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Senators call for quick passage of privacy notification tweaks

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WASHINGTON (5/9/14)--Sens. Sherrod Brown (D-Ohio) and Jerry Moran (R-Kan.) this week called on colleagues to follow up on the release of a new Consumer Financial Protection Bureau privacy notification proposal by supporting their own bill, The Privacy Notice Modernization Act.
The privacy notice bill would eliminate a requirement that privacy notices be sent on an annual basis. It would instead allow the notices to be sent only when the privacy policy of a financial institution has changed.
It would also require credit unions and other financial institutions to make their privacy policy always accessible in some form in order to qualify for the bill's exemption from sending annual privacy notices.
The Credit Union National Association supports the bill. The privacy notification legislation was introduced last year.
"Consumers don't need to be flooded with duplicative and confusing information, we need to make disclosures easier to understand," Brown said in a release. "The CFPB deserves credit for moving forward with its proposal. But our commonsense bill would further reduce burdensome and unnecessary paperwork--that burden consumers and community banks and credit unions alike--and ensure that provide disclosures are timely, clear, and concise."
Moran urged his Senate colleagues to support swift passage of the bill so credit unions and banks can better serve the public and make privacy notices readily available without filling mailboxes with duplicative information.
In a letter of support for the bill, CUNA and seven other groups said the "common sense measure would reduce the significant costs institutions incur providing unnecessary disclosures and more importantly give (consumers) a break from redundant notices."
The Senate bill currently has 63 bipartisan co-sponsors.

CFPB webinar focuses on veterans' issues

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WASHINGTON (5/8/14)--The Consumer Financial Protection Bureau will host an online forum on veteran consumer issues today at 2 p.m. (ET).
The event will focus on common consumer issues for veterans and military retirees. Highlights will include a review of tools that can help veterans capitalize on key benefits and information that can help them avoid consumer scams.
The event is open to veterans, as well as those who work with veterans or military retirees. Use the resource link.

G-fees weigh heavy in Fannie, Freddie income

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WASHINGTON (5/9/14)--Single-family guaranty fee income brought in by Fannie Mae totaled $2.9 billion in the first quarter of 2014, and the government-sponsored enterprise said it expects those fees to become the primary source of the company's revenues in the near future.
Net income was $5.3 billion and comprehensive income was $5.7 billion during that quarter, Fannie Mae added. This is the ninth consecutive quarter of profits for Fannie Mae.
Overall, Fannie Mae said it expects to remain profitable for the foreseeable future. 
Fellow government-sponsored enterprise Freddie Mac also reported strong financials in the first quarter of 2014: That firm reported quarterly income of $4 billion, and was profitable for the tenth straight quarter. However, Freddie Mac cautioned that the current level of earnings would not be sustainable over the long term.
Fannie Mae last year announced plans to increase guaranty fees, but new Federal Housing Finance Agency Director Mel Watt said he planned to delay these planned increases. 
Under former acting Director Ed DeMarco, the FHFA had planned to increase base guarantee fees for all mortgages by 10 basis points, update the up-front guarantee fee grid to better align pricing with the credit risk characteristics of the borrower, and eliminate the up-front 25 basis point adverse market fee, except in the four states whose foreclosure carrying costs are more than two standard deviations greater than the national average. These planned increases would have resulted in an average guaranty fee increase of approximately 11 basis points for the third quarter of 2013.
Watt said he will thoroughly evaluate the proposed fee changes, and would give the public a minimum of 120 days' notice before he made any changes to the guaranty fee structure.
The Credit Union National Association has urged FHFA not to go forward with these fee increases.

Proposed rule aligns ARM, FHA interest rate adjustments

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WASHINGTON (5/9/14)--The Housing and Urban Development Department has proposed two revisions to the Federal Housing Administration's (FHA) regulations governing its single-family adjustable-rate mortgage (ARM) program.
The revisions would align FHA interest rate adjustment and notification regulations with the requirements for notifying mortgagors of ARM adjustments, as required by the regulations implementing the Truth in Lending Act (TILA), as recently revised by the Consumer Financial Protection Bureau.
The first proposed amendment of this rule would require that an interest rate adjustment resulting in a corresponding change to the mortgagor's monthly payment for an ARM be based on the most recent index value available 45 days before the date of the rate adjustment, a change from current regulations that provide for a 30-day look-back period.
The date that the newly adjusted interest rate goes into effect is often referred to as the "interest change date." The number of days prior to the interest change date on which the index value is selected is called the "look-back period."
An overwhelming majority of ARMs originated in the conventional mortgage market currently have a 45-day look-back period and were required to comply with the 2013 TILA Servicing Rule notification requirements on Jan. 10, well before the effective date of this proposed rule. There should be little, if any, burden to apply the same 2013 TILA Servicing Rule requirements on FHA-insured ARMs. Therefore, the anticipated costs of this proposed rule are very minimal.
Additionally, since a majority of ARMs already have look-back periods of 45 days, the revised 45-day look-back period proposed by FHA is consistent with current industry norms.
The second proposed amendment would require that the mortgagee of an FHA-insured ARM comply with the disclosure and notification requirements of the 2013 TILA Servicing Rule, including at least a 60-day but no more than 120-day advance notice of an adjustment to a mortgagor's monthly payment.
FHA's current regulations provide for notification at least 25 days in advance of an adjustment to a mortgagor's monthly payment.
Since this proposed change also conforms to the 2013 TILA Servicing rule, HUD does not anticipate that the revised disclosure requirements will impose significant costs on FHA-approved mortgagees, since they were required to make these notification adjustments by Jan. 10.

FFIEC advises FIs prepare for cybersecurity assessments

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WASHINGTON (5/9/14)--The Federal Financial Institutions Examination Council (FFIEC) highlighted efforts to enhance financial institutions' cybersecurity during a webinar Wednesday for approximately 5,000 chief executive officers and senior managers from community financial institutions.
The webinar aimed to raise awareness of cyber threats, discussed the role of executive leadership in managing these risks and shared actions being taken by the FFIEC.
FFIEC announced it will conduct vulnerability and risk-mitigation assessments, as well as regulatory self-assessment of supervisory policies and processes later this year. These will help the FFIEC member agencies make informed decisions about the state of cybersecurity across community institutions, address gaps and prioritize necessary actions to strengthen supervisory programs.
FFIEC members want to provide additional support to community banks, which may not have access to the resources available to larger institutions. They hope to help these institutions identify and mitigate cybersecurity risks by:
  • Setting the tone from the top and building a security culture;
  • Identifying, measuring, mitigating, and monitoring risks;
  • Developing risk management processes commensurate with the risks and complexity of the institutions;
  • Aligning cybersecurity strategy with business strategy and accounting for how risks will be managed both now and in the future;
  • Creating a governance process to ensure ongoing awareness and accountability; and
  • Ensuring timely reports to senior management that include meaningful information addressing the institution's vulnerability to cyber risks.
To download the presentation from the webinar, use the resource link.

NCUA at the ready for disaster season

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WASHINGTON (5/9/14)--Severe weather, including tornadoes and flooding in the South and Midwest, is being monitored by the National Credit Union Administration, which is prepared to assist affected credit unions.
During natural disasters, NCUA works with state regulators and state league organizations to ensure all federally insured credit unions are aware of the agency's available assistance. Agency examiners remain in close contact with credit unions affected by a disaster to offer advice and provide material and technical assistance, as needed.
NCUA reminds that low-income credit unions may apply for emergency assistance through the Urgent Needs Initiative for grants up to $7,500 to cover expenses related to natural disasters or other unexpected adverse events. The grants provide funds to these credit unions to repair damages or replace equipment in order to restore services to members.
For more information about Urgent Needs Grants, use the resource link.

Fed seeks comment on financial institution combo rule

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WASHINGTON (5/9/14)--Proposed Federal Reserve rules that would prohibit insured depository institutions and other financial firms from combining with another company in certain cases are now open for public comment.
The Fed proposal would specifically prohibit firms from combining if the ratio of the resulting financial company's liabilities exceeds 10% of the aggregate consolidated liabilities of all financial companies, the Fed said. The Fed would also measure and disclose the aggregate liabilities of financial companies annually and would calculate aggregate liabilities as a two-year average, under the proposal.
Bank holding companies, savings and loan holding companies, foreign banking organizations, companies that control insured depository institutions, and nonbank financial companies designated by the Financial Stability Oversight Council for Fed supervision would also be subject to the rule.
For the purposes of the Fed rule, liabilities are defined as the difference between an institution's risk-weighted assets, as adjusted to reflect exposures deducted from regulatory capital, and its total regulatory capital. Firms not subject to consolidated risk-based capital rules would measure liabilities using generally accepted accounting standards, the Fed said.
Comments on the proposal will be accepted until July 8. For more, use the resource link.