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NCUA answers CU HARPSIP questions
WASHINGTON (12/17/08)—The National Credit Union Administration (NCUA) said 1,396 individuals tuned in to a Tuesday audio conference detailing its two new initiatives: CU HARP and CU SIP. The call-in session reiterated the details of the two programs—one to help troubled borrowers keep their homes, the other to shore up the liquidity of the corporate credit unions. It also underscored some important upcoming deadlines for credit unions interested in participating. The audio conference was hosted jointly by the NCUA, the Credit Union National Association and the National Association of Federal Credit Unions. J. Owen Cole, Jr, of the NCUA’s Central Liquidity Facility (CLF), reminded that CU HARP is a one-time, two-year, $2 billion program intended to assist homeowners who are facing delinquency, default, or foreclosure of their mortgages. The CLF will make CU HARP advances for a maximum term of one year, renewable for one year. Initial requests for CU HARP advances must be submitted on Dec. 19. Approved advances will be funded on Jan. 2, 2009 and mature on Dec. 31, 2009. Rollover CU HARP advances will be made on Dec. 31, 2009 and will mature on Dec. 31, 2010. Privately insured credit unions may be eligible for the program. However, as of September only about 600 credit unions have $1 million in first mortgages in default, which is one of the criteria for CU HARP eligibility. CU HARP stands for the Credit Union Homeowners Affordability Relief Program. CU SIP stands for the Credit Union System Investment Program. Under CU SIP, participating creditworthy credit unions would borrow from the CLF and invest the proceeds in participating corporate credit unions. Cole said that in order to enable the CLF to offer a program to make an advance for purposes other than liquidity needs, the NCUA under Section 725.23 of its Rules and Regulations had to determine that such a program under the CLF was in the “national economic interest.” The initial monthly funding amount for the CU SIP is $500 million, but that may be increased at the discretion of the CLF is the offering is oversubscribed, according to NCUA documents. Corporate credit unions interested in participating in the first monthly funding must provide notice to U.S. Central at or before 2 p.m. Dec. 19. CU SIP is designed to complement CU HARP by enabling the CLF to lend to credit unions to invest in NCUSIF guaranteed notes, the proceeds of which will be used to retire external system debt, the NCUA explained in its initial release. It added that the program will free collateral pledged by corporate credit unions and thereby provide increased contingent borrowing capacity. CU SIP will be funded on a monthly basis from January through June of 2009. The NCUSIF guarantee is provided under the Temporary Corporate Credit Union Liquidity Guarantee Program announced in October. The program guarantees senior corporate credit union debt for a 75 basis point fee. The NCUA noted it will archive the CU HARP-CU SIP audio conference and it will be accessible through the agency website soon.
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