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News Now

March 4, 2015

MBL bill a common-sense boost to economic recovery, Nussle tells lawmakers

WASHINGTON (3/4/15)--A bill that would allow credit unions to increase their member business lending (MBL) will be a boost to the economy, CUNA President/CEO Jim Nussle said Tuesday.

In a letter to Reps. Ed Royce (R-Calif.) and Gregory Meeks (D-N.Y.), Nussle thanked the legislators for introducing  the bill Monday,

"Credit unions understand that in order for the economy to fully recover, small businesses need access to credit, which will help their businesses grow," Nussle wrote. "Credit unions have capital to lend, a history of prudent and safe small business lending, and a mission to help provide access to credit to their members--including their small business-owning members. They just need Congress to enact your legislation."

Credit unions are currently limited to member business lending up to 12.25% of assets, but if the bill is passed, it could raise the cap to 27.5% of assets for credit unions that meet certain conditions.

"Today, many credit unions are rapidly approaching the cap while others choose not to engage in business lending because of the cap," Nussle wrote. "If the cap is not increased, the ability of many business-lending credit unions to help small businesses will be jeopardized."

CUNA estimates that if the bill is enacted, it would allow credit unions to lend an additional $16 billion to small businesses in the first year, helping to create more than 150,000 new jobs.

The bill, identical to a CUNA-supported bill introduced in the last Congress, would amend the Federal Credit Union Act. Currently, credit unions are prohibited from member business lending exceeding 12.5% of assets, or 1.75 times the actual net worth of the credit union.

Credit unions could lend up to 27.5% of assets if: outstanding member business loans have been at or above 80% of the 12.25% cap for the last year; it is considered well-capitalized; it has had an MBL program for at least five years; and it receives permission from the National Credit Union Administration.

CUNA writes to support QM, NCUA study bills

WASHINGTON (3/4/15)--CUNA has sent letters in support of two recently introduced pieces of legislation that help serve the credit union community. CUNA President/CEO Jim Nussle wrote Tuesday to Rep. Andy Barr (R-Ky.) in support of his Portfolio Lending and Mortgage Access Act (H.R. 1210) and to Rep. Mick Mulvaney (R-S.C.) in support of the National Credit Union Administration Budget Transparency Act (H.R. 1176). 

Barr's bill, which has CUNA's strong support, would allow residential mortgages held in portfolio by the original creditor to be deemed "qualified mortgages" (QMs) under the Consumer Financial Protection Bureau's (CFPB) mortgage lending rules.

QMs are a category of loans that are considered more stable, since lenders must have made good faith efforts to determine a borrower's ability to repay, and the absence of certain loan features that can be harmful.

"Treating loans that financial institutions hold on their balance sheets in this manner is appropriate because the lender retains all of the risk involved with these mortgages and is subject to significant safety and soundness supervision from its prudential regulator," Nussle wrote. "This will help credit unions, many of which are primarily portfolio lenders, continue to provide mortgage credit to their members."

Nussle also wrote to support Mulvaney's bill, which was introduced last week. The bill would direct the U.S. Government Accountability Office (GAO) to study the NCUA's budgeting process and identify ways the agency can increase the transparency of the process within 18 months of the bill's enactment.

The study will also determine the availability of line-by-line budget data for the National Credit Union Share Insurance Fund, Central Liquidity Facility and Temporary Corporate Credit Union Stabilization Fund.

"CUNA has consistently advocated for NCUA to be more transparent with their budget process for many years because credit unions fund the agency and the National Credit Union Share Insurance Fund," Nussle wrote. "One way to bring transparency and accountability to the NCUA budget process would be to require the NCUA Board to conduct an annual public hearing on the agency's budget ... conducting such a hearing would represent a very modest burden on the agency and the Board--a handful of hours simply to listen to those whom they regulate--but it would be very meaningful to the credit unions that are responsible for funding the activities of the agency."

Circuit court restores NCUA RMBS suit vs. Barclays

DENVER (3/4/15)--The U.S. Court of Appeals for the Tenth Circuit has restored a National Credit Union Administration lawsuit that had charged Barclays Capital Inc. with misrepresenting the quality of more than $550 million in residential mortgage-backed securities (RMBS) sold to corporate credit unions.

"These cases are extremely important to credit unions, and this is another positive step forward," said Robin Cook, CUNA senior director of advocacy and counsel for special projects.  He added, "NCUA so far has recovered more than $1.75 billion from the big banks, a huge achievement that has helped reduce corporate stabilization assessments on credit unions."
The court order overturns a 2013 ruling by U.S. District Judge John W. Lungstrum in Wichita, Kan., that dismissed the NCUA's claims on the grounds they were time-barred and NCUA hadn't filed its case in time.  NCUA, however, entered into an agreement with Barclays that would have extended the time it had to file these cases. 
In the 10th Circuit ruling filed Tuesday, the court, in part, ruled "Barclays expressly promised not to raise the statute of limitations defense if doing so would require inclusion of time periods that the parties agreed to exclude, and we hold Barclays to that promise."
The cases will now proceed to discovery.

NCUA announces March 25 FOM webinar

ALEXANDRIA, Va. (3/4/15)--Credit unions looking at altering their fields of membership (FOM) can tune into a webinar just announced by the National Credit Union Administration for March 25.

The free webinar will feature NCUA staff discussing ways reaching out to underserved communities can be incorporated into a credit union's strategic plan.

Vanessa Lowe, economic development specialist, NCUA's Office of Small Credit Union Initiatives; Ynette Gibbs, CEO, Newrizons FCU, Hoquiam, Wash.; and staff from NCUA's Office of Consumer Protection will lead the webinar.

Topics include using data to maximize membership growth and a review of the FOM Internet application.

Online registration is now open. The webinar is scheduled to begin at 2 p.m. (ET) March 25 and is scheduled to run for 90 minutes.

According to the NCUA, a closed captioned version of the webinar will be posted online within three weeks of the event.

Still time to register for today's joint NCUA-SBA webinar

ALEXANDRIA, Va. (3/4/15)--Today's joint National Credit Union Administration and U.S. Small Business Administration (SBA) webinar on "Balancing Member Business Loan Portfolios with SBA Guarantees" starts at 2 p.m. (ET). Those interested in tuning in can register right up to the start time.
The webinar is the first initiative launched under the agencies' new partnership announced Feb. 6 when the NCUA and SBA leaders signed a memorandum of understanding intended to help small businesses connect with local credit unions to get better access to capital.
The 90-minute webinar will be moderated by Dominic Carullo, an economic development specialist with NCUA's Office of Small Credit Union Initiatives. SBA Administrator Maria Contreras-Sweet and NCUA Chair Debbie Matz will provide opening remarks, and speakers will include:
  • Ann Marie Mehlum, associate administrator, SBA's Office of Capital Markets;
  • William Myers, director, NCUA's Office of Small Credit Union Initiatives; and,
  • Vincent Vieten, member business lending (MBL) program officer, NCUA's Office of Examination and Insurance.
The panel will discuss what programs SBA offers to small business, how these loan programs can enhance a credit union's MBL program, and the requirements for setting up and managing an SBA-loan program.
The webinar will be archived online approximately three weeks following the live event.

FHFA has new rules for selling non-performing loans

WASHINGTON (3/4/15)--Enhanced requirements for Fannie Mae and Freddie Mac to sell non-performing loans (NPLs) were announced by the Federal Housing Finance Agency (FHFA) Tuesday.

According to the FHFA, it approved NPL sales by Fannie and Freddie to reduce the number of severely delinquent loans held in their inventories and to transfer risk to the private sector. 

"FHFA expects that with these enhanced requirements , NPL sales by Freddie Mac and Fannie Mae will result in more favorable outcomes for borrowers and local communities, while also reducing losses to the Enterprises and, therefore, to taxpayers," said FHFA Director Mel Watt. "Under the requirements announced today, servicers must consider borrowers for a range of alternatives to foreclosure."

According to the FHFA, the requirements are expected to encourage broad participation by potential investors and provide for future publication of aggregate data about borrower outcomes.

The enhanced requirements include:
  • Bidders will be required to identify their servicing partners at the time of qualification and must demonstrate a record of successful resolution of loans through alternatives to foreclosure;
  • The new servicer will be required to evaluate all pre-2009 borrowers (other than those whose foreclosure sale date is imminent or whose property is vacant) for the U.S. Department of the Treasury's Making Home Affordable Programs;
  • Servicers must apply resolution tactics that include evaluating borrower eligibility for a loan modification, a short sale and a deed-in-lieu of foreclosure, which must be the last option;
  • Servicers are encouraged to sell properties that have gone through foreclosure and entered real estate owned status to individuals who will occupy the property as their primary residence or to nonprofits; and
  • NPL buyers and servicers, including subsequent servicers, are required to report loan resolution results and borrower outcomes to the enterprises for four years after the NPL sale.
Fannie and Freddie NPL sales are generally expected to include loans that are severely delinquent, such as loans that are more than a year past due.

Inside Washington (3/4/15)

  • ALEXANDRIA, Va. (3/4/15)-- Registration is open to sign up for free, online livestreaming of the National Credit Union Administration's March 19 open board meeting.  The March meeting is scheduled to begin at 10 a.m. (ET) and the agency expects to post the agenda to the board's calendar web page on March 12 at 3 p.m. (ET).  Once registered, participants will be given a link to use to test their systems. Participants with technical questions about accessing the livestream may email . There will be a new registration link for each subsequent open board meeting. Live captioning will be provided during each meeting for the hearing-impaired. The agency will continue to post video archives of open meetings on its website ...

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