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Cheney Report: NCUA Exam Improvements a Good Sign

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WASHINGTON (10/15/13)--The National Credit Union Administration's recent announcement that its examination processes will be streamlined and improved starting in 2014 "indicates an effort toward a better process for addressing problem examination issues," Credit Union National Association President/CEO Bill Cheney wrote in this week's Cheney Report.

The NCUA's planned improvements, which include setting clear expectations for credit unions and examiners regarding the use of Documents of Resolution (DoRs) and other areas, "reflect a number of recommendations that CUNA has been making for some time," Cheney noted.

Of course, the CUNA leader made it clear, "there is still a lot of room for improvement." CUNA has long advocated changes to some exam practices. For example, in the 2011 "Credit Union Exam Bill of Rights," CUNA said if a credit union disagrees with a DoR from its examiner, the credit union should be able to contact the regional director to discuss concerns. 

Overall, Cheney stressed, the success of these exam changes "will be in actions taken, including whether or not examiners correctly interpret information provided by credit unions."

He added that CUNA will follow up with the NCUA on these and other exam issues.

CUNA and state credit union leagues later this year will conduct an annual National Examination Survey. Credit unions will be asked to describe the strengths and weaknesses of their state and federal regulatory examination experiences. The results of the survey will be used as CUNA and the leagues hone their exam issue advocacy efforts, Cheney wrote.

This week's edition of The Cheney Report also details:
  • CUNA media outreach on debt ceiling issues;
  • A tax reform update;
  • A preview of the 'Rock Stars' issue of Credit Union Magazine; and
  • A call for credit unions to tap the power of their members to rebuff bank attacks.
Use the resource link to read the latest in The Cheney Report.

NCUA, Fed Regulators Seek Comment On Flood Insurance Enhancements

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WASHINGTON (10/15/13)--The National Credit Union Administration and other federal regulators are seeking comment on potential changes to regulations pertaining to loans secured by property located in special flood hazard areas.

The joint agency proposal would require that regulated lending institutions accept private flood insurance, as defined in the Biggert-Waters Flood Insurance Reform Act of 2012, and satisfy mandatory purchase requirements outlined in that bill.

The flood insurance reform act, which became law in July 2012, extended the National Flood Insurance Program (NFIP) until Sept. 30, 2017. The bill also called for flood insurance reforms, including the phasing out of subsidies for many properties, raising the cap on annual premium increases, allowing multifamily properties to purchase NFIP policies, imposing minimum deductibles for flood claims, requiring the NFIP administrator to develop a plan for repaying the debt incurred from Hurricane Katrina, and establishing a technical mapping advisory council to deal with map modernization issues.

The new joint agency release asks whether federal financial regulatory agencies should adopt additional regulations on the acceptance of flood insurance policies issued by private insurers.

The joint agency proposal would:
  • Require regulated lending institutions to escrow payments and fees for flood insurance for any new or outstanding loans secured by residential improved real estate or a mobile home, not including business, agricultural and commercial loans, unless the institutions qualify for a statutory exception;
  • Result in new and revised sample notice forms and clauses concerning the availability of private flood insurance coverage and the escrow requirement;
  • Clarify that regulated lending institutions have the authority to charge a borrower for the cost of force-placed flood insurance coverage after a homeowner's private insurance lapses or becomes insufficient; and
  • Outline the circumstances under which a lender must terminate force-placed flood insurance coverage and refund payments to a borrower.
The joint agency proposal is co-signed by the NCUA, the Federal Reserve, the Farm Credit Administration, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency.

Comments on the release will be accepted until Dec. 10.

CFPB Removes Enforcement Attorneys From On-Site Exams

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WASHINGTON (10/15/13)--The Consumer Financial Protection Bureau's decision to remove enforcement attorneys from on-site examinations "is a wise move on CFPB's part," Credit Union National Association General Counsel Eric Richard said Monday.

"Having enforcement attorneys take part in exams can imply some kind of punitive intent that can chill open communications between examiners and financial institutions.  Plus, taking part in exams can transform enforcement attorneys into witnesses, which often creates a conflict of interest," Richard added.

The CFPB said enforcement attorneys will continue to coordinate with examiners offsite, and will work closely with supervision examiners to ensure that the financial institutions the CFPB oversees are following the rules, the CFPB said. "We think this approach will result in better overall oversight," a CFPB representative told News Now.

The CFPB, she said, found that it was not efficient to have both examiners and enforcement attorneys physically present on exams. American Banker last week reported that banking representatives had complained about the enforcement attorney role in examinations. The attorneys, some said, were hampering communication between institutions and examiners.

Credit unions with less than $10 billion in assets are exempt from supervision and enforcement by the CFPB. CUNA continues to press the CFPB to minimize the impact of CFPB rules on credit unions where possible and appropriate.

CompBlog Wrap-Up Provides Mortgage Reg Resources

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WASHINGTON (10/15/13)--New and pending mortgage regulations remain a chief concern for credit unions across the country. The latest edition of the Credit Union National Association's CompBlog Wrap-Up provides an outline of recent Consumer Financial Protection Bureau revisions to mortgage regulations, a question and answer document on mortgage originator regulations, and much more.

The Wrap-Up section on the CFPB's mortgage rules highlights how the revisions will impact small creditors, credit insurance premiums, loss mitigation applications, mortgage loan originators and ability-to-repay standards.

The Wrap-Up also features details on CUNA's new mortgage rules resource page, which compiles compliance information addressing the new CFPB mortgage rules. CUNA e-Guides, compliance articles from Credit Union Magazine, frequently asked questions, summaries, explanatory charts, CompBlog posts, and training opportunities are among the resources posted on this page.

One key question regarding the new Regulation Z mortgage originator rules is also addressed:  Does responding to a member's request for real estate lending department contact information make a given credit union employee a mortgage loan officer? The answer, CUNA says, is no.

While referrals are considered to be loan originator activities under the rule, Reg Z's definition of loan originator does not include persons who:
  • Provide general explanations, information, or descriptions in response to consumer queries;
  • Provide loan originator or creditor contact information in response to a consumer request;
  • Describe other product-related services; or
  • Explain or describe the steps that a consumer would need to take to obtain an offer of credit, including providing general guidance on qualifications.
The Wrap-Up also provides quick answers to several remittance transfer compliance questions.

And, as it does every month, the CompBlog Wrap-Up lists the upcoming effective dates of new regulations, important compliance articles and reports to read, as well as CUNA training programs.

For more of the CUNA CompBlog Wrap-Up, and other compliance gems, use the resource link.