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Inside Washington (05/14/2009)

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* WASHINGTON (5/15/09)-- The U.S. Treasury Department's Community Development Financial Institutions (CDFI) Fund announced Thursday it had received a 249 applications under the 2009 round of the New Markets Tax Credit (NMTC) program. The applicants requested a total of more than $22 billion in NTMC allocation authority. A total of $5 billion of allocation authority is available this round including the $1.5 billion in additional allocation authority authorized through the American Recovery and Reinvestment Act of 2009. The NMTC program was established by Congress in December of 2000 and is administered by Treasury’s Community Development Financial Institution (CDFI) program. It permits individual and corporate taxpayers to receive a credit against federal income taxes for making qualified equity investments in investment vehicles known as Community Development Entities (CDEs)… * WASHINGTON (5/15/09)--An amendment that would allow visitors to carry guns in national parks could delay the enactment of legislation to curb abusive credit card practices (American Banker May 14). The amendment was introduced by Sen. Tom Coburn (R-Okla.). The addition of the gun amendment will make it tougher for the card bill’s sponsors, Sens. Richard Shelby (R-Ala.) and Christopher Dodd (D-Conn.) to keep the legislation narrow. President Barack Obama has said he wanted to sign a card bill by Memorial Day. Though the gun amendment could slow the passage of card legislation, it won’t necessarily derail it. Brian Gardner, KBW Inc. analyst, said the bill should be signed by July 4. The legislation was expected to be taken up in the Senate Thursday ... * WASHINGTON (5/15/09)--On Wednesday, Treasury Secretary Timothy Geithner called for legislation that would require many derivatives to be traded on clearinghouses or exchanges instead of over the counter (OTC). Banks argue that regulation on OTC derivatives would drive up prices and reduce earnings. Regulators, however, worry that banks’ exposure to OTC derivatives could hurt the financial system. If a large dealer fails, it could affect the entire industry (Reuters May 14). Derivatives are contracts with values that depend on a commodity, currency, bond or stock. A derivative can be tailored to a customer’s individual needs. As such, they can be hard to trade unless another party shares the same needs ...

Incentives added to Making Home Affordable program

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WASHINGTON (5/15/09)--Several incentives have been added for short sales and home price declines under President Barack Obama’s Making Home Affordable (MHA) program. The program, announced in February, aims to stabilize the housing market and offer assistance to seven to nine million homeowners by reducing house payments to affordable levels and preventing avoidable foreclosures. Short sales incentives include:
* Up to $1,000 for successful completion of a short sale or deeds-in-lieu (DIL); * Up to $1,500 for borrowers to help with relocation; and * A shared cost with Treasury for junior lien holders to release their claims--matching $1 for every $2 paid by investors--up to $1,000.
A lender may consider a short sale--or if that is unsuccessful, a DIL--when a borrower meets eligibility requirements for a Home Affordable Modification but not for a modification or cannot maintain payments during the modification trial period. Each successful modification for a home price decline also will be eligible for a Home Price Decline Protection (HPDP) incentive. MHA will pay up to $10 billion to encourage lenders to modify rather than foreclose. Payments will be based on the number of modified loans that successfully complete the modification trial period and remain in the program. If a trial modification remains successful, 1/24th of the HPDP incentive will accrue to the lender/investor each month for up to two years. Incentive payments will be made at the end of the first and second year of modification. Between loans covered by servicers or those securitized by Fannie Mae or Freddie Mac, more than 75% of all loans nationwide are covered by MHA. For more information, use the links.

Fryzel encourages CDFI participation

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ALEXANDRIA, Va. (5/15/09)--National Credit Union Administration Chairman Michael Fryzel encouraged credit unions to use Community Development Financial Institutions (CDFI) funds to enhance delivery of financial products and services. “Credit unions have received more than $14 million from the CDFI Fund over the past three years,” Fryzel said. “Credit unions are well-suited to benefit from the programs offered by the CDFI Fund.” The fund, created in 1994 under the Treasury, certifies and invests in financial institutions that provide financial products and services primarily to low-income communities or low-income people. Credit unions may apply for up to $100,000 in Technical Assistance grant funding to build internal capacity or to achieve CDFI certification. Certified CDFI credit unions may apply for up to $2 million in Financial Assistance for capitalization funds to support their overall business plan. Through the American Recovery and Reinvestment Act of 2009, the CDFI Fund received another $98 million to make awards. Funding is also anticipated for 2010 programs, expected to be announced this fall.

Youth Week noted in ICongressional RecordI

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WASHINGTON (5/15/09)--The Credit Union National Association’s (CUNA) National Credit Union Youth Week was noted in extended remarks of the Congressional Record, which was published Wednesday. The Congressional Record is the official record of the proceedings and debates of the U.S. Congress. It is published daily when Congress is in session. Youth Week was highlighted by the Hon. Ruben Hinojosa in the House during remarks he made supporting Financial Literacy Month, which took place in April. Hinojosa said, “Staff from America’s credit unions made presentations to young people at local schools on financial topics such as student loans, balancing a checkbook, and auto loans during National Credit Union Youth Week, April 19-25.” It’s important for Congress to support the goals and ideals of Financial Literacy Month, including raising public awareness about financial education, he added. Hinojosa ended with a statement by President Barack Obama in which Obama said financial literacy awareness and education must extend beyond Financial Literacy Month. CUNA has sponsored Youth Week since 2002. This year, CUNA’s National Saving Challenge, which ran for the entire month of April, exceeded last year’s deposit record by more than double. During the challenge, participating credit unions nationwide encourage youth to deposit their money into savings accounts.