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Consumer advisors to Fed take up mortgage issues June 16

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WASHINGTON (6/8/11)--The consumer advisory panel for the Federal Reserve Board is scheduled to meet June 16 to discuss several housing and mortgage loan-related topics, as well as a propose rule on remittance transfers. The CAC is composed of 30 members that serve three-year terms, and UW CU Chief Credit Officer Mike Long currently serves on the panel. The CAC advises the Fed on its responsibilities under the Consumer Credit Protection Act and on other matters in the area of consumer financial services. The group meets three times a year in Washington, D.C. and meetings are open to the public. The agenda for the June 16 meeting carries the following discussion items:
* National servicing standards for residential mortgage loans; views on what principles, policies, and procedures such standards should include; * Real estate-owned (REO) properties’ a look at such as topics as financial institutions' REO management practices, ``first look'' programs, and the implementation of the regulation providing Community Reinvestment Act consideration for certain neighborhood stabilization activities; * The Fed’s proposed rules under Regulation Z (Truth in Lending Act) that would require lenders to determine a consumer's ability to repay a mortgage loan before extending the credit and establish minimum mortgage underwriting standards; * A risk retention proposal that would require sponsors of asset-backed securities to retain at least 5% of the credit risk of the assets underlying the securities--with certain exemptions. The panel will also address a proposed definition of ``qualified residential mortgages,'' which would not be subject to the rule's requirements; and * Proposed rules, issued under Regulation E (Electronic Fund Transfer Act), to create new disclosures and protections for consumers who send remittance transfers to recipients in foreign countries.
The June 16 meeting is the second CAC meeting of the year.

CUNA offers audio conference on NCUAs prepaid assessment plan

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WASHINGTON (6/9/11)--Credit unions can tune in Monday, June 13, for a free Credit Union National Association audio conference on issues surrounding a proposed a plan to allow credit unions to prepay some of their total assessments to the Temporary Corporate Credit Union Stabilization Fund. The National Credit Union Administration proposed the voluntary prepayment plan at its May open board meeting and is accepting public comment through June 20. The NCUA prepayment program could help reduce credit unions’ assessment for 2011 substantially, depending on credit unions’ participation, and it would help even out assessments for subsequent years, CUNA has noted. CUNA is offering the audio conference to credit union officials who continue to have questions about the proposal, to help address those questions and facilitate credit unions’ understanding of the proposal. Speakers on the call will be CUNA President/CEO Bill Cheney, NCUA Deputy Director Larry Fazio, CUNA Chief Economist Bill Hampel and CUNA Deputy General Counsel Mary Dunn. The call will last one hour, 45 minutes of which will be reserved for questions. Use the resource link to register. For those who cannot participate in the live event, use the second resource link to register for an archived version to be available within 48 hours of the live event.

CU efforts intensify at Fed as interchange delay fails in Senate

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WASHINGTON (6/9/11)--Credit Union National Association (CUNA) President/CEO Bill Cheney said Wednesday that the U.S. Senate's failure to delay implementation of the Federal Reserve's debit card interchange fee cap is deeply disappointing and CUNA and credit unions will continue pressing the Federal Reserve to improve the proposed rule to minimize negative effects on credit unions and their members. In fact, promptly after the Senate vote, CUNA sent a letter to all Fed governors to reiterate several recommendations that could help insulate small issuers from the negative impact on their income that many fear will be the result of the Fed’s current proposal. Among the actions Cheney suggested:
* Establish a monitoring process under which the card networks would first report to the Board that a two-tiered structure has been established and then report annually on how such a two-tiered system is working, and also provide that information to Congress; * Include all allowable and reasonable costs in setting the cap on interchange fees; and * Revise the proposal regarding routing and exclusivity provisions to consider either exempting small issuers or delay the provisions for up to 24 months for small issuers. (See resource link for full letter)
CUNA is also involved in litigation to challenge the law and rule in an endeavor to preserve the revenue credit unions need to offer debit card services. CUNA filed an amicus brief in the suit against the interchange provisions brought by TCF Financial. The Fed's proposed interchange regulations, which now seem to be on track for at least the fee cap provisions to go into effect July 21, would limit debit card transaction fees to as little as 12 cents per transaction, if adopted as proposed. The Fed has acknowledged there are costs it could include but did not in the proposal. An exemption for issuers with under $10 billion in assets is include in the statue and acknowledged in the Fed proposal, but CUNA, the leagues and credit unions emphasize that the exemption is flawed and will not work in practice if it is not subject to enforcement by the Fed. Fed Chairman Ben Bernanke, FDIC Chairman Sheila Bair, National Credit Union Administration Chairman Debbie Matz, and other regulators have also said they are not sure that the exemption would work as planned. In the Senate vote yesterday, credit unions won the majority of votes when the Senate weighed in on an amendment--54 in favor and 45 against--to effect a delay and require an impact study of the interchange cap and the small-issuer exemption. However, to pass the amendment needed a total of 60 votes in favor. CUNA has worked intently for months on the legislative and regulatory fronts in an effort to improve the interchange rules, make the exemption for smaller institutions truly effective, and prevent credit unions and their members from being hurt by these measures, CUNA’s Cheney said. He commended Sens. Jon Tester (D-Mont.) and Bob Corker (R-Tenn.), sponsors of the amendment to delay the interchange cap, for their work on behalf of credit unions. The Senate "missed a huge opportunity to get this right," and credit unions are "deeply disappointed the Senate disregarded the more than half a million contacts made by credit unions and their members over the last three months in failing to pass the Tester-Corker amendment," Cheney added. Cheney said that CUNA has made it clear that these cap rules "will impose a severe hardship on credit unions with debit card programs, draining the revenue they need to offset the costs of providing card services.” He added, "much as they would prefer not to, credit unions will have no recourse but to make up these costs by imposing new fees or service restrictions on their members. How are consumers better off under this scenario? The plain fact is they are not."

Flood insurance examined today by Senate Banking

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WASHINGTON (6/9/11)—National Flood Insurance Plan (NFIP) reauthorization will be discussed by the Senate Banking Committee at 10 A.M. ET today. Federal Emergency Management Agency Administrator William Craig Fugate was the sole witness at press time, but the committee said that additional witnesses may still be added. A separate NFIP reauthorization package passed out of the House Financial Services Committee last month. That piece of legislation would reauthorize the NFIP for a further five years. It would also preserve the rights of credit unions to protect their collateral from flood hazards and would clarify that flood insurance purchased by credit unions "would date back to the date the existing policy lapsed or became insufficient in coverage amount, including any premiums or fees incurred during the 45-day notification period." CUNA has backed these planned changes to the NFIP. The Senate committee will likely develop its own legislation, and eventually merge its bill with the House legislation. The NFIP is currently set to expire on Sept. 30.

Inside Washington (06/08/2011)

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* ALEXANDRIA, Va. (6/9/11)—The National Credit Union Administration Board has scheduled a special closed board meeting for Thursday, June 9 at 5:30 pm (ET) to consider a supervisory activity. The agenda for that meeting is available online … * WASHINGTON (6/9/11)--Two model mortgage disclosure forms unveiled by the Consumer Financial Protection Bureau (CFPB) last month attracted more than 14,500 individual comments. In May, the CFPB released two alternate prototype forms that combine two federally required mortgage disclosures into a single form to make the costs and risks of the loan clear and allow consumers to comparison shop for the best offer, as required by the Truth in Lending Act and Real Estate Settlement Procedures Act (American Banker June 8). The initial 10-day comment period on the new prototype forms ended Friday. The bureau began testing the prototypes with focus groups in Baltimore last month, a process it said will continue in other cities before beginning a formal rulemaking process. It will conduct four more rounds of evaluation and revision through September. The bureau has until July 2012 to issue the final version of the form … * WASHINGTON (6/9/11)--The Federal Deposit Insurance Corp. (FDIC), the receiver for Downey Savings and Loan Association, has filed a lawsuit against mortgage broker Amerifund Financial Inc. and affiliated individuals in federal court. The suit, filed June 3 in U.S. District Court in Santa Ana, Calif., seeks $1 million in damages for breach of contract, professional negligence and civil fraud. Amerifund, of Spring Valley, Calif., and its agents processed mortgages for Downey in 2004 and 2005 and allegedly altered or misstated financial statements in loan applications, according to the complaint (American Banker June 8). Downey Financial Corp., the S&L’s parent, filed for Chapter 7 liquidation in 2008, claiming $50 million in assets and $500 million in debts. U.S. Bancorp eventually acquired Downey … * WASHINGTON (6/9/11)--Austan Goolsbee has resigned as chairman of the Council of Economic Advisers, the White House announced Monday. Goolsbee, a key adviser to President Barack Obama on economic policy, has been on the council since the beginning of the president’s term in early 2009. Goolsbee took over as chairman in September, following Christina Roemer’s resignation (American Banker June 8). He also was the staff economist for the president’s Economic Recovery Advisory Board. Goolsbee will reassume his position as an economics professor at the University of Chicago, where he taught for 14 years before joining the administration, the White House said …

Fannie Mae releases delinquent mortgage rules

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WASHINGTON (6/9/11)—Mortgage servicers will need to build “a strong customer-service relationship with homeowners” to determine why a borrower’s mortgage is delinquent, under new mortgage servicing guidelines issued by Fannie Mae. Those guidelines also ask lenders to assess a delinquent borrower’s ability to pay the remainder of their mortgage. The guidelines go into effect on Sept. 1. The new guidelines were released earlier this week, and the government sponsored mortgage entity said that these guidelines will “require servicers to implement consistent processes across a number of areas, and hold them accountable if they do not.” Servicers will also need to inform borrowers on any available foreclosure prevention resources, and mortgageholders must be contacted within the first 120 days that they are delinquent, Fannie Mae said. The foreclosure process will begin after 120 days of delinquency. Servicers must follow a strict timeline as they move loans through the foreclosure process, and financial penalties will be assessed for any timeline violations. However, Fannie Mae said it would provide financial incentives to mortgage servicers that work out foreclosure alternatives with their mortgageholders. The new standards are required by a Federal Housing Finance Agency (FHFA)-ordered regulatory alignment between Fannie Mae and Freddie Mac. FHFA Acting Director Edward DeMarco has said that the directive should "result in earlier servicer engagement to identify the best solution available for homeowners, given their individual circumstances." The Credit Union National Association continues to analyze the Fannie Mae release. Freddie Mac is required to release similar guidelines by the end of the third quarter of 2011. For more on the new standards, use the resource link.

NEW CUs deeply disappointed on interchange vote CUNA

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WASHINGTON (UPDATED: 2:40 p.m. ET, 6/8/11)-Credit Union National Association (CUNA) President/CEO Bill Cheney said that the Senate’s failure to delay implementing the Federal Reserve’s interchange debit fee cap “is going to create a train wreck that will affect every consumer with a debit card.” Credit unions won the majority of votes this afternoon when the Senate weighed in 54 in favor and 45 against an amendment that would have required the U.S. Congress to stop, study, and start over on a statutory debit card interchange fee cap. However, a 60 vote majority was required to pass the delay. After the vote, Cheney said credit unions are “deeply disappointed the Senate disregarded the more than half a million contacts made by credit unions and their members over the last three months in failing to pass the Tester-Corker amendment.” The Senate “missed a huge opportunity to get this right,” Cheney added. Cheney said that CUNA has repeatedly emphasized that these rules “will impose a severe hardship on credit unions with debit card programs, draining the revenue they need to offset the costs of providing card services. “Much as they would prefer not to, credit unions will have no recourse but to make up these costs by imposing new fees or service restrictions on their members. How are consumers better off under this scenario? The plain fact is they are not,” he added. Cheney said CUNA will continue and re-double its efforts to work with the Federal Reserve as it moves forward in creating its implementation rule, set to go into effect July 21. Last December, the Fed proposed to cap debit card transaction fees at 12 cents per transaction. A proposed exemption for issuers with under $10 billion in assets is included in the proposal, but CUNA, the leagues and credit unions--and the Fed itself--have said that the exemption is flawed and will not work in practice.