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CUNA backs FHA risk management initiatives

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WASHINGTON (8/19/10)--The Credit Union National Association (CUNA) this week said it supports the Federal Housing Administration’s (FHA) pending imposition of new down-payment requirements. The new down-payment requirements, which were proposed by the FHA last month, would remove potential borrowers with credit scores of 500 or less from consideration for FHA loans and would require borrowers with scores between 500 and 579 to make a minimum 10% down payment. The FHA currently requires borrowers with credit scores below 500 to make a minimum payment of 10% of the value of the home being purchased. In a comment letter sent this week, CUNA said that it would support stricter requirements if those requirements were imposed on a graduated basis. CUNA said that it also agrees with the FHA’s potential plan to exempt borrowers who refinance current loans from the credit score requirements, as long as it is restricted to an interest rate reduction refinance, as well as the FHA’s proposal to reduce the amount of the buyer’s closing costs that may be paid by the seller from 6% to 3% of the purchase price of the property. Jeff Bloch, CUNA senior assistant general counsel, said that CUNA's understanding is that these proposed changes will not affect credit union mortgage lending, as credit union underwriting standards generally meet or exceed these standards. "The goal of these changes appears to be to help ensure that the lax underwriting standards of others in the past do not reoccur," he added. For the full comment letter, use the resource link.

NCUA to hold Oregon-based CU town hall

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ALEXANDRIA, Va. (8/19/10)--National Credit Union Administration (NCUA) Chairman Debbie Matz has encouraged “all interested parties” to take part in the NCUA’s next town hall, which is set for Oct. 5 in Portland, Ore. The town hall will address portions of the recently enacted financial regulatory reform package that impact credit unions. It also will include NCUA staff presentations on recent NCUA regulatory developments, and several issues that are occurring in both the natural person and corporate credit union systems. In a statement accompanying the release, Matz said that she looks forward to “the same vigorous dialogue and forthright examination of the important issues facing the credit union system at this Town Hall as we saw in previous sessions.” The NCUA has held several live and virtual town halls in recent months, and Matz said that public interaction would be a hallmark of her term as NCUA head. The NCUA held several town hall meetings as it developed its new set of corporate credit union rules. Those rules are expected to be released next month. The NCUA has always benefited from “reasoned, constructive input from stakeholders,” Matz added. For the NCUA release, use the resource link.

CU-backed candidates win in Wash. state

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WASHINGTON (8/19/10)--The trend of strong results for credit union-backed candidates continued on Tuesday, with credit union backers moving on to general election contests in Washington State. Senate incumbent Patty Murray (D), who has been backed by the Credit Union National Association (CUNA) and the Washington Credit Union League, will move on to face Dino Rossi (R) in November after she won 46% of the total primary vote on Tuesday. Rossi won 34% of the total electorate, with a pair of Tea Party-supported Republican nominees garnering 15% of the total vote. Washington’s primary system ends in a general election runoff between the top two vote-getters, regardless of party affiliation. Murray last year worked with the league, as well as GESA CU and Spokane Teachers CU, to promote financial literacy legislation in the senate. State Representative Jamie Herrera (R), who has also worked with the Washington league on a successful public funds bill, will face Denny Heck (D) in November. The contest, which is expected to be competitive due to the close party registration in Washington’s third district, is for the open seat of retiring congressional Rep. Brian Baird (D). "Both of these candidates--Senator Murray and Representative Herrera--are strong credit union friends who will face very competitive races in the general election," said Trey Hawkins, CUNA vice president of political affairs. "We look forward to working with the Washington Credit Union League to ensure that these candidates win in November."

CUNA CEO Interchange reg. reform remain on radar

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WASHINGTON (8/19/10)--In his weekly regulatory action update, Credit Union National Association (CUNA) President/CEO Bill Cheney said CUNA is “actively engaged” in the Federal Reserve’s development of pending interchange fee rules. CUNA’s legislative staff is also looking to work with the U.S. Congress to make some technical corrections to key interchange statutory provisions, Cheney added. Cheney noted that the Fed will soon distribute surveys on the regulation of debit interchange and network fees to debit card issuers, and added that CUNA’s Interchange Working Group is currently developing its own comments to provide to the Fed. CUNA’s Corporate Credit Union Next Steps and Supervisory Issues Working Groups both continue their work. The Next Steps group is compiling a report on the investment services, and payment and settlement service options available to natural person credit unions, and that report is expected to be released in September. The Supervisory Issues Working Group also is gathering information of its own via a new site on CUNA’s homepage. That site, which will be labeled “top initiatives,” will allow credit unions to share examination and supervisory concerns with the working group. CUNA also is monitoring ongoing regulatory reform developments and will keep credit unions updated via a two-part audio conference on Aug. 24 and 25, and a comprehensive implementation date database, to be published in next week’s edition of CUNA’s bi-weekly, members-only publication, NewsWatch. For more on the audio conference and to sign up for NewsWatch, use the resource links.

Federations Rosenthal NCUA pushing CU mergers consolidation

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WASHINGTON (8/19/10)--In a recent release, National Federation of Community Development Credit Unions (federation) President/CEO Cliff Rosenthal said that “there is a broad and growing feeling among many small credit unions that there is an unwritten agenda to force mergers and consolidation within the credit union industry.” Rosenthal pointed to the National Credit Union Administration’s (NCUA) recent liquidation of Kappa Alpha Psi FCU as one event that “has heightened that perception.” Kappa Alpha Psi earlier this month filed a legal challenge to the NCUA's liquidation order, alleging that the "significant drop" in its net worth ratio that predicated the liquidation was created by assessments charged by the NCUA. The NCUA countered, saying that its liquidation order was well founded and was directly related to the credit union's inability to generate profits, build its net worth, and adequately grant, service, and collect loans. The NCUA on Friday formally liquidated the troubled credit union by distributing all shares held in the credit union to its former members, and the credit union abandoned its injunction request on Wednesday. Rosenthal had backed Kappa Alpha Psi’s challenge, saying recently that “it is important for credit unions who feel that they have been mistreated by their regulators to use all means available, ultimately including the courts, to assert their legal rights and argue their case publicly.” Rosenthal also noted that the federation “receives a steady stream of complaints” from member credit unions CDCUs about examiners acting overly aggressively or inappropriately.

Inside Washington (08/18/2010)

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* WASHINGTON (8/19/10)--The Government Accountability Office (GAO) released a report this week on federal efforts to end mortgage-fraud schemes and recommended that the government develop a more comprehensive strategy than currently exists. In 2009, the administration created the Financial Fraud Enforcement Task Force (FFETF), headed by the Department of Justice, to combat mortgage fraud and other financial crimes. The GAO report said: To develop a comprehensive strategy for the FFETF’s Mortgage Fraud Working Group’s efforts to counter mortgage fraud, the U.S. Attorney General, as the head of the FFETF, should develop clear, long-term strategies and performance measures that the working group can use to evaluate its progress toward its long-term goal of increasing enforcement in the area of mortgage fraud”…