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Compliance A SAFE registration update

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WASHINGTON (9/13/10)--The Conference of State Bank Supervisors (CSBS) briefed the Credit Union National Association (CUNA) and other trade associations last week about its progress on developing the registration process that banks, credit unions, and their employees will have to follow in order to comply with the Safe and Fair Enforcement for Mortgage Licensing Act (SAFE Act). All credit unions that make residential mortgage loans are subject to the National Credit Union Administration’s (NCUA’s) SAFE regulations and may have to register certain employees. NCUA, the federal banking agencies and the Farm Credit Administration are working with CSBS, which already runs the web-based registration system for state licensing of mortgage loan originators, to modify the current CSBS system to create the Nationwide Mortgage Licensing System and Registry. When the final SAFE regulations were issued in July, the agencies indicated they expect the Registry to be operational on January 28, 2011. The law provides that credit union employees who are “mortgage loan originators” (MLOs) as defined by the SAFE regulations and approve a certain number of mortgage loans a year will have 180 days after the agencies formally announce the date that the registry is operational to become registered in order to continue to be authorized to make residential mortgage loans, including home equity loans. Registration requires that MLOs provide certain information, including employment history, and provide finger prints for a criminal background check. Some of this information, including the unique identifying number assigned by the registry to the individual, will be publicly available. All of the information will be made available to the federal agencies. Although the registration procedures are not finalized, CSBS provided CUNA with an overview of how the electronic registration system will work. Each credit union will have to have a “research statistics supervision discount” (RSSD) number, which is assigned by the Federal Reserve Board, in order to initially access the Registry to register the credit union itself into the system. On its “SAFE Act” webpage, NCUA has a link to “Finding Your Credit Union’s RSSD Number.” CUNA isn’t sure how many credit unions lack a RSSD number and will explore what has to be done to have this number assigned. The registry will then provide each credit union with a number to be used for all future SAFE purposes. The credit union will complete a “MU1R” form for registering the credit union, which will include a name of an employee to contact for questions, who can be the same person designated as the account administrator. The account administrator will have full access to all the information provided by the credit union and its MLO employees. The credit union has to be registered before individual MLO employees can register. Individuals will do so by completing the “MU4R” form. Employees will have to attest to the accuracy of the information they provide, and the credit union will have to indicate that it has received the criminal background check information before finally completing the registration process. CSBS indicated that it hopes to post these forms to its website in the next week or so, which will allow everyone to understand what information will have to be provided even though actual registration is months away. CSBS described that it will have a “MLO batch upload process,” which will allow the credit union to manage the registration process of its employees. CUNA’s Senior Vice President for Compliance Kathy Thompson noted that although the batch upload process will not be required, CSBS said that it would recommend financial institutions use the batch upload process. “Undoubtedly credit unions will want to use this batch process in order to track that designated employees are actually registering, and employees will want the credit union to centralize the process so that the credit union, rather than the employee, pays the registration fees,” Thompson added. CSBS says it hopes to have the batch upload specifications released at the same time the forms are available in coming weeks. CSBS is required to seek public comment on the fees it’s proposing for SAFE registration, and CSBS said at the meeting that it expects to do so in the next two to three weeks. It would not provide even a range of what the cost might be, but said there will be fees for the actual registration process, fees for conducting the criminal background check, and a security fee required to protect the system. Starting in November, CSBS plans to provide training materials and webinars to help prepare credit unions and banks on how to register. It also noted that it has an experienced call center, which already provides technological support to the state licensing programs. It emphasized that the federal agencies, not its call center, have to address such questions on who has to register and other issues related to interpreting the regulations. CSBS has a page on its “NMLS Resource Center” website which provides public information about the federal registration process, which is where it will post the forms and answer frequently asked questions. CSBS says this page will serve as the gateway into the registration system. In addition to its regular meetings with the federal agencies, which determine what the registration system will require, CSBS has organized an informal working group of some credit union and bank loan officers to discuss implementation issues and training needs as it finalizes the SAFE registration program. It plans to meet with this group throughout the fall. As a reminder, the SAFE regulations are effective Oct. 1, 2010, even though the registration process won’t begin for another four months. “The regulations require credit unions to adopt a general SAFE policy in the next few weeks,” Thompson emphasizes, “although NCUA acknowledges the credit union’s policy will need to be reviewed, and possibly revised, once the registration procedures are announced.” Thompson said that credit unions should also begin the process of identifying which credit union employees will have to be registered. While credit unions and their employees will be given 180 days to register starting in late January, Thompson said that they should not wait until the beginning of next summer to focus on registration. "You don't want to find you have technological glitches, problems with fingerprints, or delays in receiving the background checks, and suddenly your credit union can't make a mortgage loan in mid-summer because staff isn't SAFE-ly registered." For more CSBS information, use the resource link.

CUNA meets White House officials on MBL urgency

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WASHINGTON (9/13/10)--Senior White House officials and top representatives of the Credit Union National Association (CUNA) met Friday as CUNA again urged the administration to increase its efforts in support of a higher member business lending (MBL) cap as it promotes ideas to help small businesses. CUNA President/CEO Bill Cheney underscored that by taking his bill-signing pen to legislation to increase the statutory MBL cap, the President could help infuse $10 billion of new credit into small businesses and create more than 108,000 new jobs--at no cost to the American taxpayer. The U.S. Senate is scheduled to take up a pending small business jobs bill at 11:00 a.m. (ET) tomorrow, and Sen. Mark Udall (D-Colo.) has drafted a possible amendment that would increase the MBL cap to 27.5% of a credit union’s total assets, up from the current 12.25% limit. CUNA, the state credit union leagues and credit unions have been working feverishly to urge senators to vote in favor of the amendment as they continue consideration of the jobs bill. Within that bill is a $30 billion taxpayer-funded program to encourage community banks to do more lending to the nation’s small businesses. Cheney noted to the White House officials that, absent the Udall amendment, America's 7,800 credit unions “will find it hard to understand” how the U.S. Congress could approve a $30 billion taxpayer expense to bolster flagging bank lending, but not let credit unions step in to help increase credit flow and job opportunities at no cost to the government. CUNA General Counsel Eric Richard, who also participated in the White House meeting, noted, “We stressed the urgency of quick action by the White House in support of this amendment” because of the quickly approaching vote. CUNA Deputy General Counsel Mary Dunn and Senior Economist Bill Hampel also attended the meeting. In a letter to Obama earlier this month, CUNA applauded the administration for its commitment to small business, and reminded the administration that U.S. Treasury Secretary Timothy Geithner earlier this year publicly backed lifting the MBL cap in a letter to Congress. Geithner also encouraged the administration to include MBL language in future economics-oriented legislative packages.

Inside Washington (09/10/2010)

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* WASHINGTON (9/13/10)--With both houses of the U.S. Congress scheduled to return to session this week, talk already has turned to abbreviating the new session from four weeks to three. CongressDaily reported Friday that House Democrats are considering adjourning at the end of this month, a move that would give House members more than a month to focus on their campaigns prior to the Nov. 2 elections. However, the article stressed that so far the early release date is just talk and that the official adjournment date stays set at Oct. 8 … * WASHINGTON (9/13/10)--About half of Americans who claimed the first-time homebuyer tax credit on their 2009 returns will need to repay the government, said CNNMoney.com (Sept. 9). Roughly 950,000 of the 1.8 million Americans who claimed the credit will have to give back their money due to some confusion about which tax credits homebuyers were eligible for. Those who purchased homes during 2008 were supposed to deduct 10% of the home’s purchase price or $7,500, whichever was less. The money then would have to be repaid in 15 years with no interested. Congress in 2009 extended the loan into a refund. The Internal Revenue Service (IRS) is creating a strategy to separate the 2009 taxpayers who are required to repay the credit from those who are not. A report from the Inspector General earlier this year indicated the IRS could not tell between home purchases made in 2008 and 2009, which triggered concerns that some claims could be in error. About 73,000 claims had incorrect purchase dates ... * WASHINGTON (9/13/10)--The U.S. Treasury Department has received roughly $16 billion in dividends and interest regarding its investments in banks and others through the Troubled Asset Relief Program (TARP). Payments totaling $666 million have been made since August. Half of the money came from banks in the capital purchase program. Investments in automakers General Motors Co., Chrysler Group and others have garnered $2.6 billion. The Treasury also is earning about $411 million in interest from its asset guarantee program, and about $140 million in dividends in the Public-Private Investment Program. About 97 banks are behind on payments, with a backlog of $45 million, said Bloomberg (Sept. 9) ...

FHFA reports rise in home loan mods refinancings

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WASHINGTON (9/13/10)--The number of home loan modifications and refinancings executed by Fannie Mae and Freddie Mac increased during the second quarter of 2010, the Federal Housing Finance Agency (FHFA) said in a Friday release. The FHFA said that the number of permanent modifications under the Obama Administration’s Home Affordable Modification Program (HAMP) also increased by 65%. Over half of these modifications lowered homeowners’ monthly payments by at least 30%, the FHFA said. The FHFA also noted that the overall performance of modified loans has increased over the last two quarters, with fewer than 10% of those loans falling into delinquency. The number of refinancings executed under the Administration’s Home Affordable Refinance Program (HARP) also rose by 30% during the quarter. A total of 1,013,700 “foreclosure prevention actions” have been undertaken since Fannie and Freddie were taken under government conservatorship in late 2008, the FHFA said. Freddie Mac also reported the results of its most recent weekly mortgage survey on Friday, with that survey revealing an increase in overall 30-year mortgage rates for the first time in weeks. Both 30- and 15-year mortgage rates had been at record lows for several consecutive weeks. The 15-year mortgage rates remained at 3.83%, identical to the rate reported as of Sept. 2, and still at a record low level. For the FHFA and Freddie Mac releases, use the resource links.

Go Direct Crime prevention can include direct deposits

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WASHINGTON (9/13/10)--The U.S. Treasury Department's direct deposit program, Go Direct, is encouraging credit unions and other financial institutions to use October’s Crime Prevention Month to promote the use of electronic payment systems. Go Direct in a Friday release said that “too many senior citizens, people with disabilities and other federal benefit recipients still receive their payments by paper check, putting their money and themselves at risk of check theft and other financial crimes.” By receiving their payments electronically, individuals can avoid having their money stolen “are better protected against financial crimes,” Go Direct added. Go Direct is providing financial institutions and community organizations with newsletter copy, news briefs, and brief tips to spread the financial crime prevention message. The Credit Union National Association is a national partner of the Go Direct program, which was founded in 2004 and encourages Americans to switch to direct deposit. For the full Go Direct release, use the resource link.