ALEXANDRIA, Va. (7/25/12)--The National Credit Union Administration's (NCUA) decision to reduce its projected 2012 budget by $2 million, as announced on Tuesday, is a step in the right direction, according to the Credit Union National Association (CUNA), but CUNA also encouraged the agency to make greater budget cuts.
The budget reduction, the setting of the interest rate cap for federal credit unions, and a briefing on an interagency Truth in Lending Act (TILA) proposal were three of the many items on Tuesday's busy July NCUA open board meeting agenda.
NCUA Chairman Debbie Matz, center, and board members Gigi Hyland, right, and Michael Fryzel discuss one of many agenda items at Tuesday's NCUA open board meeting. (CUNA Photo)
Under the NCUA's adjusted 2012 budget, employee pay and benefits were reduced by $3.6 million. However, the agency said this reduction was offset somewhat by increases in travel expenses, rent, administrative costs and contractor support.
The budget decrease, which amounts to a reduction of less than 1%, brings the total 2012 budget to $235 million. This is the third mid-year budget decrease the agency has approved. NCUA staff said that the decrease will be deducted from the amount credit unions would otherwise owe to fund the 2013 agency budget.
The NCUA board during the meeting also voted unanimously to maintain the current 18% interest rate ceiling for federal credit union loans through March 10, 2014. The agency is required by the Federal Credit Union Act to set the ceiling, at least every 18 months, if the rate ceiling is to exceed the 15% maximum rate established by law.
The agency will notify federal credit unions of the unchanged interest rate ceiling in an upcoming letter.
The NCUA board members were also briefed on plans regarding an upcoming interagency proposed rule on appraisal requirements for "higher-risk" mortgages under TILA. The rule, which is required by the Dodd-Frank Wall Street Reform Act, would change some home appraisal requirements, require lenders to provide free home appraisal reports to borrowers, and introduce new requirements for short-term sales. NCUA staff noted that federal financial agencies are currently working through their own approval processes, and a proposed rule is expected to be released in August.
For more on the NCUA meeting, use the resource link.