Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive

Washington

NCUA issues prohibition orders (09/29/2010)

 Permanent link
ALEXANDRIA, Va. (9/30/10)—Two former credit union employees have been banned from future work at any federally insured financial institution under prohibition orders issued by the National Credit Union Administration (NCUA). In a Wednesday announcement, the NCUA noted the following details of the enforcement orders:
* Carla Daniels, a former employee of School Systems FCU in Albany, N.Y., was convicted of grand larceny and sentenced to five years' probation; and * John Freundner, a former employee of BMI FCU in Dublin, Ohio, was convicted of theft. Freundner was sentenced to five years' mental health supervision and 60 hours of community service, and ordered to pay $125,025 in restitution.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.

GAO Problems in nonprime loan market slow to disappear

 Permanent link
WASHINGTON (9/30/10)--Recent government analysis of loan performance and default factors associated with nonprime mortgages originated from 2000 through 2007 shows a 27% increase in the numbers of such loans that were seriously delinquent at the end of 2008, compared with 2007. In a Government Accountability Office (GAO) report titled “NONPRIME MORTGAGES: Analysis of Loan Performance, Factors Associated with Defaults, and Data Sources,” the government noted as background that “the surge in mortgage foreclosures that began in late 2006 and continues today was initially driven by deterioration in the performance of nonprime (subprime and Alt-A) loans.” Those loans, the analysis said, increased dramatically from 2000 through 2006, jumping from about $125 billion--or 12% of all mortgage originations--to about $1 trillion, or 34% of originations. “The number of nonprime loans that were 90 or more days late grew throughout 2009, accounting for most of the overall growth in the number of serious delinquencies. By comparison, the number of active loans in the foreclosure process grew in the first half of the year, and then began to decline somewhat. Additionally, 475,000 nonprime mortgages completed the foreclosure process during 2009. “The persistently weak performance of nonprime loans suggests that problems in the nonprime market will not be resolved quickly, and underscores the importance of federal efforts to assist distressed borrowers and prevent a recurrence of the aggressive lending practices that helped precipitate the foreclosure crisis,” the GAO report said. For more, use the resource link to access the report.

CUNA on YouTube CUs alone pay for corporate CU plan

 Permanent link
WASHINGTON (9/30/10)--Credit Union National Association (CUNA) President/CEO Bill Cheney in a video posted on YouTube urges consumers to get the full story on the National Credit Union Administration’s (NCUA) corporate credit union actions and not be misled by headlines that call those actions “a bailout.” “Credit unions are paying for the cost of the corporate stabilization, every single penny will be paid by credit unions,” Cheney emphasizes. The CUNA CEO urged people to read past the headlines and go to the meat of the articles. The stories in such publications as The Wall Street Journal, The New York Times, MarketWatch, Reuters, and CNN Money.com got it right -- that "taxpayers are not paying for this stabilization; credit unions are paying for it.” The NCUA’s corporate credit union and legacy asset plans were released during a closed meeting last Friday. Cheney assured credit union members that the consumer credit unions used by members every day “have not been affected" by the NCUA actions. “Credit unions, because they are conservatively managed and have come through this crisis stronger than other financial institutions, will still pay the highest rates on savings; they’ll charge the lowest rates on loans, and they’ll have the lowest fees. CUs are still the best deal for American consumers."

NCUA addresses Can I buy my college kid an apartment

 Permanent link
ALEXANDRIA, Va. (9/30/10)--Can a credit union member get a long-term mortgage loan to purchase a second residence for a family member to live in while attending college, a New Orleans federal credit union recently inquired of the National Credit Union Administration (NCUA). With housing in many colleges and universities not guaranteed after a college student’s sophomore year, a growing number of parents are seeking to fill the college housing gap by purchasing digs for their son or daughter. So this question may be on the rise at credit unions. In its query, Shell New Orleans FCU stated that the borrower’s family member would be the primary resident of the dwelling while studying and may share the residence with a roommate paying rent for space in the house. NCUA Associate General Counsel Hattie Ulan, in the agency’s reply said that the credit union can make this loan under the long-term mortgage lending authority--but only if the house is intended to be the future principal residence of the member. So if the parents want to retire eventually to College Town, USA, then the credit union can write the loan up to the NCUA's 40-year maturity limit. Ulan wrote that the credit union must determine if the “principal residence” requirement has been met when the loan is made. In what effectively was a clarification of the agency’s mortgage rules, the NCUA also stated that if the “future residency” requirement is met, it would not then matter if the temporary college-aged occupant was a member of the credit union making the loan. Also, the dwelling in question would “still qualify as a future principal residence if space in the home is rented out” until the parents move in. If the loan for the student's lodging will not be the borrower's future residence, the credit union could make a loan subject to NCUA's general lending rules, including the 15-year maturity limit. For the full NCUA letter, use the resource link.

Inside Washington (09/29/2010)

 Permanent link
* WASHINGTON (9/30/10)--Sen. Olympia Snowe (R-Maine), Ranking Member of the Senate Committee on Small Business and Entrepreneurship, wrote to Treasury Secretary Timothy Geithner, Senate Banking Committee Chairman Chris Dodd (D-Conn.) and Ranking Member Richard Shelby (R-Ala.) urging them to provide strict oversight of the new $30 billion Small Business Lending Fund, which was included in the Small Business Jobs and Credit Act of 2010 signed into law Monday by President Obama. In a letter to lawmakers, Snowe said the fund is meant to help community banks give credit to small businesses. She raised concerns about the program’s cost and how it would be structured. “I am asking the Senate Banking Committee to hold regular oversight hearings regarding the new lending facility, paying particular attention to the fund’s cost, unintended consequences, and overall effectiveness,” she said. Credit Union National Association Chairman Harriet May attended the signing ceremony for the Small Business Jobs and Credit Act. May on Monday thanked President Obama on behalf of credit unions for expanding Small Business Administration (SBA) loan limits, a move that will allow credit unions to increase their work with small business-owning members (News Now Sept. 28). Erie (Pa.) FCU's Sandi Carangi also attended the signing ceremony on behalf of her credit union ...