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CFPB proposes broader 'small creditor,' 'rural' area definitions

WASHINGTON (1/30/15)--The Consumer Financial Protection Bureau Thursday proposed a broader definition of "small" credit union and bank, as well as an expanded designation for what comprises a "rural" area.

If finalized, the proposal would increase the number of financial institutions able to offer certain types of mortgages in rural and underserved areas by exempting more small creditors from the CFPB's tough new mortgage rules.

In May 2013, the bureau announced it would study whether the definitions of rural and underserved should be adjusted. In May 2014, the bureau requested public comment regarding the origination limit for small creditor status.

The Credit Union National Association strongly backed easing the regulatory burden of the rules for credit unions. Being exempt from some of the provisions of the CFPBs Ability-to-Repay and Qualified Mortgage (QM) rules can beneficially affect the types of products a credit union can offer its members in what can be underserved areas, CUNA has noted.

CUNA President/CEO Jim Nussle said after the CFPB announcement Thursday that the changes are significant.

The CFPB's new proposal would define "small creditor" as one that originates no more than 2,000 first-lien mortgage loans, up from a 500 loan origination limit.

It also would expand the definition of "rural" by adding "census blocks that are not in an urban area as defined by the Census Bureau" to its current description.

Nussle noted, "CUNA fervently advocated to the bureau to take another look at these areas, and we thank them for listening to the concerns of credit unions.  More work still needs to be done, but this is an important step in the right direction.
"We're working with our mortgage lenders and member credit unions to submit a robust comment letter on these proposed changes. The changes announced today will benefit a number of community lenders, including credit unions, across the country. Ultimately, the real winners are communities.  As credit becomes more available, it's the growth of the communities across America that will develop in the long run."

The bureau also proposes a compliance grace periods for creditors that suddenly push past the loan threshold qualifying for the relief. Among other things, the CFPB proposal considers extending small creditors' exemption from limits on balloon-payment loans by about three months, which would bring it to April 2016, among other changes.

Interested parties have until March 30 to comment.

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NCUA to hold session on opportunities in underserved markets

ALEXANDRIA, Va. (1/30/15)--Credit unions can sign up to learn about opportunities that exist within underserved markets. The National Credit Union Administration is offering a Feb. 18 webinar, which will launch at 2 p.m. (ET).
Among the discussion items on the 90-minute agenda for the session are:
  • What credit union products and services appeal to the underserved market;
  • The revenue potential of those products; and
  • Programs credit unions already have in place to successfully embrace the unbanked and underbanked markets.
Webinar participants will also have the opportunity to learn more about Lower Valley CU's outreach efforts to the underserved market in their community. The Sunnyside, Wash. credit union is known for such things as its Northwest area immigrant asset-building initiative, designed to connect low-income immigrants with quality immigration services and safe, affordable financial products ( News Now Sept. 29, 2014).
Online registration is available here . Participants are asked to use the same link to log into the webinar. Registrants should allow pop-ups from this website.

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Private student lenders get guidance on graduated payment loans

WASHINGTON (1/30/15)--The National Credit Union Administration, in concert with the other federal financial regulatory agencies, and in partnership with the State Liaison Committee (SLC) of the Federal Financial Institutions Examination Council, issued guidance Thursday on private student loans with graduated repayment terms at origination.  

The guidance is intended to provide credit unions and other private student lenders with principles that financial institutions should consider in their policies and procedures for originating such loans. 

The joint-regulators' guidance notes that while graduated repayment terms are available under certain federal student loan programs, credit risk associated with loans guaranteed and originated by the federal government differ from that of private student loans.
"Accordingly, some extended repayment features offered under the federal student loan programs may not always be appropriate for private student loans," the guidance says.

Also: "Financial institutions that originate private student loans with graduated repayment terms should prudently underwrite the loans in a manner consistent with safe and sound lending practices.

"Additionally, financial institutions should provide disclosures that clearly communicate the timing and the amount of payments to facilitate a borrower's understanding of the loan's terms and features."

The guidance recommends the following principles for private student loans with graduated repayment terms at origination:
  • Ensure orderly repayment;
  • Avoid payment shock;
  • Align payment terms with a borrower's income;
  • Provide borrowers with clear disclosures;
  • Comply with all applicable federal and state consumer laws and regulations and reporting standards; and
  • Contact borrowers before reset dates.

The guidance was issued by the NCUA, Federal Reserve Board, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the SLC.
Read more guidance details here .

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FIs reminded of CFPB confidential info requirements

WASHINGTON (1/30/15)--Financial institutions under the supervision of the Consumer Financial Protection Bureau (CFPB) have been sent a bulletin reminding them of their responsibilities regarding treatment of confidential supervisory information (CSI). The CFPB has supervisory authority over credit unions and banks with more than $10 billion in assets.

The bulletin , issued Tuesday, provides guidance on what types of information constitute CSI and explains that disclosure of CSI is not allowed.

Under CFPB regulations, CSI is defined as:
  • Reports of examination, inspection and visitation, non-public operating, condition, and compliance reports, and any information contained in, derived from, or related to such reports;
  • Any documents, including reports of examination, prepared by, or on behalf of, or for the use of the CFPB or any other federal, state or foreign government agency in the exercise of supervisory authority over a financial institution, and any supervision information derived from such documents;
  • Any communications between the CFPB and a supervised financial institution or a federal, state or foreign government agency related to the CFPB's supervision of the institution; and
  • Any information provided to the CFPB by a financial institution to enable the CFPB to monitor for risks to consumers in the offering or provision of consumer financial products or services, or to assess whether an institution should be considered a covered person, as that term is defined by 12 § U.S.C. 5481, or is subject to the CFPB's supervisory authority.
According to the bureau, examples of CSI include: CFPB reports and supervisory letters; all information contained or related to those documents, including an institution's supervisory compliance rating; communications between the CFPB and the institution relating to the CFPB's examination and other supervisory activates; and other information created by the bureau in the exercise of its supervisory authority.

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Registration for CDFI bond application workshops ends Feb. 20

WASHINGTON (1/30/15)--Prospective applicants to the U.S. Treasury's Community Development Financial Institutions (CDFI) Bond Guarantee Program are strongly encouraged to attend application workshops in February. As of Dec. 31, credit unions make up 243 of 933 CDFIs in the country.

The Bond Guarantee Program allows the Treasury Department to guarantee notes or bonds issued to support CDFIs that make investments for eligible community or economic development purposes, providing those institutions with long-term, patient capital to CDFIs. The Treasury may guarantee up to 10 bonds per year, each at a minimum of $100 million. Per statute, the total of all bonds cannot exceed $1 billion per year.

According to the CDFI Fund, the workshops are meant to "expand the CDFI industry's knowledge of the CDFI Bond Guarantee Program and the various ways to participate." Fund staff will describe the application process, including how applications are reviewed and evaluated.

Registration is now open for the workshops, which will take place:
  • Session 1, for existing and potential qualified issuers, from 9 a.m. to 4:30 p.m. (ET) Feb. 26; and
  • Session 2, for interested program participants and potential eligible CDFI applicants, from 9 a.m. to 4:30 p.m. (ET) Feb. 27.
Both workshops will take place at the U.S. Treasury CDFI Fund, 1801 L St. NW, Washington, D.C. Registration for both sessions closes at 5 p.m. (ET) Feb. 20.

According to the CDFI Fund, information on the fiscal year 2015 round, including opening dates and deadlines, will be released in the coming weeks.

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