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Washington

CUNA Urges Qualified Mortgage Changes In Letter To Congress

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WASHINGTON (5/22/13)--Qualified mortgage rules must be changed to ensure credit unions will be able to meet their members' borrowing needs in a way that minimizes risk and default, Credit Union National Association President/CEO Bill Cheney wrote in a letter submitted to the U.S. Congress on Tuesday.

The letter was submitted to House Financial Services financial institutions and consumer credit subcommittee chair Shelley Moore Capito (R-W.Va.) ahead of a hearing entitled: "Qualified Mortgages: Examining the Impact of the Ability to Repay Rule." Consumer Financial Protection Bureau Assistant Director for Mortgage Markets Peter Carroll and Assistant Director for Regulations Kelly Cochran testified at the hearing.

To help improve the regulation for credit unions, Cheney in his letter suggested expanding the ceiling on the debt to income ratio beyond the current 43% limit: "Credit unions often write mortgage loans for members that have a 45% debt-to-income ratio...Even so, our mortgage losses remain very low," he said.

Members of the subcommittee echoed some other concerns raised in CUNA's letter. There was broad consensus on both sides of the aisle that community based financial institutions should not be harmed by the "ability to repay" rule as currently written. Specifically, members raised concerns about the 3% cap on points and fees and asked questions about the debt-to-income ratio established in the rule. The cap could potentially harm those that participate in relationship banking, they said.

"As the loan amount decreases, certain fees cannot decrease alongside of it--some fees are fixed and are not dependent upon the size of the loan," Cheney wrote in the letter. "Therefore, the smaller the loan amount, the easier it is for fees to constitute a higher percentage of the total loan. This is especially true as the fees are currently defined as including loan originator compensation, and affiliate and non-affiliate fees."

Members of the subcommittee also discussed how this rule would interface with existing regulations. In his letter, Cheney also raised this point: "Examiners may be critical of credit unions and assess their CAMEL ratings accordingly if credit unions do not make mortgages that meet the qualified mortgage standards. We believe credit unions should retain the flexibility they currently have to either hold a loan in portfolio or sell it on the second mortgage market based on the needs of the credit union to manage its assets and obligations," the CUNA leader added.

For the full letter, use the resource link.

NCUA Activates Disaster Relief For Oklahoma

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WASHINGTON (5/22/13)--In the wake of this week's tornadoes, the National Credit Union Administration has activated its disaster relief policy to aid impacted credit unions and their members.

Under the NCUA disaster relief policy, the agency will, where necessary:

  • Encourage credit unions to make loans with special terms and reduced documentation to affected members;
  • Reschedule routine examinations of affected credit unions if necessary; and
  • Guarantee lines of credit for credit unions through the National Credit Union Share Insurance Fund.
The NCUA also encouraged credit unions to exercise prudent efforts to alter terms on existing loans for affected members, including:

  • Extending the terms of loan repayments;
  • Restructuring a borrower's debt obligations; and
  • Easing credit terms for new loans to certain borrowers, consistent with prudent practices.
Institutions in need of assistance in dealing with members affected by this disaster should contact NCUA's Region IV office in Austin, Texas, at 512-342-5600.

Members needing emergency assistance related to the tornados and severe weather should call NCUA's toll-free consumer assistance hotline at 800-755-1030 and press the appropriate option. Operators will answer calls Monday through Friday between 8 a.m. and 5 p.m. EDT, the agency said.

Federal credit unions may also provide emergency financial services for non-members and aid other credit unions by providing services.

For the full NCUA release, use the resource link.

Mica Calls For Tax Defense Action In CUinsight Column

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WASHINGTON (5/22/13)--"The current potential threat of the taxation on credit unions is the highest it has ever been in my 20 years that I have been involved in the movement," longtime member of Congress and former Credit Union National Association CEO Dan Mica wrote in a CUinsight.com piece.

While some in the U.S. Congress have promised that the credit union tax exemption will remain unchanged when current tax reform discussions are complete, credit unions must not rest on their laurels, Mica said. Sitting back, feeling secure and doing nothing in this crucial time "is the surest way to guarantee taxation of credit unions," he noted. "Make no mistake about it; there will be tax increases in the future. The government is gasping for revenue."

In his 15 years as head of CUNA and his 20 years in the credit union movement, Mica was instrumental in ensuring that credit unions won many key battles, including:

  • The Credit Union Membership Access Act (H.R. 1151), which granted credit unions power to serve multiple groups; and
  • A 2005 credit union tax status fight that ended when then-House Ways and Means Committee Chairman Bill Thomas (R-Calif.) said he had no plans for legislation that would add federal income tax to credit unions, regardless of their size or the diversity of their service offerings.
To prevent credit unions from being taxed this time around, CUNA and its affiliated state credit union leagues have launched a large-scale, nationwide grassroots-mobilization campaign urging America's 96 million credit union members to deliver a united message to the U.S. Congress: Don't tax my credit union!

"Every single day the bankers are pressing for taxation of credit unions. Every single day until the issue has been resolved in our favor all those who believe in the credit union movement should be shouting, "Do not tax my credit union!" Mica wrote.

"On the other hand, if you want to destroy the credit union movement. Do nothing," he said.

A legislative briefing on the tax situation facing credit unions and valuable information on the tools CUNA and state leagues are providing to help credit unions join the tax status fight will both be covered in today's National Webinar on the Credit Union Tax Status.

For the full CUinsight.com column and more on the free CUNA webinar, use the resource links.

More Than $1M In Grants Available From NCUA

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WASHINGTON (5/22/13)--Low-income credit unions can now apply for a total of $1.18 million in grants to help support their financial literacy, product development, collaboration, staff and board member training, office relocation and computer modernization efforts, the National Credit Union Administration said on Tuesday.

Eligible credit unions may apply for as much as $24,000 in funding. Grant applications can be filed between June 17 and July 12, and grantees will be announced at the end of August, the agency said. Eligible credit unions may file a single application for all funding initiatives, the NCUA added.

NCUA Chairman Debbie Matz encouraged eligible credit unions to apply. "These grants provide critical assistance to low-income designated credit unions so they can better meet the evolving financial needs of their members," she added.

The grant money was appropriated by Congress through the Community Development Revolving Loan Fund. NCUA's Office of Small Credit Union Initiatives administers that fund.

The NCUA has scheduled a "Multi-Initiative Grant Webinar" for today at 2 p.m. ET.

For the full NCUA release, and to register for the webinar, use the resource link.

NASCUS, CFPB Sign Memorandum Of Understanding

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WASHINGTON (5/22/13)--The National Association of State Credit Union Supervisors and the Consumer Financial Protection Bureau "will continue to endeavor to promote consistent examination procedures and effective enforcement of state and federal consumer laws and to minimize regulatory burden on state credit unions" under the terms of a new memorandum of understanding (MOU).

Click to view larger imageCFPB Deputy Director Steve Antonakes, left; Mary Martha Fortney, NASCUS president/CEO; and John Ryan, Conference of State Bank Supervisors president/CEO, pose after signing a memorandum of understanding. (Photo by Randy Jonoski provided by NASCUS)
NASCUS said the MOU, signed Tuesday by representatives from both groups, "provides that state regulators and the CFPB will consult each other regarding the standards, procedures, and practices used by state regulators and the CFPB to conduct compliance examinations of credit unions."

The MOU will help NASCUS and the CFPB avoid wasting time and resources, NASCUS said in a release.

"As we are committed to reducing regulatory burden and increasing examination efficiencies while protecting America's state credit union members, NASCUS is pleased to sign this MOU," Mary Martha Fortney, NASCUS president/CEO, said.

For the full NASCUS release, use the resource link.

Cordray Confirmation Vote Reportedly Delayed Until After Recess

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WASHINGTON (5/22/13)--A Senate confirmation vote for Consumer Financial Protection Bureau Director Richard Cordray will not be held until after the upcoming U.S. Congress recess, several outlets reported on Tuesday.

Sen. Harry Reid (D-Nev.) told reporters of the delay on Tuesday afternoon. Members of Congress are scheduled to leave Washington at the end of this week for the Memorial Day district work period. They are set to return on June 3.

The Senate Banking Committee in March approved Cordray's nomination by a 12 to 10 vote, moving the nomination on to the full Senate.

Cordray's nomination passed the committee in 2011, but ultimately failed to get a vote in the Senate. President Barack Obama appointed Cordray to the CFPB director position during a brief congressional recess in 2012, and Cordray's term as director would end this year if he is not confirmed.

Many Senate Republicans have consistently said they would block any CFPB nominee if certain structural changes were not made to the agency makeup.