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Exam issues remain high priority CUs to NCUA

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SAN DIEGO, Calif. (7/13/12)--Examination issues again loomed large as the National Credit Union Administration (NCUA) this week held its fifth credit union listening session in San Diego, Calif.

NCUA Chairman Debbie Matz was joined at the session by NCUA Executive Director Dave Marquis, Director of Examination and Insurance Larry Fazio, Region II Director Jane Walters, General Counsel Mike McKenna, and Office of Small Credit Union Initiatives Director Bill Myers. Regional supervisory examiners also answered questions from the audience.

Attendees made suggestions on how the examination process could be improved, and the NCUA officials said they were aware of the burden that regulations and examinations can create for credit unions.

Some credit union representatives criticized NCUA examiners' overuse of Documents of Resolution (DOR). Matz said due to the improving condition of the credit union system, examiners are now being instructed to restrict the use of DORs to only material examination findings. She said the agency expects the number of DORs filed with credit unions to decline in the future.

The agency staff also recognized that receiving two separate lists of regulatory requests, from NCUA and state examiners, can create issues for credit unions. Matz and the NCUA representatives said they would work to encourage increased coordination between state and federal examination teams. The federal regulator also clarified that the California Department of Financial Institutions' "examiner in charge" would serve as the lead examiner for joint examinations held in that state.

Credit unions that have demonstrated net-worth ratios of 6% or higher for four consecutive quarters should be removed from the restrictions imposed under the Net Worth Restoration Plan (NWRP), the NCUA said. Listening session attendees said they were concerned by NCUA rules that prevent credit unions under NWRPs from providing loans to members who are above a specified debt-to-income ratio. The agency officials said they would take this and other NWRP issues under consideration.

The importance of communication between examiners and credit union staff was one of many issues that the NCUA again addressed at this listening session.

Credit union representatives also asked the agency to work toward a quicker, more consistent, and less redundant member business lending (MBL) waiver process. NCUA staff said they are reconsidering their waiver approach. They added that blanket waivers should be made available in some cases, and appeared to be receptive to credit union suggestions that loan participants should not be required to request duplicate waivers if the lead lender in a loan participation has acquired a waiver.

The agency added that it would work with credit unions to address issues related to Allowances for Loan Losses (ALL), ALL funding levels, and Asset Liability Management modeling issues.

The agency will hold the last of its scheduled listening sessions on July 31 in Denver, Colo., and Credit Union National Association (CUNA) will attend that meeting. CUNA and its examination and supervision subcommittee will follow up with the NCUA on key issues brought up during this and other listening sessions.

Registration for the final listening session is limited to the first 150 reservations. See resource link for more information.

Mortgage fraud leads title escrow BSA filings

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WASHINGTON (7/13/12)--Mortgage loan fraud, structuring fraud and false statement fraud are among the most frequently reported crimes in title market- and escrow market-related Bank Secrecy Act (BSA) filings sent to the Financial Crimes Enforcement Network (FinCEN), the agency reported this week.

In its first comprehensive study of suspicious activity reports (SARs) and other related BSA forms filed in the title and escrow markets, the agency noted that thousands of banks, money service businesses and other financial institutions have suspected crimes were being committed at various title and escrow companies. The study covers the period between 2003 and 2011.

Title and escrow companies are not required to file SARs, but some have reported suspected crimes by employees or others on other FinCEN form 8300 payment statements that they are required to file.

Around $122 million have been reported in escrow and title firm SARs filed between 2003 and 2011. Mortgage loan fraud has been the most frequent subject of SARs reporting suspected title or escrow firm malfeasance since 2003.

California was the most frequently listed location of filers, branches, and subjects on SARs filed in the firms, and the majority of suspicious activities reported took place in Texas. Some filed SARs were also tied to business in China, Nigeria, Canada and other foreign locales.

Potential mortgage fraud also was suspected in half of the SARs filed by title and escrow companies in 2011, the agency added. The number of reports linked to potential crimes at escrow and title companies peaked in 2005 and has fallen significantly since then.

The mortgage fraud attempts often feature mortgage brokers and title, escrow or real estate agents who have helped borrowers falsify their mortgage applications by providing untrue employment, income and asset data. Identity theft and the filing of multiple mortgage loan applications for multiple properties were also commonly reported crimes, according to FinCEN.

Title or escrow agents have also reportedly taken part in predatory lending practices and colluded in property flipping schemes, FinCEN said.

BSA reports also noted attempted check fraud, check kiting, wire fraud and money laundering schemes.

This first study of BSA reports filed by and on title and escrow firms will help inform FinCEN's ongoing efforts to identify regulatory gaps that criminals look to take advantage of, and will help the agency address those gaps and mitigate those risks through public awareness, support to law enforcement, or appropriate regulatory action, FinCEN Director James Freis said.

For a FinCEN release, use the resource link.

Financial factors led to May NCUA mergers

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WASHINGTON (7/13/12)--The National Credit Union Administration (NCUA) announced 24 mergers were approved in May, citing poor financial conditions as the primary factor in nearly half of the mergers reported.

Expanded services, inability to obtain officials, and loss of field of membership also played a part in many of the mergers.

NCUA approved the following mergers:

  • UFCW Local 342 FCU, with $5.5 million in assets, Mineola, N.Y., into $4.7 billion asset Bethpage CU, Bethpage, N.Y.;
  • Hartford Postal Employees CU, with $10 million in assets, Wethersfield, Conn., into $1.3 billion asset American Eagle CU, East Hartford, Conn.;
  • Massachusetts State Employees CU, with $71 million in assets, Boston, Mass., into $1 billion asset Metro CU, Chelsea, Mass.;
  • Mountain Valley FCU, with $6.9 million in assets, Nitro, W. Va., into $169 million asset West Virginia FCU, Salem, W. Va.;
  • California Pacific FCU, with $41 million in assets, and CD FCU, with $76 million in assets, both of Concord, Calif., into $1.6 billion asset Western FCU, Manhattan Beach, Calif.;


  • University Drive VAH FCU, with $8 million in assets, Pittsburgh, Pa., into $12 million asset VA Pittsburgh Employees FCU, Pittsburgh, Pa.;
  • Tetco Employees FCU, with $2.4 million in assets, West Chester, Pa., into $260 million asset Benchmark FCU, West Chester, Pa.;
  • South Berkeley FCU, with $2.3 million in assets, Martinsburg, W. Va., into $286 million asset Bayer Heritage FCU, Proctor, W. Va.;
  • Queen Street Baptist Church FCU, with $70,699 in assets, Hampton, Va., into $1.6 billion asset Langley FCU, Newport News, Va.;
  • New Bethel A.M.E. FCU, with $95,382 in assets, Philadelphia, Pa., into $854 million asset Philadelphia FCU, Philadelphia, Pa.;
  • Lower Bucks Hospital FCU, with $1.7 million in assets, Bristol, Pa., into $1.2 billion asset American Heritage FCU, Philadelphia, Pa.;


  • North Orange County CU, with $61 million in assets, Fullerton, Calif., into $565 million asset Credit Union of Southern California, Whittier, Calif.;
  • Atlanta Teachers FCU, with $7.2 million in assets, Atlanta, Ga., into $75 million asset Credit Union of Atlanta, Atlanta, Ga.;
  • Baptist Regional Medical FCU, with $8.1 million in assets, Pensacola, Fla., into $127 million asset Harvesters FCU, Cantonment, Fla.;
  • St. Luke Parish FCU, with $8.9 million in assets, Beavercreek, Ohio, into $78 million asset Incenta FCU, Englewood, Ohio;
  • Georgia Department of Public Safety CU, with $13 million in assets, Atlanta, Ga., into $533 million asset Justice FCU, Chantilly, Va.;
  • Abilene Telco FCU, with $4.5 million in assets, Abilene, Texas, into $10 million asset First Priority CU, Abilene, Texas;


  • Sunrise CU, with $18 million in assets, Green Bay, Wis.,  into $803 million asset Fox Communities CU, Appleton, Wis.;
  • Cleaver-Brooks CU, with $1.4 million in assets, Milwaukee, Wis., into $134 million asset Appletree CU, West Allis, Wis.;
  • CY-Hannibal CU, with $1 million in assets, Palmyra, Mo., into $51 million asset United Community CU, Quincy, Ill.;
  • Hawaii Stevedores/Castle & Cooke Hi CU, with $11 million in assets, Honolulu, Hawaii, into $714 million asset Aloha Pacific FCU, Honolulu, Hawaii;
  • Shoshone County School Employees CU, with $930,417 in assets, Pinehurst, Idaho, into $486 million Potlach No 1 FCU, Lewiston, Idaho; and
  • Montana First CU, with $63 million in assets, Missoula, Mont., into $451 million asset Horizon CU, Spokane Valley, Wash.

Inside Washington (07/12/2012)

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  • WASHINGTON (7/13/12)--House Republicans on Wednesday argued the potential negative impact of a pending rule--part of the Dodd-Frank Act--that would require proof of a borrower's ability to repay a mortgage loan (American Banker July 12). The most contentious part of rule is how regulators will define "qualified mortgages"--a special type of mortgage with fewer compliance requirements. The hearing before the House Financial Services financial institutions subcommittee was one of six planned by the Republicans to address the effects of the Dodd-Frank Act. July 21 marks the two-year anniversary of the Dodd-Frank Act being signed into law …
  • WASHINGTON (7/13/12)--The U.S. Small Business Administration has joined with the Department of Veterans Affairs and the Department of Defense to launch a training program for transitioning service members and veterans to help them become entrepreneurs and create jobs.  Operation Boots to Business: From Service to Startup is a national initiative that will be piloted with the U.S. Marine Corps. The program will pilot in four locations: Quantico, Va.; Cherry Point, N.C.; Camp Pendleton, Calif.; and Twenty-Nine Palms, Calif.  It will be expanded nationwide during fiscal year 2013 with the goal of providing entrepreneurial training and awareness to transition service members from all branches of the military …
  • WASHINGTON (7/13/12)--The Federal Reserve has released new supervisory guidance related to bank acquisition applications...