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FHFA directive loosens policy on sales of existing REOs

WASHINGTON (11/26/14)--A change to Fannie Mae and Freddie Mac's existing real estate owned (REO) properties policy will allow the enterprises to sell existing REO properties to any qualified purchasers at fair-market value. The Federal Housing Finance Agency (FHFA) directed Fannie and Freddie to make the change Tuesday.

The change is limited to Fannie Mae and Freddie Mac REO inventory of single-family homes as of Nov. 25, which is roughly 121,000 properties.

Previously, Fannie and Freddie required homeowners who have been through foreclosure and want to buy their home back to pay the entire amount owed on the mortgage. This applied to anyone buying the home for the benefit of the previous homeowner as well.  

The new rule applies to existing REO properties and allows homeowners who are able to repurchase their home, or a third-party able to purchase on their behalf, to do so under the fair-market value policy that already applies to other purchasers of REO properties. 

According to a release by the FHFA, certain property exclusions may apply and will be handled by the Fannie and Freddie on a case-by-case basis.

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DoD extends comment deadline on lending act proposal

WASHINGTON (11/26/14)--The U.S. Department of Defense (DoD) announced a 30-day extension of the comment period for its proposed changes to the Military Lending Act. Comments will now be accepted until Dec. 26.

According to the posting in Tuesday's Federal Register, the DOD is "extending the comment period after receiving requests from several organizations. These organizations expressed that they would not have sufficient time to adequately cover their concerns."

The proposal would overhaul the Military Lending Act and could affect credit unions that serve military members and families. Most notably, it would place a 36% cap on the annual percentage rate of interest charged for credit products covered by the regulation, which includes credit cards and payday loans.

Current National Credit Union Administration regulations allow federal credit unions to offer payday alternative loans with an interest rate of up to 28% and an application fee of up to $20.

NCUA Chair Debbie Matz previously expressed concern that the rule could prevent credit unions from making payday loans permitted by NCUA rules. The NCUA finalized a payday lending alternative rule in 2010, and considered existing DOD regulations when constructing it.

"The Defense Department's new proposed rule would broaden the definition of  'consumer credit' under Military Lending Act regulations in a way that would prevent federal credit unions from making payday alternative loans permitted by our rule," Matz said.

The Credit Union National Association and the Defense Credit Union Council are working with state associations and credit unions to develop a comment letter. CUNA is still accepting comments on the proposal.

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CFPB ombudsman reports top complaint areas of 2014

WASHINGTON (11/26/14)--A review of the Consumer Financial Protection Bureau (CFPB) from the agency's ombudsman has been released, highlighting several issues from 2014.

CFPB Ombudsman Wendy Kamenshine said the report aims to highlight ways the ombudsman has resolved process issues with the bureau throughout 2014.

The report includes inquiries by consumers, financial entities, trade associations and through internal engagement with bureau staff.
Click to view larger imageThe number of inquiries to the Consumer Financial Protection Bureau ombudsman in FY2014 compared with FY2013, sorted by category. (CFPB Graphic)

The ombudsman received 1,133 inquiries in fiscal year 2014, down from 1,422 in fiscal year 2013. According to the report, nearly all of the decline is attributed to fewer consumer contacts--871 this year compared with 1,219 the year before. The number of individual inquiries from other groups increased by roughly 9% over the year before.

The bureau as a whole received roughly 240,600 consumer complaints this year, up from 144,000 the year prior.

Inquiries to the ombudsman about the CFPB included questions (41%), complaints (36%), topics of concern (14%), courtesy copies to the ombudsman (6%), and feedback on CFPB and non-CFPB topics (2%).

The ombudsman's office also reviews systemic issues that may be affecting consumers or financial institutions around the country. One of the issues reviewed in FY2014 was what information the CFPB shares with consumers about public actions and what channels are used to connect with the bureau regarding industry developments, and how that information is shared within the CFPB.

The bureau generally releases information about public actions via press release, website, a telephone contact center and, in some cases, letters to consumers.

The ombudsman recommended the bureau standardize all informational documents provided to the contact center so information can easily be found as the staff interacts with the public. It also recommended the bureau make public actions easier to find on the CFPB's homepage.

Other issues reviewed in the report include: setting expectations and the need for transparency, how the bureau shares information and a look into the CFPB caller contact center.

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NCUA posts updates on guaranteed notes, corporate resolution program

ALEXANDRIA, Va. (11/26/14)--Updated information on the performance of the National Credit Union Administration's Guaranteed Notes program and costs of the corporate credit union resolution program have been posted to the agency's website.

The information was previously covered at the agency's last board meeting; however, the website features the updated figures and new infographics.

According to the agency, the Temporary Corporate Credit Union Stabilization Fund assessment range is from negative $2.2 billion to negative $200 million, making it likely that credit unions will not be charged future assessments.
Click to view larger imageTotal corporate credit union system resolution costs and net remaining assessments, in billions. (NCUA Graphic)

"However, the projections are subject to change based on the performance of the failed corporates' legacy assets, future legal recoveries and economic variables such as interest rates, unemployment and housing costs," reads a statement from the NCUA.

Credit unions have paid $4.8 billion in assessments since the creation of the Stabilization Fund in 2009.

The agency also said the negative balance will not result in refunds for credit unions in 2015, due to the $2.6 billion in outstanding borrowings to the U.S. Treasury, Guaranteed Notes principal and interests, as well as other obligations of the stabilization fund. Refunds are unlikely until at least the expiration of the Stabilization Fund in 2021.

In addition to the updates, the agency has posted a question-and-answer document with detailed information about costs incurred to date and projected future assessment ranges over the life of the Stabilization Fund.

According to the NCUA, it will provide periodic updates on the estimates about the costs associated with the corporate system resolution, the performance of the Guaranteed Notes program and the total anticipated assessments credit unions will pay during the life of the Stabilization Fund.

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Freddie to add loan-level loss data to historical dataset

McLEAN, Va. (11/26/14)--Freddie Mac will begin including loan-level actual loss to its single family loan-level historical dataset, it announced Tuesday.

According to a release, the enhanced dataset will increase transparency and help investors build more accurate credit performance models in support of Freddie's single-family credit risk offerings.

"It is important for investors to have this expanded view of credit risk, especially as we continue to grow and evolve our credit risk offerings. Having data openly available in the marketplace allows us to expand the amount of risk transferred to private investors," said Kevin Palmer, vice president of single-family strategic credit costing and structuring for Freddie.

"We expect to introduce an actual loss credit offering in our [Agency Credit Insurance Structure] reinsurance and [Structured Agency Credit Risk] programs next year. We are releasing this data now to give potential credit investors sufficient time to get familiar with Freddie Mac's actual loss performance," he added.

The dataset, which was first made available in March 2013, also contains loan-level credit performance data on 30-year fixed-rate single-family mortgages. It excludes data on adjustable-rate mortgages, balloon mortgages, initial interest mortgages, government-insured mortgages, relief refinancing mortgages and other affordable or non-standard mortgages.

The dataset covers roughly 17 million 30-year fixed-rate single-family mortgages originated between Jan. 1, 1999, and June 30, 2013.

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Inside Washington (11/26/14)

  • WASHINGTON (11/26/14)--The U.S. Treasury Department has announced a new director of the Community Development Financial Institutions (CDFI) Fund. Annie Donovan, former CEO of CoopMetrics, will serve as director, overseeing the expansion of access to capital and financial services in critically underserved urban, rural and tribal communities, where one of the biggest obstacles to economic development is a lack of access to mainstream sources of private sector capital, according to a release announcing the hire. Donovan has experience as a board member of many organizations in the community development finance sector ...

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