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CFPB collecting student loan complaints

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WASHINGTON (3/6/12)--Private student lenders, loan servicers, and associated debt collectors have been added to the list of financial service providers that the Consumer Financial Protection Bureau (CFPB) now accepts consumer complaints on, the agency announced on Monday.

"Borrowing for college should be the best investment you'll make, but for many Americans, paying off those student loans is a real challenge," Rohit Chopra, CFPB student loan ombudsman, said.

Chopra in a blog post said that the agency would work with student lenders and servicers to resolve consumer issues.

And to current and former students with loan debt, Chopra said, "While we certainly can't make your debt disappear, we can help bring your concern to your financial institution's attention."

The CFPB plans to have comment systems set up for comments and complaints on all consumer financial products and services by the end of 2012. The bureau last week announced it would start accepting consumer complaints regarding checking and savings accounts, and it also accepts complaints related to credit cards, mortgages, and other home loans. (See March 2 News Now story: CFPB accepting more consumer complaints)

The agency recently asked credit unions and other financial institutions, students, the higher education community, and others in the student loan industry to provide information on the role of schools in the private student loan marketplace, student loan underwriting criteria, repayment terms and behavior, loan servicing and loan modification, and financial education and default avoidance. The collected responses will be used to develop a comprehensive report on the private student lending market, and the CFPB is scheduled to deliver that report in the summer of 2012.

For the CFPB release, use the resource link.

TDR plan moves in right direction CUNA

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WASHINGTON (3/6/12)--The National Credit Union Administration's (NCUA's) Troubled Debt Restructuring (TDR) proposal would provide regulatory relief, and is "an important step forward in terms of guidance and reporting requirements for TDRs," the Credit Union National Association said in a comment letter.

TDR loans, which have very specific accounting and reporting requirements, include certain loan modifications where a credit union or other lender grants a concession—often involving modification to the terms of a loan—to a borrower that it would not have otherwise provided based on the borrower's financial situation. The financial statement and call report  treatment of  TDRs are also unique.

Current TDR reporting requirements force credit unions to segregate TDRs and report TDR payments as delinquent until the member has made timely and consecutive payments for six months after the modification. These requirements have generally resulted in credit unions having to manually track such payments.

CUNA noted that many credit unions want to work with homeowners that cannot pay their mortgages due to financial difficulties but have struggled to meet regulatory and reporting requirements that have been imposed on TDRs.

The NCUA's TDR proposal would allow credit unions to modify TDR loans without having to immediately classify those loans as delinquent. Credit unions would no longer be forced to track each TDR loan's performance manually for six months. The proposal would also set consistent standards for the management of loan workout arrangements that assist borrowers, and eliminate confusion between TDRs and other loan modifications.

However, Deputy General Counsel Mary Dunn, in CUNA's  comment letter, noted that the TDR proposal's different treatment of member business loans (MBLs) could create issues for credit unions with certain processing systems, forcing those credit unions to manually track MBLs that have been modified.

The NCUA proposed making the TDR rules effective 120 days after the final version of the rule is published in the Federal Register. While the rule should become effective "as soon as possible" for credit unions that are able to comply with the changes, CUNA encouraged the NCUA to give small credit unions more time to comply with the TDR changes.

CUNA had urged NCUA to improve reporting and regulatory treatment for TDRS for some time and leagues also had weighed in to urge the agency to move forward with improvements in this area.

CUNA's letter was developed with its Examination and Supervision and Accounting Subcommittee, as well as with the American Association of Credit Union Leagues' Regulatory Advocacy Advisory Committee.

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

NCUA others observe National Consumer Protection Week

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WASHINGTON (3/6/12)--The 14th annual National Consumer Protection Week (NCPW) began on Sunday and continues through March 10, and the National Credit Union Administration (NCUA) and Consumer Financial Protection Bureau (CFPB) are joining several federal, state and local governmental agencies and consumer protection organizations as participants.

This year's NCPW will focus on helping consumers manage credit and debt, avoid identity theft, fight scams and fraud, understand technology and how to use it safely, and more, NCPW director David Vladeck said. The website provides resources from more than 30 federal agencies and national organizations, and contains sample letters and news releases and social media materials.

The NCUA encouraged credit union members and others to use during this week, and other times, to access financial tools and calculators, learn about home loans and car loans, or understand federal share insurance at credit unions. "Credit unions can also link their members to this valuable resource via their own websites," NCUA Chairman Debbie Matz said.

The Consumer Financial Protection Bureau noted that this is the second year that the agency has taken part in the NCPW, and that agency reported on the pro-consumer work it has completed so far, including accepting consumer complaints, launching new supervision programs, and adopting new rules to protect consumers.

The National Foundation for Credit Counseling (NFCC) has also challenged consumers this week to "add a layer of security to their financial future" by using caution when engaging with social media sites, learning about how to avoid phishing scams, and taking precautions when shopping online.The Federal Deposit Insurance Corporation has also issued its own guide to help consumers understand the differences between debit, credit and prepaid cards.

Credit unions, libraries, schools, colleges, city halls, and senior centers across the U.S. are also participating in NCPW. Check out the event page on the NCPW website to find consumer protection fairs, shredathons or workshops in your area.

Use the resource link to visit CUNA's, a consumer website launched a year ago to help consumers find a credit union they can join. In 2011, consumers saved $6.5 billion through better rates and lower fees using not-for-profit credit unions rather than banks.

For more information, use the resource links.

Senate panel considers jobs CUNA urges MBLs

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WASHINGTON (3/6/12)--With the Senate Banking Committee scheduled to discuss initiatives that could create job growth during a hearing this morning, the Credit Union National Association (CUNA) continues to advocate for increasing the 12.25%-of-assets credit union member business lending (MBL) cap as a good, immediate way to spur the economy and create new jobs--all at no cost to the U.S. taxpayer.

Increasing the MBL cap to 27.5% of total assets could inject $13 billion of credit for small businesses into the economy in the first year after enactment, and help small businesses create 140,000 new jobs, CUNA has estimated.

Separate bills in the U.S. House and Senate that would increase the MBL cap have bipartisan support. CUNA Senior Vice President of Legislative Affairs Ryan Donovan noted Monday that both have been vetted by the U.S. Congress, and added that opposing arguments introduced by bankers have been "debunked."

For instance, in February CUNA coordinated a small business Hike the Hill event, during which small business owners underscored their unmet need for credit and their support of increased MBL authority for credit unions.  During a congressional hearing, banking witnesses had claimed that there is no unmet demand for credit by the country's small businesses.

The Senate version of MBL cap increase legislation (S. 509) had 22 cosponsors and the House version (H.R. 1418) has 122 cosponsors.

Also of interest to credit unions this week in Congress:

  • The House Financial Services Committee is scheduled today to markup that panel's budget views and estimates for fiscal year 2013;
  • On Wednesday, the Senate Judiciary Committee has scheduled a hearing on "Examining Lending Discrimination Practices and Foreclosure Abuse."  Assistant Attorney General Thomas Perez of the Civil Rights Division is expected to testify during that hearing; and
  • The Senate Homeland Security and Government Affairs Committee has scheduled a hearing on President Barack Obama's government reorganization plan on Wednesday.

The Senate will remain in session next week, but the House will be on recess until March 19.

Inside Washington (03/05/2012)

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  • WASHINGTON (3/6/12)--The Federal Reserve Board Friday issued guidance to ensure that supervisors apply consistent standards as they evaluate whether banks with $10 billion or less in assets are eligible for upgrades of supervisory ratings. The guidance is being issued to ensure that upgrades made addressed any supervisory concerns that had prompted lower ratings. To be eligible for an upgrade, banks must demonstrate improvement in financial condition and risk management in areas such as capital levels, core earnings asset quality, liquidity and interest-rate positions. Banks also must demonstrate their risk-management capabilities have improved to address weaknesses that contributed to prior ratings, and policies and they have implemented policies and practices that focus on sustainability commensurate with the bank's risk profile …
  • WASHINGTON (3/6/12)--The Federal Reserve Board Friday extended until April 30 the comment period on a proposed rule that would include new capital and liquidity requirements for banks with more than $50 billion in assets, as required by the Dodd Frank Act. The proposal also includes single counterparty credit limits, stress testing, risk management and early remediation requirements. "In recognition of the complexities of the issues addressed and the variety of considerations involved with implementation of the proposal, the Board requested that commenters respond to numerous questions," the Fed said in a press release. Comments previously were due March 31 …

Prohibition order for former Western Corp. FCU employee

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ALEXANDRIA, Va. (3/6/12)--The National Credit Union Administration (NCUA) has issued an order prohibiting Timothy T. Sidley, a former employee of Western Corporate FCU (WesCorp), San Dimas, Calif., from participating in the affairs of any federally insured financial institution.

Sidley consented to the order, without admitting liability or fault, to avoid administrative litigation and further court proceedings, the NCUA said. 

Sidley was the chief risk officer at WesCorp, and was one of five officials the NCUA sued as a result of the collapse of Western Corporate FCU.

The NCUA and Sidley on Friday filed a settlement agreement with a federal court in Los Angeles to dismiss the case, according to a stipulation filed Friday. (News Now March 5) The proposed order stipulates that dismissal of the case would be "with prejudice of all claims and counterclaims" between NCUA and Sidley.

It would not apply to the NCUA's claim against any other defendant in the WesCorp case--Robert Siravo, CEO; Thomas Swedberg, head of human resources; Robert Burrell, chief investment officer; and Todd Lane, chief financial officer. The case stems from the conservatorship and eventual liquidation of that corporate credit union.

The NCUA said the prohibition order against Sidley was one of the terms of the confidential settlement agreement.

Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.

Use the resource link to view NCUA enforcement orders online.

Mortgage-fraud SARs increase in 2011 3Q

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WASHINGTON (3/6/12)--The Financial Crimes Enforcement Network (FinCEN) Monday reported that the 19,934 Mortgage Loan Fraud (MLF) suspicious activity reports (SAR) filed during the third quarter of 2011 represented a 20% increase above 2010's third quarter total. MLF SARs accounted for 10% of all SARs filed during the quarter, according to FinCEN.

The FinCEN update also reported that 5,728 of the MLF SARs filed in the third quarter--29% of the total--reported activity that occurred between October 2009 and September 2011. Some of the types of suspicious activity reported included: some form of loan workout or debt elimination attempt, questionable refinance or loan modification attempts by borrowers or others targeting distressed homeowners, and Social Security number discrepancies submitted in the original loan application and the workout request.

FinCEN Director James Freis said "criminals persist in their efforts to prey on struggling homeowners" and financial institutions continue to uncover apparent fraud as they work through their portfolios of earlier mortgages now in default."

More than 85% of the mortgage-related reports involved sums under $500,000. Hawaii, California, Nevada, Florida, and Delaware had the highest amounts of SAR filings, per capita.

For the full FinCEN report, use the resource link.