small business advocates will tout the benefits of H.R. 1418 and S. 509, two bills that would increase the current 12.25% of assets credit union member business lending cap to 27.5%. Royce is the main sponsor of H.R. 1418.

CUNA has estimated that lifting the MBL cap would inject $13 billion in extra funds into the economy in the first year after enactment, helping small businesses create 140,000 new jobs at no cost to taxpayers.

CUNA President/CEO Bill Cheney said the aim of the hike is to "foster an environment in which lawmakers hear and see more about this key issue for small business owners and credit unions."

"We are hopeful that a vote to allow credit unions to help small businesses will occur soon--and that lawmakers will be armed with all of the facts when the votes come due," Cheney added.

Congress this week CFPB Dodd-Frank

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WASHINGTON (2/7/12)--Congressional scrutiny of the Consumer Financial Protection Bureau (CFPB) will continue this week, with the House Financial Services financial institutions subcommittee on Wednesday considering legislation that would change the structure and some authorities of the agency.

The bills in question would make the CFPB's yearly funding subject to the congressional appropriations process and remove the CFPB's director from their current slot on the Board of Directors of the Federal Deposit Insurance Corporation. H.R. 3871, a bill that would ensure that groups or individuals that supply information to the CFPB would not waive their right to privacy protections, may also be addressed during the hearing.

Wednesday will also feature a House Financial Services capital markets subcommittee hearing entitled "Limiting the Extraterritorial Impact of the Dodd-Frank Act." Finance industry insiders and others will testify during that hearing.

Other hearings are set for today, as the House Financial Services subcommittee on insurance, housing and community opportunity marking up the "Affordable Housing and Self-Sufficiency Improvement Act of 2012"; the "Emergency Fiscal Solvency Act of 2012"; and the "Homeless Children and Youth Act of 2011." The Senate Budget Committee today will also hold a hearing on "The Outlook for US Monetary and Fiscal Policy."  Federal Reserve Board Chairman Ben Bernanke will testify during that hearing.

The Senate Banking Committee will address the state of the housing market on Thursday, and that group's housing, transportation and community development subcommittee will hold a Plainfield, New Jersey-based foreclosure field hearing on that same day. Plainfield Mayor Sharon Robinson-Briggs, New Jersey General Assembly speaker pro tempore Jerry Green, and other community representatives will speak during that hearing.

Legislation will also be considered throughout the week.

iRoll Calli highlights new lawmakers MBL support

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WASHINGTON (2/7/12)--Citing new U.S. House member Suzanne Bonamici's (D-Ore.) interest in consumer protection issues, Capitol Hill publication Roll Call Monday highlighted Bonamici's strong interest in increasing the cap on credit union member business lending (MBL).

Bonamici told the publication that MBL legislation is among her top priorities, a message she shared in print and television interviews leading up to the recent special election held to fill the first district seat of Rep. David Wu's, who retired in August.

"I see this proposal as an excellent way to get capital to small businesses," she said.

Bonamici is scheduled to be sworn into her House position today. Her staff is working with the Credit Union National Association (CUNA) to schedule a meeting after the new congresswoman's swearing-in ceremony.

The Northwest Credit Union Association (NWCUA) has said the association is grateful for Bonamici's early support of raising the MBL cap, and looks forward to working with her.

The NWCUA and CUNA supported Bonamici, a long-time credit union backer, in the Democratic primary and then in the more recent special election. Also, Oregon credit unions backed Bonamici with phone bank and neighborhood canvassing efforts. (News Now Feb. 2)

Roll Call is a widely read publication covering Capitol Hill.

Use the resource link to read the Roll Call article.

Inside Washington (02/06/2012)

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  • WASHINGTON (2/7/12)--Recent orders from regulators have cited banks for not meeting updated accounting standards. Regulators have specifically cited banks' failures to report troubled debt restructurings (TDRs). The Office of Comptroller of Currency is flagging banks for not identifying loans as TDRs and not recording an allowance as required by Generally Accepted Accounting Principles, an unidentified bank accounting executive told the American Banker (Feb. 6). Regulators have stepped up guidance since the Financial Accounting Standards Board clarified guidance on TDRs last year, said Bill Massey, an accountant and consultant at Saltmarsh, Cleaveland & Gund. Most regulatory orders citing accounting issues tied to troubled debt restructurings were issued since June 30. Regulators have been enforcing the new rules since they went into effect, according to industry observers …
  • WASHINGTON (2/7/12)--Banks remain concerned that data shared with the Consumer Financial Protection Bureau (CFPB) during exams could be used against them in lawsuits, despite assurances for CFPB Director Richard Cordray that the agency will support legislation to protect the institutions' information. Banks worry that plaintiffs could argue that financial institutions waived their attorney-client privileges when they turned the information into the CFPB. In such cases, financial institutions could be subpoenaed to provide confidential data that might be used against them in lawsuits (American Banker Feb. 6). House Financial Services Committee Chairman Spencer Bachus (R-Ala.) and Rep. Shelley Moore Capito, (R-W.V.) sent a letter to the CFPB last week asking the agency to stop requesting confidential information from banks until the panel can hold a hearing on the until legislation is in place. A committee hearing is scheduled for Wednesday …
  • WASHINGTON (2/7/12)--President Barack Obama on Friday said he will nominate Jeremiah Norton to serve on the board of directors of Federal Deposit Insurance Corp. Norton is currently an executive with J.P. Morgan Chase & Co (American Banker Feb. 6). Norton served from 2007 to 2009 as deputy assistant secretary in the Treasury Department, where he was a key adviser to former Treasury Secretary Henry Paulson during the financial crisis. He also worked as a staffer for Rep. Edward Royce (R.-Calif.) …