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HMDA rule changes could increase reporting burden

Washington
WASHINGTON (7/25/14)--The negative impact of the Consumer Financial Protection Bureau's proposed changes to Home Mortgage Disclosure Act (HMDA) reporting rules will far outweigh any benefit to credit unions--or their members, Credit Union National Association Associate General Counsel Jared Ihrig said Thursday.
 
In a release, the CFPB unveiled a proposal it said is intended to improve the information reported about the residential mortgage market under HMDA. It also is meant to simplify the reporting process for credit unions and other financial institutions. However, by the CFPB's own estimates, the changes would represent a compliance burden of 4.7 million hours annually for all regulated entities required to report under HMDA.
 
However, Ihrig noted that the proposal adds 37 data fields to the HMDA reporting requirements and also adds a requirement for reporting HMDA information on all Home Equity Lines of Credit (HELOCs).  Currently, reporting on HELOCs is optional.

"CUNA is disappointed to see that the CFPB's proposal contains requirements that are well beyond the statutory requirement carried in the Dodd-Frank Act. The bureau upped that to an unwieldy and unnecessarily burdensome 37 new data fields under the proposal," Ihrig said. According the CFPB's numbers, more than 2,000 credit unions were required to file HMDA reports in 2013.
 
The CFPB's Small Business Regulatory Enforcement Fairness Act advisory panel met earlier this year to discuss possible changes to HMDA rules. Six CUNA-member credit unions on the 21-member panel urged the bureau to consider the compliance burden on small institutions and to only require reporting of those data fields that are statutorily required under the Dodd-Frank Act.
 
Ihrig noted that credit unions also informed the CFPB that requiring HMDA reporting on HELOCs would create great operational complications and a significant compliance burden.

Many credit unions maintain their first-mortgage origination operations separate from their HELOC operations, which are more aligned with consumer lending. In these instances, data aggregation for HMDA reporting purposes may require significant changes in training, operations and technical requirements.
 
On the plus side of the CFPB proposed changes, the bureau is considering raising the reporting threshold to 25 or more closed-end loans or reverse mortgages in a year. In addition, the proposal would eliminate reporting of certain home-improvement loans. Currently, financial institutions must submit reports on their mortgage lending activities even if they write just one home-purchase loan or refinancing in a year.

Also in its announcement, the CFPB noted that it would be providing clarifications on its HMDA rules. CUNA's Ihrig said credit unions would welcome any guidance on such things as the definition of what constitutes a "dwelling," how to treat manufactured, modular and multiple properties under HMDA, and many other topics.
 
"Any clarification the bureau can provide is helpful," Ihrig said, but added that CUNA will be analyzing the proposal to see if any of the CFPB's proposed amendments would be adding to the regulatory burden.
 
The CFPB also said it is looking to improve the electronic reporting process and will be considering what new technological tools would make the data submission process more efficient, ease the data formatting requirements and help financial institutions prevent errors.
 
Ihrig noted that CUNA will be posting a Regulatory Call to Action for state credit union leagues and credit unions in the coming days and encourages all affected credit unions to weigh in with comments on the proposed rule. Comments are due to the CFPB Oct. 22.

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Elimination of fixed-asset cap on NCUA board agenda for July

Washington
ALEXANDRIA, Va. (7/25/14)--The National Credit Union Administration will consider a proposed rule on federal credit union ownership of fixed assets, among other proposals, at its monthly board meeting Thursday.

Speaking at the National Association of Federal Credit Unions conference Wednesday, NCUA Chair Debbie Matz said the proposal is intended to streamline the rules that implement Federal Credit Union Act provisions governing the process for those credit unions to occupy land or buildings.

Matz said the intent is to allow federal credit unions to manage their own fixed-asset purchases without having to seek permission or waivers from the NCUA. This would allow them to update facilities, upgrade technologies and make purchases that do not impact safety and soundness.
                 
"NCUA should not micromanage individual business decisions," she said ( News Now July 24).

Board member Rick Metsger has made fixed-asset issues an area of focus since joining the NCUA board in 2013, and said Thursday at the American Association of Credit Union Leagues meeting in Chicago that he was strongly in favor of giving credit unions the ability to make their own decisions on managing fixed assets.

The board will also give the quarterly share insurance fund report, the guaranteed notes performance report, and the agency's 2014 mid-year operating budget.

Also on the agenda is a request for a community charter expansion for Call FCU, a $360 million-asset institution based in Richmond, Va.

Matz said last week that along with the fixed assets proposed rule, board meetings later this year would address two other regulatory relief proposals. One would be to support legislation to increase the member business loan cap from 12.15%, as well as look for other ways to "modernize" member business lending to make it easier for credit unions to serve small businesses. The other proposal would involve updating appraisal provisions.

The NCUA board will not meet in August. The next board meeting is scheduled for Sept. 18.

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Fraud-fighting advice for CUs: Now on NCUA YouTube channel

Washington
ALEXANDRIA, Va. (7/25/14)--In an effort to help credit unions detect and deter fraud, the National Credit Union Administration has released the first videos in a new series on fraud prevention.

The agency has posted the first three videos on its YouTube channel, with the remaining four to be released in the coming weeks.

"The potential for employee fraud should always be a concern for credit union officials and volunteers," NCUA Board Chair Debbie Matz said in announcing the new resource.

"Unfortunately, employee fraud led to $311.4 million in losses for the Share Insurance Fund between 2010 and 2013 at liquidated credit unions. To protect the Share Insurance Fund from future losses, NCUA has developed this new video series to educate credit union managers and volunteers about detecting and reducing the potential for fraud and dishonesty among employees," she added.

The series, conducted by staff from the NCUA's Office of Small Credit Union Initiatives in partnership with CUNA Mutual Group, discusses ways credit unions can increase internal controls to deter insider fraud and employee dishonesty. Credit union managers and volunteers will also learn how to identify potential clues that are warning signs for fraud.

The first three episodes of the "Deterring, Preventing and Detecting Employee Dishonesty" series provide an overview of the series and outline the importance of maintaining a policy on employee fraud and conducting surprise cash counts.

Joette Colletts, senior manager for risk management with CUNA Mutual Group, is featured in the videos taking a credit union CEO through various phases of fraud prevention and explaining why each one is essential to an overall prevention strategy.

The NCUA will release the remaining four episodes in the coming weeks, which will address separation of duties, employee and family member accounts, file maintenance transactions and vault cash.

Use the resource link below to access the videos.

Comments on NCUA regs, Freddie/Fannie g-fees due in August

Washington
WASHINGTON (7/25/14)--Various regulatory agencies have comment call deadlines during the month of August, on regulations from mortgage guarantee fees to the National Credit Union Administration's annual regulatory review.

The Credit Union National Association will be circulating its draft letters in advance of comment deadlines to credit union leagues and others then submitting detailed comments. CUNA's ongoing concern is to urge all regulators to minimize negative rules and facilitate a more favorable regulatory environment for credit unions.

The due dates and regulations in question are:
  • Aug. 4: NCUA Administration 2014 Regulatory Review. The agency reviews its regulations every three years on a rolling schedule that examines one-third of regulations each year. This year the NCUA will review regulations 748, 749, 750, 760, 761, 790, 791, 792, 793, 794, 796 and 797. CUNA will be recommending a numbers of changes and improvements to NCUA rules;

  • Aug. 4: Freddie Mae and Freddie Mac Guarantee Fees. The Federal Housing Finance Agency announced proposed increases to guarantee fees that Fannie Mae and Freddie Mac charge lenders. The changes include an across-the-board 10 basis point (bp) increase, an adjustment of upfront fees charged to borrowers in different risk categories and elimination of the 25 bp adverse market charge for all but four states. CUNA opposes increases in the g-fees;

  • Aug. 25: NCUA Asset Securitization. The NCUA board would amend regulations to clarify that a natural person federal credit union is authorized to securitize loans that it has originated, as an activity incidental to the business for which the institution is chartered, provided the transaction meets certain requirements. This would also apply to state-chartered credit unions that are permitted by state law to securitize their assets. CUNA supports this proposal and the complementary one below but will be recommending some improvements;

  • Aug. 25: NCUA Safe Harbor. The NCUA board would amend regulations regarding its treatment as liquidating agent or conservator of a federally insured credit union of financial assets transferred by the credit union in connection with a securitization or a participation. The proposed rule continues the safe harbor for financial assets transferred in connection with securitizations and participations in which the financial assets were transferred in compliance with the existing regulation and defines conditions for safe harbor protection for securitizations and participations for which transfers of financial assets would be made after the effective date of this proposed rule; and

  • Aug. 25: NCUA Appraisals. The NCUA would amend the agency's regulations to eliminate the now duplicative requirement that federal credit unions make available a copy of the appraisal used in connection with that member's application for a loan secured by a first lien on a dwelling. The proposed rule would also amend NCUA's appraisal regulations by expanding the current exemption for certain transactions involving an existing extension of credit. CUNA continues to support changes to minimize appraisal requirements.
There are also two comment deadlines coming in September. Comments on the NCUA Regulatory Publication and Review under the Economic Growth and Regulatory Paperwork Reduction Act of 1996 are due Sept. 2. Comments on the Consumer Financial Protection Bureau's Mobile Financial Services and their potential for improving financial lives of economically vulnerable citizens are due Sept. 10.

Use the resource links below for information about each comment call.
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