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B of A debit fee no surprise post-interchange Cheney

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WASHINGTON (10/3/11)--The higher debit card fees planned by Bank of America and other large banks are “no surprise,” but consumers can avoid these and other potential fees that may follow this past weekend’s implementation of the debit interchange fee cap by joining a credit union, Credit Union National Association (CUNA) President/CEO Bill Cheney said. The debit interchange fee cap regulations, which became effective on Saturday, limit debit interchange fees for issuers with assets of $10 billion or more to 21 cents, and allow an additional five basis points per transaction to be charged to cover fraud losses. An extra penny may be charged by financial institutions that are in compliance with established fraud prevention standards. Most credit unions are exempt from the fee cap. “Consumers should give credit unions a close look and take advantage of credit unions’ emphasis on service to members over profits, typically with no or lower fees overall,” Cheney added. Potential credit union members can learn about credit unions nonprofit structure, the credit union system, and where their nearest credit union is located at, he added. The CUNA CEO said at least 80% of credit unions surveyed by CUNA provide at least one free checking account with no minimum balance requirement and no maintenance or activity fees. The Los Angeles Times and the New York Times are two media outlets that are focusing on consumer dissatisfaction with Bank of America’s announcement that it will charge $5 per month to many debit card accountholders. A story in the Los Angeles Times focused on University of Southern California medical school employee Guadalupe Garcia, whose dissatisfaction with Bank of America led her to an on-campus credit union. Garcia said she felt a “social responsibility” to leave BofA after its debit card policy change, which will impact many of the bank’s lower-income customers, was announced last week. The New York Times told a story of small business owner Patrick Shields, who left Citibank after he “realized he could do better at a credit union.” Shields told the Times that the credit union opened his business and personal checking accounts “free of charges, which Citi could not and would not do.”

Inside Washington (09/30/2011)

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* WASHINGTON (10/3/11)--The U.S. Department of Homeland Security pledged to keep stakeholders informed of the status of National Flood Insurance Program (NFIP) reauthorization. The NFIP authority to issue new policies, more coverage on existing policies, or renewal policies was to expire at midnight on Friday. The department said that as interested parties await congressional reauthorization of NFIP, they should refer to this new guidance. NFIP is administered by the department’s Federal Emergency Management Agency--known as FEMA. The NFIP could be temporarily extended to Tuesday under a temporary measure that was up for vote late Friday. Under a continuing resolution set to be taken up in Congress this week, the program could be given a reprieve until Oct. 18 … * WASHINGTON (10/3/11)--Boston Federal Reserve Bank President Eric Rosengren last week called for the Federal Housing Finance Agency (FHFA) to bolster existing refinance programs to alleviate housing market problems. The market’s slow recovery is in part due to the uncharacteristically muted response by consumers to historically low interest rates, Rosengren said at an economic outlook seminar in Sweden. “Not only has residential investment been unusually weak, but to add insult to injury, consumption, business formation and employment have also been affected by problems in the housing sector,” Rosengren said. He called for the FHFA to enhance the Home Affordable Refinancing Program by making it available to Fannie Mae and Freddie Mac mortgage holders who owe more on their loans than the value of their homes. He suggested that the FHFA reduce or eliminate loan-level price adjustments on mortgages from the government-sponsored enterprises. The adjustments raise interest rates for many borrowers and reduce the benefit of refinancing, Rosengren said … * WASHINGTON (10/3/11)--The performance of first-lien mortgages serviced by large national banks and federal savings associations declined slightly during the second quarter. About 88% of the 32.7 million loans were current and performing at the end of the second quarter, down from 88.6% at the end of the first quarter, but up from 87.3% a year earlier, according to the quarterly Office of Comptroller of Currency (OCC) Mortgage Metrics Report. The OCC attributed the drop to an increase in early stage delinquencies--mortgages 30 to 59 days delinquent--which increased 0.4% from the previous quarter to represent 3% of the servicing portfolio. Mortgages in the process of foreclosure remained steady at 4%. Although completed foreclosures decreased by more than 30% from a year earlier and increased only 1.2% from the previous quarter, completed foreclosures may continue to increase in future quarters as a more foreclosures work through the process and alternatives to modification are exhausted, the OCC said … * WASHINGTON (10/3/11)--The domestic monetary policy and technology subcommittee, chaired by U.S. Rep. Ron Paul (R-Texas), will hold a hearing on auditing the Federal Reserve and the need for transparency at the central bank. The subcommittee will hear testimony from the Government Accountability Office (GAO) on its procedural audit and report, issued in July, of the Federal Reserve’s emergency lending facilities. The hearing also will examine the history of Federal Reserve audit legislation and the adequacy of existing Fed audit and data disclosure requirements. Paul has re-introduced the “Federal Reserve Transparency Act,” which calls for a full and complete audit of the Federal Reserve by the GAO …

CUNA to Fed Increase interchange fraud prevention fee

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WASHINGTON (10/3/11)—The Credit Union National Association (CUNA) is urging the Federal Reserve to increase the amount of per transaction fees that debit card issuers receive to cover their costs associated with fraud prevention. Though the Fed’s approach to add the fraud coverage charge is a positive development, CUNA recommended in a joint comment letter that the Fed allow four or five cents per transaction for fraud rather than the one cent that the agency proposed. That adjustment would better cover costs that are incurred when financial institutions investigate the source of a data breach or theft, attempt to stop any instances of fraud, and deal with the aftermath of the theft or data breach. The increased fraud prevention adjustment would also help protect smaller issuers whose fraud prevention costs often represent a larger portion of their total debt card program costs. The current level of one cent “acts as a disincentive for all issuers to develop and apply new technologies that require significant costs upfront but have the potential for substantial long-term reductions in fraud losses, because there is no guarantee that the [Fed] will later revise the adjustment amount or permit compensation for past expenditures,” the letter added. CUNA also recommended that the Fed periodically revisit the fraud prevention cost issue to see if the costs have changed and whether any future adjustments are necessary. The Fed is required to study and report on how the debit interchange fee cap has impacted merchants, consumers and financial institutions within the next two years. The letter was cosigned by CUNA, the American Bankers Association, the Consumer Bankers Association, the Financial Services Roundtable, the Independent Community Bankers of America, the National Association of Federal Credit Unions, the Midsize Bank Coalition of America, the Clearing House Association, and the Clearing House Payments Company. It was sent to Fed Chairman Ben Bernanke, U.S. Treasury Secretary Tim Geithner, National Credit Union Administration Chairman Debbie Matz, and several other leaders of federal finance agencies. The Fed’s final interchange rule, which became effective over the weekend, sets a debit interchange fee cap of 21 cents and allows an additional five basis points of the value of the transaction to cover fraud losses. An extra penny may be charged by financial institutions that are in compliance with Fed-established fraud prevention standards. Credit unions and other institutions with under $10 billion in assets are exempt from the rate cap provisions of the rule. For the full comment letter, use the resource link.

CFPB Help available for soldiers facing foreclosure

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WASHINGTON (10/3/11)--The Consumer Financial Protection Bureau's (CFPB) Office of Servicemember Affairs leader Holly Petraeus last week praised the U.S. Treasury for extending the terms of its Home Affordable Foreclosure Alternatives (HAFA) Program to aid military families that are facing mortgage difficulties due to relocation. Petraeus noted that relocation orders that are given to families that owe more than their home is worth have forced some military families into foreclosure or “into the costly and stressful situation of maintaining two households, with the family remaining behind while the servicemember moves alone.” She added that many servicemembers that have asked their lenders to help with a loan modification or a short sale have been told that they must be delinquent “in order to be considered as having a qualifying financial hardship.” Under new guidance, “servicemembers who cite a [permanent change of station (PCS)] order as the basis for their financial hardship when asking for help under HAFA will now be eligible even if their income has not decreased,” Petraeus said in a blog post. HAFA, according to Fannie Mae, provides financial incentives to servicers and borrowers who utilize a short sale or a deed-in-lieu of foreclosure to avoid a foreclosure on eligible loans. This helps preserve the condition and value of the property by minimizing the time a property is vacant and subject to vandalism and deterioration, Fannie Mae added. Petraeus in her blog post encouraged legislators, regulators and financial institutions to do more to help military families. The Credit Union National Association (CUNA) recently called on the CFPB to "minimize compliance burdens on credit unions that provide important and reasonably priced products and services" to servicemembers and their families. CUNA plans to work with the CFPB on its servicemember protection endeavors, and has encouraged the CFPB to work with credit union leagues, the Defense Credit Union Council, and individual credit unions to further support the CFPB’s pro-servicemember efforts.