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Inside Washington (07/23/2010)

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* ALEXANDRIA, Va.(7/26/10)--Supervisory activities will be discussed at the National Credit Union Administration’s (NCUA) upcoming closed board meeting, which will take place on Friday at 9 a.m. ET. The NCUA will hold its monthly open meeting, with a closed meeting to follow, on Thursday. Another closed meeting was held last week … * WASHINGTON (7/26/10)--The Federal Deposit Insurance Corp. (FDIC) plans to disclose the individuals and groups that it met with regarding the regulatory reform bill, which was signed into law by President Barack Obama Wednesday. The plan moves beyond current disclosure policies and perceptions that banks will try to weaken provisions of the reform bill as regulators implement its provisions (American Banker July 23). Right now, agencies publish only records of meetings about proposed regulations during a comment period. However, FDIC Chairman Sheila Bair said July 15 that she would develop rulemakings in an transparent manner. The agency’s disclosure plan is similar to the Obama administration’s--the administration has published records of meetings it held with lobbyists about the Troubled Asset Relief Program and economic stimulus measures ... * WASHINGTON (7/26/10)--Recent reports by government and private analysts indicate that mortgage loan servicers are making more loan modifications on their own than through government programs, such as the $50 billion Home Affordable Modification Program (HAMP), which aims to lower borrowers’ mortgage payments for five years. This year, servicers completed more than 800,000 alternative modifications, while HAMP produced 389,198 (USA Today July 23). Several recent reports the newspaper cited indicate that newer modifications have better results, lower monthly payments reduce default rates, redefault rates on modified mortgages remain high and eligibility standards for HAMP modifications are not consistent or clear-cut. Diane Thompson, lawyer at the National Consumer Law Center, said that some of the alternative programs trigger concerns because the interest rates and payments aren’t as low as HAMP. Under HAMP, servicers must reduce mortgages to 31% of borrowers’ monthly incomes. If borrowers make payments for three months, the modified mortgage is good for five years. Some alternatives only help borrowers for a few months, the newspaper added ...

Online gambling regs up for markup this week

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WASHINGTON (7/26/10)--Rep. Barney Frank (D-Mass.) on Friday announced that his House Financial Services Committee will begin the process of marking up H.R. 2267, Internet Gambling Regulation, Consumer Protection, and Enforcement Act, on Tuesday. Discovery FCU President/CEO Ed Williams testified on behalf of the Credit Union National Association during a recent House committee hearing on H.R. 2267. During the hearing, which took place last Wednesday, Williams said that fully licensing and regulating online gambling portals used by U.S. citizens would eliminate some of the uncertainty that credit unions face regarding compliance with the Unlawful Internet Gambling Enforcement Act (UIGEA). UIGEA regulations currently require credit unions and other financial institutions to establish and implement policies and procedures to identify and block restricted internet gambling transactions, or rely on those procedures established by the payments system. H.R. 2267, which was introduced last year by Frank, would give the U.S. Treasury the authority to license internet gambling operators to accept bets and wagers from U.S. citizens and to create regulations for those gambling operators. Frank's legislation currently has 69 co-sponsors. Williams said that while he supports H.R. 2267, regulators and legislators should strengthen the safe harbor rules contained in the current UIGEA rules. Legislation related to housing, medical debt relief, shareholder protection, and bonds will also be discussed by the committee.

CUNA seeks comment on FHA loan insurance changes

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WASHINGTON (7/26/10)--The Credit Union National Association (CUNA) has asked credit unions to comment on new credit score requirements imposed by the Department of Housing and Urban Development’s (HUD) proposed changes to Federal Housing Administration (FHA) loan insurance standards. The HUD proposal would alter the FHA’s credit score requirements, the level of seller concessions; and the standards for loans that are underwritten manually. HUD in a release said that these changes are aimed at preserving “both the historical role of the FHA in providing a home financing vehicle during periods of economic volatility and HUD’s social mission of helping underserved borrowers.” The proposal is also meant to strengthen the reserves of the fund that covers FHA losses, CUNA added. CUNA has specifically asked for credit unions for their comments on the proposed decrease in the maximum permitted seller concessions or the underwriting standards for manually underwritten loans. Comments are due to CUNA by Aug. 9. Comments to HUD should be submitted by Aug. 16. For the comment call, use the resource link.

Allow CUs to sell loans in secondary markets--CUNA to Treasury

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WASHINGTON (7/26/10)--Responding to a U.S. Treasury request for public input on the reform of the housing finance system, the Credit Union National Association (CUNA) has recommended that the Treasury’s pending housing finance plan “ensure that all segments of the financial services industry can take full advantage of the opportunities to sell their loans into the secondary market and to receive services from the Federal Home Loan Banks or other entities.” CUNA also urged the Treasury to “recognize that credit unions perform, and can continue to perform, a valuable role in the mortgage lending system” as it develops the new plan. The “overriding goal” of any new housing finance system should be “ensuring that consumers receive mortgage loans that they can afford,” CUNA added. The housing finance system should also minimize any legislative and regulatory burdens that credit unions may face, the letter said. Credit union burdens related to housing finance regulations are “very substantial,” and have escalated in recent years, CUNA added. CUNA plans to work with member credit unions in anticipation of the Obama Administration’s legislative proposal. For the full comment letter, use the resource link.

30B small biz fund added to jobs bill

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WASHINGTON (7/26/10)--The Senate by a 60 to 37 vote count late last week agreed to add back into a small business jobs bill a provision that would create a $30 billion fund to help small banks lend funds to small businesses. Similar legislation was dropped by Senate Democrats earlier in the week, but Sens. George LeMieux (R-Fla.) and Mary Landrieu (D-La.) presented the small business lending fund as an amendment on Thursday. That amendment, which passed with a mere two Republican votes from Sens. George Voinovich (R-Ohio) and LeMieux, also faced substantial procedural hurdles and was hampered by extensive political maneuvering prior to its passage. The Credit Union National Association (CUNA) and Sen. Mark Udall (D-Colo.) continue to work to add an amendment that would lift the member business lending (MBL) capacity of credit unions to 27.5% of total assets to the small business jobs bill. Udall discussed his amendment before the Senate earlier this month, saying that the legislation would "safely and soundly increase small business lending by credit unions without costing Americans a dime" and "could lead to large-scale job creation" in both his home district and nationwide. CUNA Senior Vice President of Legislative Affairs John Magill said that the prolonged debate over the small business legislation has allowed CUNA and credit unions to further solidify their argument for lifting the MBL cap. While it is not known if the MBL amendment will be added to the final Senate version of the small business legislation, CUNA President/CEO Bill Cheney continues to urge credit unions and credit union backers to encourage their legislators to support the legislation. Cheney last week also met with several legislators to discuss MBLs and other pressing credit union issues. CUNA has estimated that lifting the MBL cap to beyond 25% of total assets could create over 108,000 new jobs and inject $10 billion in new funds into the economy, providing needed relief to small businesses without costing taxpayers a dime.