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CUNA joins with 400 firms, amplifies patent reform support

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WASHINGTON (5/1/14)--"Patents are bedrock to the American innovation economy, but when they are used by patent trolls to extort American businesses, congressional action is unquestionably necessary," the Credit Union National Association, with about 400 co-signers, said in a Wednesday letter to the U.S. Congress.
The letter comes as the Senate Judiciary Committee prepares for a vote on its Patent Transparency and Improvements Act (S. 1720).  The  committee had scheduled a markup on the bill for today, starting around 10 a.m. (ET), but that session has been delayed.

That bill would aid credit unions and other businesses that have been targeted by patent "trolls" who manipulate the patent system for their own gain.
The coalition letter notes that senators are working on additional legislative language that would:
  • Require patent demand letters to include basic information about the alleged infringement and the method by which a demand was calculated;
  •  Require patent owners to reveal their ownership when demanding licenses and attempting to enforce a patent; and
  • Protect customers and end-users from lawsuits based on alleged infringements by manufacturers and service providers, and make it easier for courts to get rid of frivolous claims of willful infringement.
"Today, abusive patent litigation is killing small companies, chilling employment and growth of all companies, and stifling the economies of a wide range of industries nationwide. Instead of investing in new jobs and services, businesses must fight frivolous claims and overly broad lawsuits made by patent trolls against a range of technologies and commonplace ideas," the letter added.
The letter was signed by CUNA and a large group of diverse firms, including Apple Inc., Facebook, Ford Motor Co., Google, Hasbro, Hilton Worldwide, J.C. Penney Co., Kickstarter Inc., Newspaper Association of America, Polaroid, Wal-Mart Stores Inc. and White Castle.
"To date, we have borne the economic costs and burdens of a patent system increasingly held hostage by trolls that do not seek to build up the American economy, but rather tear it down, one demand letter and exorbitant licensing fee at a time," the coalition wrote.
The bill, the co-signers said, "would help restore balance to the system in a manner that will help to bolster innovation and the entrepreneurial spirit."

The letter is expected to be posted on the CUNA site this morning. Use the resource link.

With CFPB tweak, lenders could refund some fees, points for QM rating

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WASHINGTON (5/1/14)--Minor mortgage rule adjustments proposed by the Consumer Financial Protection Bureau would allow credit unions and other institutions to refund excess points and fees that are charged on mortgages in certain cases.
The proposed changes would set limited circumstances where lenders that exceed a points and fees cap can refund the excess amount to consumers and still have the loan be considered a Qualified Mortgage, the CFPB said.
CFPB Director Richard Cordray said the proposal would maintain strong consumer protections set by the agency while making tweaks to ensure consumers have access to credit. "This includes helping nonprofits that provide working families with important pathways to affordable homeownership," he added.
The CFPB in a release said the proposal also:
  • Offers an alternative definition of a small servicer that would allow certain nonprofits to continue to consolidate their servicing activities while maintaining their exemption from some servicing rules; and
  • Allow certain nonprofits to continue to extend certain interest-free, forgivable loans, also known as "soft seconds," without regard to the 200-mortgage loan limit.
While the CFPB's points and fees proposed "cure" provision would affect credit unions, the remaining two portions of the proposal noted above will not, as they are not 501(c)(3) organizations.  However, the Credit Union National Association will be urging the bureau to consider expanding the scope of these two provisions to other nonprofit creditors, such as credit unions.
The CFPB is also seeking:
  • Comment on a possible limited, post-closing cure or correction provision for loans that are originated with the good faith expectation of QM status, but that actually exceed the 43% debt-to-income ratio limit that applies to certain QMs; and
  • Feedback and data from smaller creditors such as credit unions regarding implementation of certain provisions of the 2013 mortgage rules that are tailored to account for small creditor operations and how their mortgage origination activities have changed in light of the new rules.
Specifically, the CFPB is seeking comment on amending the credit extension limits under the "small creditor" provisions of the Ability-to-Repay/Qualified Mortgage rule.  CUNA will be weighing in on this aspect of the proposal to urge the Bureau to expand the number of first lien mortgages allowed to be originated by small creditors and recommending other changes, as well.
"We appreciate that the bureau is reviewing and proposing these amendments to the mortgage rules, taking into consideration the operational concerns and needs of small creditors, such as credit unions; however, we will be urging the agency to do more to exempt credit unions from these and other rules," CUNA Associate General Counsel Jared Ihrig said Wednesday.
CUNA will work with credit union leagues, its Consumer Protection Subcommittee and other groups to analyze the proposed changes and prepare comments for the CFPB, he added.
For the full CFPB release, use the resource link.

Tech can help fin. lit. efforts, panelist says

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WASHINGTON (5/1/14)--"Technology holds the promise of expanding access to personal finance education by providing flexibility in how, where and when learning occurs," but will never serve as a replacement for the power of in-person motivating instruction between students and financial experts, CEO Sabrina Lamb said in prepared testimony Wednesday.

Lamb was one of five witnesses at a House Financial Services subcommittee on financial institutions and consumer credit hearing titled "Examining How Technology Can Promote Consumer Financial Literacy." is a nonprofit firm that provides financial education sessions taught by industry experts to youth ages 7 to 18.

Lamb noted that technology, and social media in particular, can be a powerful tool that "can create a financial education cultural revolution." However, it "should be used as an instructional supplemental activity that is supported by compassionate financial coaching" or other means of education, she added.

U.S. Government Accountability Office Director of Financial Markets and Community Investment Alicia Puente Cackley also testified during the hearing. Puente Cackley in part presented a GAO report that examined the financial literacy efforts of several federal agencies, including the Consumer Financial Protection Bureau.

The GAO report noted that federal agencies have shown improvement in four areas: Coordination, partnerships, delineating their roles, and evaluation tools. However, that report said, significant work remains to be done in one major area--determining the most effective and efficient allocation of federal resources.

BancVue CEO Gabriel Krajicek, Visa Senior Vice President and Global Head of Financial Inclusion Stephen Kehoe and Intuit Consumer Ecosystem Group Senior Vice President Barry Saik also testified on Wednesday.

The Credit Union National Association and National Credit Union Foundation submitted a letter for the hearing record.  It noted the positive work of credit unions and highlighted that credit unions invest millions of dollars in consumer financial education and counseling programs, helping provide financial counseling to more than 1.6 million consumers a year. (See April 30 News Now ).

For more on Wednesday's hearing, use the resource link to access written testimony.

Five banned from FCU work in newest NCUA prohibition orders

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ALEXANDRIA, Va. (5/1/14)--Former Pampa (Texas) Teachers FCU loan officer Erin Trevathan is one of five individuals prohibited from future financial institution work under National Credit Union Administration prohibition orders released Wednesday.

Trevathan, who pleaded guilty to fraud charges, was the only loan officer at the $11 million-asset credit union between mid-2008 and 2010, and used funds she allegedly stole for personal use, The Associated Press reported in 2013.  The Pampa News said that year that Trevathan allegedly funded false loans with funds from other credit union member accounts and made false entries into financial statements and credit union records to cover her tracks.

She has been ordered to pay $442,973.91 in restitution. Trevathan will also serve three years of prison and five years of supervised release.

Also subject to NCUA prohibition orders are:
  • Jayme Cather, aka Jayme Suiter, a former employee of Pittsburgh Central FCU, Sewickley, Pa., with $42 million in assets. Cather entered into an accelerated rehabilitative disposition program in connection with charges of unlawful use of a computer, theft and receiving stolen property. Cather was also required to complete 200 hours of community service and ordered to pay $16,508.02 in restitution;
  • Aaron Kyle Harris, a former employee of Mainstreet CU, Lenexa, Kan., with $338 million in assets, who pleaded no contest to charges of unlawful acts concerning computers and theft. Harris was sentenced to eight months in prison, one year of supervised release and 18 months of probation;
  • Susanne Jenness, a former employee of $4.8 million-asset United Neighbors FCU, Watertown, N.Y., who pleaded guilty to a charge of grand larceny. Jenness was sentenced to a five-year probation and ordered to pay $22,215.70 in restitution; and
  • Kelly Osborne, a former employee of Charlotte Fire Department CU, Charlotte, N.C., with $48 million in assets. Osborne pleaded guilty to embezzlement charges and was sentenced to six months in prison, three years of supervised release and ordered to pay $97,953.05 in restitution.
The NCUA reminds that 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 access all NCUA enforcement orders.