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CUs Raise $6M for Kids' Hospitals

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WASHINGTON (4/5/13)--More than 15,000 runners are set to take to the streets of Washington, D.C. this Sunday as part of the Credit Union Cherry Blossom 10-Mile Run, and Credit Union National Association (CUNA) President/CEO Bill Cheney on Thursday said CUNA is again "honored to be a part of it."

CUNA President/CEO Bill Cheney on Thursday told attendees at a Credit Union Cherry Blossom 10-Mile Run press conference that he, like many of them, will be out early on Sunday to take part in the day's festivities. CUNA volunteers are again running the race bag check, and some brave souls are taking part in the race itself. (CUNA Photo) 
Cheney joined race organizers and representatives from Congressional FCU, Washington, D.C.; CUNA Mutual; PSCU Financial Services; and Children's Miracle Network Hospitals at a Thursday press conference to kick off the Credit Union Cherry Blossom Run.

The 10-mile run and 5k run/walk event raises funds for Children's Miracle Network Hospitals. The title sponsor, Credit Union Miracle Day Inc., is entering its 12th year of race sponsorship. This year's donation of $483,000 will bring the total amount of funds raised to more than $6 million since beginning its sponsorship of the race in 2002. The group is slated to sponsor the race through 2016.

This is the 12th straight year that CUNA will support the race. A group of CUNA volunteers will work the race bag check tent, where runners will store their belongings while they race. CUNA employees are also taking part in the day's festivities by either running or walking the 10-mile or 5k routes.

The customary Capitol Hill Competition will also be held, as nearly 800 staffers from 70 teams represent their congressional offices. More than 160 members of Congress are serving as honorary race chairs this year.

USA Track and Field has named this year's Credit Union Cherry Blossom Ten Mile as the USA Women's 10 Mile Championship, Presented by America's Credit Unions. As a result, top American female athletes, including five-time U.S. National Road Running Champion and London Olympian Janet Cherobon Bawcom, are scheduled to run this weekend. U.S. Olympians Jen Rhines and Colleen De Reuck are also planning to run the race.

Boston Half Marathon record holder and 2012 Credit Union Cherry Blossom Ten Mile champion Allan Kiprono will defend his title against 2012 runner-up Lani Kiplagat and others in the Men's race.

Nearly 1,700 runners are expected to take part in the Credit Union SacTown Ten-Mile Run in Sacramento, Calif., and more than 1,000 athletes are set to run in two separate Credit Union Freedom Runs at the U.S. Army Garrison in Wiesbaden, Germany, and Camp Arifjan in Kuwait.

GAO Report: Independent Foreclosure Review Process Is Flawed

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WASHINGTON (4/5/13)--Complexity, overly broad guidance, and limited monitoring for consistency hampered the progress of regulators' Independent Foreclosure Review (IFR), the U.S. Government Accountability Office (GAO) reported on Thursday.

The IFR process started in 2011 as part of consent orders issued against 14 top mortgage servicers. The foreclosure review process was meant to provide foreclosed borrowers with an opportunity to have their cases reviewed for errors and misrepresentations on the part of servicers. Restitution was also a possibility for some foreclosed borrowers.

The Office of the Comptroller of the Currency and the Federal Reserve Board on Jan. 7 announced that the IFR process would instead be replaced with a tentative $9.3 billion settlement. The settlement would allow all IFR-eligible borrowers "to receive compensation significantly more quickly," the OCC said in a release.

Thursday's GAO report said limited communication with borrowers and the public adversely impacted transparency and public confidence in the foreclosure review. Borrowers that asked for reviews also experienced gaps in communication, with some waiting for nearly one year before they were updated on the status of their case, the GAO said.

"Broad guidance and limited monitoring reduced the potential usefulness of data from consultants and increased risks of inconsistency," the GAO added. Guidance for consultants and others reviewing lending cases was revised. "Regulators lacked objective monitoring measures, resulting in difficulty assessing the extent of borrower harm," GAO added.

Rep. Maxine Waters (D-Calif.), who, along with other legislators, requested the GAO study in early 2012, said "the report confirms that the Independent Foreclosure Review process was poorly designed and executed." She also criticized the OCC's oversight of independent consultants that were hired by mortgage servicers to work the review cases, and said she will soon introduce "legislation to address the problem of relying on outside contractors for enforcement actions.

For the GAO report and Rep. Waters' statement, use the resource link.

Mortgage Market Reforms Continue On Difficult Path

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WASHINGTON (4/5/13)--While Congress continues to wade through a myriad of possible housing finance system models, financial regulators and housing agencies are working on their own to address the future of the housing finance system.

A range of housing policy changes have been discussed by the U.S. House, the Senate, and the Obama administration in recent months, including full market privatization, limiting government market intervention, and several stops in-between. (See Part 1 of this two-part series, detailing legislative work to address housing finance issues, in an April 1 News Now story: GSE Reform Will Remain Hot Topic As Congress Returns)

Engaging in housing finance reform is one of the Credit Union National Association's top 2013 legislative priorities.

Fannie Mae this week reported a record $17.2 billion in annual profits and $7.6 billion in fourth quarter profits for 2012, and said it "expects to remain profitable for the foreseeable future." However, many, including Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.), have expressed the need for long-term housing finance system reforms, and said these record profits should not become an excuse for inaction.

So, profitable or not, Fannie Mae and fellow government-sponsored enterprise (GSE) Freddie Mac seem set for reforms.

The GSEs have been held under government conservatorship since 2008, and they continue to repay more than $150 billion in taxpayer funds that were used to prop them up. Fannie Mae paid $11.6 billion in dividends to the U.S. Treasury under the terms of a senior preferred stock purchase agreement unveiled last year, and the Treasury last year said the gradual winding down of mortgage investment portfolios held by the GSEs will be accelerated. Fannie and Freddie's investment portfolios are being wound down at an annual rate of 15%, with the goal of reducing the amount of mortgage assets held by the GSEs to $250 billion by 2018.

The Treasury also requires the GSEs to submit plans detailing how they will reduce taxpayer exposure to mortgage credit risk on an annual basis.

Other government agencies are also acting to address housing financing issues. Acting Federal Housing Administration (FHA) Commissioner Carol Galante last year said she would consider down payment requirement and insurance pricing changes to protect the FHA against losses on high-balance loans that are outside Fannie Mae and Freddie Mac conforming loan limits. This change could also help to scale back the government's footprint in the housing market.

Fannie and Freddie themselves are preparing for change. Federal Housing Finance Agency Acting Director Edward DeMarco early last month said the GSEs would begin to build a new securitization infrastructure, including a joint venture to handle mortgage securitization, and contract Fannie Mae and Freddie Mac's dominant presence in the marketplace while simplifying and shrinking some of those firms' operations.

"The overarching goal is to create something of value that could either be sold or used by policy makers as a foundational element of the mortgage market of the future," DeMarco added.

CUNA has repeatedly said that any changes to secondary mortgage market structure must allow credit unions and other small issuers to maintain full and unrestricted access to that market. CUNA has also highlighted the importance of preserving 30-year, fixed-rate mortgages and ensuring that the secondary market is strong enough to weather economic adversity.

CFPB Now Accepting Money Transfer Complaints

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WASHINGTON (4/5/13)--Consumers now can take their complaints about a bad money transfer experience to the Consumer Financial Protection Bureau.

In a blog post announcing that the bureau now takes money transfer complaints, the CFPB noted that it is "pretty incredible" that a person can quickly send money to almost anywhere in the United States or abroad, and that many do so on a daily basis.

The CFPB told consumers they can submit a complaint for such issues as:

  • Money was not available when promised;
  • Wrong amount charged or received (Transfer amounts, fees, exchange rates, taxes, etc.);
  • Incorrect/missing disclosures or info;
  • Other transaction issues (Unauthorized transaction, cancellation, refund, etc.);
  • Other service issues (Advertising or marketing, pricing, privacy, etc.); and/or
  • Fraud or scams.
"Reading your complaints about money transfers will complement work we have already started in this area, including issuing a rule on international money transfers, which will include a new set of protections for consumers who send money internationally," the CFPB said.

The CFPB in January announced it was delaying the effective date of its international remittance transfer rule that was set to go into effect Feb. 7. A new effective date will be set later in the year.

Use the resource link to read more about the CFPB money transfer rule.

Four Mortgage Insurers To Pay $154M In CFPB Penalties

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WASHINGTON (4/5/13)--Four mortgage insurers have been ordered to stop alleged illegal payment schemes and to pay a combined $15.4 million in penalties under Consumer Financial Protection Bureau enforcement actions announced on Thursday.

The enforcement actions allege that Genworth Mortgage Insurance Corporation, United Guaranty Corporation, Radian Guaranty Inc., and Mortgage Guaranty Insurance Corporation provided payments to mortgage lenders by purchasing captive reinsurance.

The CFPB noted that many insurance companies purchase reinsurance to reduce their own risk if unexpectedly high mortgage losses occur. Mortgage lenders can set up subsidiaries to provide reinsurance for mortgage insurers, and reinsurance provided under these circumstances is known as captive reinsurance. "It is 'captive' because the lender both originates the loan and, through its own subsidiary, provides the reinsurance," the CFPB explained.

The captive reinsurance that these four mortgage insurance firms purchased was essentially worthless, but was designed to make a profit for the lenders, the CFPB reported in a press release.

These actions, which are violations of the Real Estate Settlement Procedures Act, helped mortgage insurance companies funnel millions of dollars to mortgage lenders "for well over a decade," CFPB Director Richard Cordray said. "Illegal kickbacks distort markets and can inflate the financial burden of homeownership for consumers," he added.

The four companies have agreed to the terms of the enforcement orders, and the orders must now be approved by the presiding judge of the United States District Court for the Southern District of Florida.

Under the orders, the four companies will not enter into any new captive mortgage reinsurance arrangements with affiliates of mortgage lenders, or obtain captive reinsurance on any new mortgages, for a 10-year period. The CFPB will also monitor the companies to ensure compliance with the terms of the orders.

For the full CFPB release, use the resource link.