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December 19, 2014

CUNA hails president's signing of IOLTA

WASHINGTON (12/19/14)--The Credit Union National Association hailed President Barack Obama's signing of the Credit Union Share Insurance Fund Parity Act Thursday.
"Each time the government removes barriers that hinder the operations for the nation's credit unions it is a victory for U.S. consumers," said CUNA President/CEO Jim Nussle. "Credit unions can better serve their members, through their consistently superior service and lower fees and better rates, when not encumbered by unnecessary constraints that do nothing to maintain credit unions' stellar safety and soundness record."
The law creates deposit insurance parity for credit unions by directing the National Credit Union Administration to extend share insurance coverage to trust accounts, such as Interest on Lawyer Trust Accounts (IOLTA) and other similar accounts, opened and managed by credit union members.

Nussle added that CUNA is proud to have been an early and prominent supporter of the IOLTA bill in both the House and Senate.

The statutory change was needed, CUNA had argued, because the NCUA historically had interpreted that the Federal Credit Union Act did not permit it to extend share insurance coverage to trust accounts.

"CUNA thanks the president for signing this change into law," Nussle said, adding, "And we repeat our thanks to Sens. Angus King (I-Maine) and Mark Warner (D-Va.) and Reps. Ed Royce (R-Calif.) and Ed Perlmutter (D-Colo.) for standing with credit unions to bring parity to the not-for-profit cooperatives, their members and the communities they serve."

The Senate passed the bill by unanimous consent last week and the House voted passage in May. ReadMore

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CU tax status preservation, reg relief top 2014 CUNA legislative efforts

WASHINGTON (12/19/14)--The Credit Union National Association and state credit union leagues spent 2014 advancing a legislative agenda designed to preserve credit unions' tax status and removing regulatory barriers preventing them from serving their members.

On Thursday CUNA released a report highlighting its legislative victories in 2014 and over the course of the 113th Congress.

"The credit union system was able to advance its priorities over the last two years, despite a challenging legislative environment," said CUNA President/CEO Jim Nussle. "This was no small feat: The 113th Congress will go down in history as the least efficient, having enacted less than 2% of the bills introduced. As a result of our collective efforts, Congress preserved the credit union tax status and took modest steps toward removing barriers that keep credit unions from more fully serving their members."

One of the major highlights from the 113th Congress was the preservation of the credit union tax status. Members from the Senate and House spent this year engaged in comprehensive tax reform talks, which began with the premise that everything was on the table.

Last year featured the launch of the "Don't Tax My Credit Union" campaign, and when the first draft of comprehensive tax reform was released in February by Rep. Dave Camp (R-Mich.), House Ways and Means Committee chair, credit unions' tax status was untouched.

"While tax reform did not cross the finish line this year, the favorable treatment the credit union tax status received in this initial draft represents a very significant victory, and should position us well when Congress resumes the tax reform debate next year," reads CUNA's report, which adds that both Rep. Paul Ryan (R-Wis.), incoming House Ways and Means chair, and Sen. Orrin Hatch (R-Utah), incoming Senate Finance Committee chair, are both expected to pursue tax reform next year.

Other highlights from CUNA's legislative advocacy efforts in 2014 include:
  • Passage of the Credit Union Share Insurance Fund Parity Act, which extends share insurance coverage to lawyer trust accounts and other similar trust accounts. When passed by the House Financial Services Committee, it was the first stand-alone piece of credit union regulatory relief legislation to pass the committee since 1998;

  • House passage of the Regulation D Study Act, which would direct the Government Accountability Office to study how the Federal Reserve uses Regulation D, the cap on automatic transfers between checking and savings accounts, to influence monetary policy;

  • Getting more than 370 members of Congress to share their concerns with the National Credit Union Administration about the agency's risk-based capital proposal;

  • Testifying three times on housing reform proposals and contributing several dozen pages of legislative language to the Senate Banking Committee; and

  • Calling for hearings on the Target data breach, launching the "Stop the Data Breaches" campaign and hosting coalition meetings with banking industry associations to develop a strategy for data breach legislation for the new Congress. 
"More certainly needs to be done to remove the barriers that keep credit unions from more fully serving their members, which is why we plan to take an ambitious 'removing barriers' agenda to Congress when it convenes in a few weeks," Nussle said. "We also plan to renew vigorous advocacy on behalf of the credit union tax status as Congress turns its attention back to comprehensive tax reform." ReadMore

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PALs should be exempt from MLA proposal: NCUA's Matz

ALEXANDRIA, Va. (12/19/14)--The Department of Defense (DOD) should exempt National Credit Union Administration Payday Alternative Loans (PALs) from its Military Lending Act proposal, NCUA Chair Debbie Matz said in a letter filed with the DOD Thursday.

In her comment letter, Matz said exempting PALs would continue to allow federally insured credit unions (FCUs) to provide affordable credit alternatives to the military and its families.

"PALs serve as a viable alternative to predatory payday loans and can help members avoid or end dependency on those loans," Matz wrote. "In fact, the department's report on enhancing protections on consumer credit for servicemembers and their dependents cites PALs as an example of 'small dollar loans designed to assist servicemembers who appear to need a way out of unmanageable debt.'"

Matz added that while the agency supports consumer protections and the goal of the proposed rule, the NCUA believes its regulation permitting payday alternative loans "appropriately balances" the needs of consumer protection and affordable credit.

The NCUA's current regulation, issued in 2010, allows federal credit unions to offer PALs with a rate cap of 1,000 basis points above the 18% general rate cap for credit unions and an application fee of up to $20.

"The PALs regulation reflects NCUA's careful deliberation about how to develop a product that would enable FCUs to offer their members a reasonable alternative to high-cost payday loans," Matz wrote. "PALs have beneficial features that protect borrowers, and the evidence to date shows that PALs are considerably cheaper than payday loans."

Under the DOD's proposed rule, consumer credit to covered borrowers is subject to a 36% cap on the military annual percentage rate (APR), which includes application fees. According to the NCUA, if these regulations are revised to cover payday alternative loans, the rate and fee for many payday alternative loans would be higher than the military APR cap.

The Defense Department's proposed rule would cover other types of consumer credit as well, including credit card accounts and overdraft lines of credit with a finance charge. ReadMore

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NCUA projects no assessment for NCUSIF in 2015

ALEXANDRIA, Va. (12/19/14)--The National Credit Union Administration is projecting no Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessments this year, and "only a possible small premium" for the National Credit Union Share Insurance Fund (NCUSIF), according to a letter sent to federally insured credit unions Thursday.

The letter , sent to boards of directors and CEOs of federally insured credit unions, outlines a projected potential NCUSIF premium of zero to five basis points of insured shares. These projections are the same as they were for 2014, and no premium was charged this year.

The more than $1.75 billion in legal recoveries against Wall Street firms that sold faulty securities to five failed corporate credit unions is the primary reason for no assessment, according to the agency.

The NCUSIF remains at the 1.3% normal operating level as of Sept. 30, and after Dec. 31 the agency will transfer anything over that number to the TCCUSF, as required by statute.

According to the NCUA, three factors will drive the NCUSIF's equity ratio in 2015: growth in insured shares; yield on NCUSIF investments; and the cost and pace of credit union failures.

However, in the event of a very large credit union failure, "actual premium needs in 2015 could vary from the projected range," the letter reads. ReadMore

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CFPB proposes changes to mortgage servicing rules in regs X, Z

WASHINGTON (12/19/14)--The Consumer Financial Protection Bureau (CFPB) has proposed amendments to its mortgage servicing rules that were first introduced in 2013. The proposal would amend provisions in Regulation X, which implements the Real Estate Settlement Procedures Act, and Regulation Z, which implements the Truth in Lending Act.

According to the CFPB, the proposed amendments focus primarily on clarifying, revising or amending provisions regarding force placed insurance notices, policies and procedures, early intervention, and loss mitigation requirements under Regulation X's servicing provisions. The Regulation Z amendments involve periodic statement requirements under its servicing provisions.

Among other things, the proposal would:
  • Change how a servicer must respond to requests for information asking for ownership information for loans in trust for which Fannie Mae or Freddie Mac is the trustee, investor, or guarantor;

  • Clarify the early intervention live contact obligations and written early intervention notice obligations. The bureau is also proposing to require servicers to provide written early intervention notices to certain borrowers who are in bankruptcy or who have invoked their cease communication rights under the Fair Debt Collection Practices Act;

  • Clarify how servicers must treat periodic payments made by consumers who are performing under either temporary loss mitigation programs or permanent loan modifications. Under the proposal, periodic payments made to temporary loss mitigation programs would continue to be credited according to the loan contract and could be credited as partial payments, while periodic payments made to a permanent loan modification would be credited under the terms of the permanent loan agreement;

  • Exclude certain seller-financed transactions from being counted toward the 5,000 loan limit placed on institutions defined as "small servicers," allowing servicers that would otherwise qualify for small servicer status to retain their exemption while servicing those transactions; and

  • Make several changes to loss mitigation requirements, including requiring servicers to meet the loss mitigation requirements more than once in the life of a loan for borrowers who become current after a delinquency; and clarify that servicers have significant flexibility in setting a reasonable date by which a borrower must return documents and information to complete an application, so long as the date maximizes borrower protections and allows borrowers a reasonable period of time to return documents and information.
The proposed rule also makes technical corrections to several provisions of Regulations X and Z. Comments on the proposal are due March 16. ReadMore

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Inside Washington (12/19/14)

  • WASHINGTON (12/19/14)--The Consumer Financial Protection Bureau has sued Texas-based Union Workers Credit Services for deceiving consumers into paying fees to sign up for a sham credit card. According to the bureau, the company falsely advertises a general-use credit card that can actually only be used to purchase products from the company. The CFPB also alleges Union Workers Credit Services deceptively implies an affiliation with unions by using pictures of nurses, firefighters and other public servants in its advertising, among other things. The lawsuit seeks compensation for victims, a civil penalty and an injunction against the company...

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