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Inside Washington (04/10/2009)

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* WASHINGTON (4/13/09)--Senate Democrats are working to cut down on a packed legislative agenda by dropping legislation that doesn’t have enough support to pass (CongressDaily PM April 9). If some of the legislation is dropped, there will be more time for the Senate to focus more intently on other issues. The Senate’s legislative agenda could focus on revamping financial regulation, according to aides. The Senate is scheduled to reconvene April 20 ... * WASHINGTON (4/13/09)--The Treasury and Vice President Joe Biden are encouraging federal benefit recipients to switch to direct deposit from paper checks by April 20. By doing so, senior citizens, the disabled and others can ensure they will receive their $250 Economic Recovery payment. The Treasury will issue more than 64 million of the $250 payments, and about 80% will be electronic. The announcement is part of an ongoing effort by Treasury to switch all federal benefit recipients to direct deposit, saving taxpayers $130 million annually. The Treasury and the Federal Reserve Banks are sponsoring GoDirect, a campaign to motivate those receiving federal benefit checks to use direct deposits. The Credit Union National Association is a national GoDirect partner and supports the goals of direct deposit ...

FinCEN SARs can help detect mortgage-help scams

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WASHINGTON (4/13/09)--The Financial Crimes Enforcement Network (FinCEN) is asking credit unions and other Suspicious Activity Report (SAR) filers to help identify schemers taking advantage of homeowners with mortgage difficulties, so law enforcement can crack down. FinCEN issued guidance last week on potential indicators that financial institutions can be on the look out for regarding loan-modification or foreclosure-rescue scams. On February 10th, U.S. Treasury Secretary Timothy Geithner outlined Treasury's comprehensive Financial Stability Plan, which includes a Home Affordable Refinance Program and a Home Affordable Modification Program. FinCEN said that with the introduction of these new programs, more homeowners facing difficulty meeting the mortgage obligations have the opportunity to modify their mortgages and avoid foreclosure. However, along with the positive comes a growing negative, FinCEN warned, as growing numbers of unscrupulous persons or companies could attempt to abuse these loan modification and foreclosure prevention programs. FinCEN, in its recent SARs guidance, asks financial institutions to be on the look out for such things as a statement by a homeowner that s/he has been making payments to a party other than the mortgage holder or servicer. If a homeowner says that s/he has hired a third party, perhaps advertised as a "foreclosure specialist" or "mortgage specialist," it may be suspicious, FinCEN said, if the homeowner indicates that the third party did such things as:
* Charge up-front fees for foreclosure rescue or loan modification services; * Accept up-front payment only by official check, cashier's check or wire transfer; * Use aggressive tactics to seek out the homeowner by telephone, e-mail, mail or in person; * Pressure the homeowner to sign paperwork he/she didn't have an opportunity to read thoroughly or that he/she didn't understand; * “Guarantee” to save the home from foreclosure or stop the foreclosure process "no matter what;" * Claims the process will be quick with relatively little information and paperwork required from the homeowner; and more.
FinCEN said it will continue to monitor Suspicious Activity Reports that identify mortgage loan fraud, and specifically loan modification and foreclosure rescue scams, in order to provide future analysis and ways to mitigate losses to financial institutions and consumers. FinCEN will issue further advisories on this issue “as appropriate” Use the resource link below to read more about the FinCEN SAR guidance.

NCUA provides deeper info on corporate analysis

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ALEXANDRIA, Va. (4/13/09)—National Credit Union Administration (NCUA) Chairman Michael Fryzel Friday released a summary of the agency’s analysis of the distressed securities held by U.S. Central FCU (U.S. Central) and Western Corporate FCU (WesCorp). In what was the NCUA’s third weekly update on corporate credit unions, the chairman noted that the “incomplete or insufficient nature” of available information on the agency’s action addressing corporate credit union stabilization has “led some to question the necessity of the NCUA’s actions and level of expected credit losses being projected.” In fact, the Credit Union National Association (CUNA) has repeatedly requested more information regarding NCUA’s corporate stabilization actions and filed a formal Freedom of Information Act (FOIA) in March. The agency has 20 days from the March 30 request date to respond, but extensions to that deadline are possible. Fryzel said the portfolio outlines released Friday and the NCUA’s associated summary analysis provides a “concise synopsis of the respective portfolios and enables informed parties to appreciate the scope and severity of the stress on these investments.” “Though virtually all of the securities purchased by these two corporate credit unions were AAA- or AA-rated at the time of purchase, the summary clearly demonstrates how the nature of the securities and the deterioration in the economy have resulted in significant expected credit losses. In the near future NCUA will also be releasing a summary of the PIMCO report,” Fryzel said. The chairman added that the agency also will be addressing the “many questions” surrounding how member credit unions will account for any impairment or write-down of paid-in-capital and membership capital accounts at corporate credit unions. The NCUA, Fryzel promised, will be issuing guidance next week on this subject. Use the resource link below to access the NCUA weekly summary and for CUNA's comprehensive reource on corporate credit union issues.

State-chartered CU red flags date is May 1

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WASHINGTON (4/13/09)—Time is almost up for state-chartered credit unions to comply with the Federal Trade Commission’s identity theft “red flags” rule. The FTC effective date is May 1. Last October, state-chartereds got a bit of a compliance reprieve when the FTC postponed its effective date because of concern that some entities under its jurisdiction—such as automobile dealers and utility companies--were unaware that the rule applied to them as well as to financial institutions. The National Credit Union Administration and the federal banking agencies required compliance on Nov. 1, 2008. This month, the FTC launched a website to help entities covered by the red flags rule develop and implement identity theft prevention programs. The website features an online publication called “Fighting Fraud with the Red Flags Rule: A How-To Guide for Business.” The website also offers articles and guidance on specific elements of the rule. The red flags rule was developed to implement parts of the Fair and Accurate Credit Transactions (FACT) Act of 2003. Under the rule, financial institutions and creditors with covered accounts must have identity theft prevention programs to identify, detect, and respond to patterns, practices, or specific activities that could indicate identity theft. A covered account generally is a consumer account or any other account the institution determines carries a foreseeable risk of identity theft.