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Examiners Won't Expect Immediate 'Perfection' in Mortgage Rule Compliance, says CUNA

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WASHINGTON (12/19/13)--The National Credit Union Administration will not be expecting "compliance perfection" with new mortgage rules as soon as they go into effect, according to the Credit Union National Association's CompBlog.
 
CUNA asked the NCUA during its webinar Wednesday afternoon whether credit unions will have reasonable time after a Jan. 10 effective date to come into full compliance with the Consumer Financial Protection Bureau's new mortgage rules. 
 
Gail Laster, director of the NCUA's Office of Consumer Protection, responded that CFPB Director Richard Cordray and others understand the compliance challenges sparked by the new rules. "We are not expecting compliance perfection" right away, she said.
 
Examiners will be looking for good-faith compliance efforts first, and then "substantial compliance" in due time, Laster told CUNA.
 
In today's webinar--the second part of a series on the new mortgage rules--NCUA staff provided a high-level overview of the upcoming CFPB mortgage rules. Specific topics covered this afternoon included: ability-to-repay and Qualified Mortgages, high-cost mortgage and home ownership counseling, loan originator compensation and ECOA appraisals and valuations.
 
An archived version of this free webinar, as well as written Qs-and-As, will be available on the agency website in the next couple of weeks.

NCUA Tweaks December 2014 Meeting Date

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ALEXANDRIA, Va. (12/19/13)--Credit unions, mark your calendars. The National Credit Union Administration December 2014 open board meeting, originally scheduled for Dec. 18, has been re-scheduled to Dec. 11, 2014.

The agency made the announcement Wednesday. The board meeting schedule can be subject to change at any time.

Use the resource link to access next year's updated meeting schedule.

The Credit Union National Association's daily online news service for credit unions, News Now, provides live updates during all open NCUA meetings through Twitter via NewsNowLiveWire. CUNA's News Now also provides full meeting coverage.

SAFE Act Changes Passed by Senate

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WASHINGTON (12/19/13)--The SAFE Act Confidentiality and Privilege Enhancement Act (S. 947) was passed by the U.S. Senate this week, and will now move on to the House for consideration.

Under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act), employees of financial institutions, or their subsidiaries that act as residential loan originators, are required to register with the Nationwide Mortgage Licensing System and Registry.

The bill would amend the SAFE Act to grant all state and federal financial regulatory officials access to NMLS and Registry information without jeopardizing privilege or confidentiality provided under federal and state law.

Currently, only state and federal regulators with mortgage oversight authority are allowed access to the NMLS and Registry data.

Senate Budget Deal Could Speed 2014 Tax Reform Talks

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WASHINGTON (12/19/13)--While the budget deal approved by the Senate on Wednesday does not directly impact credit unions, it could help speed issues like tax reform along when Congress returns in early January, Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said.

House Budget Committee Chairman Paul Ryan (R-Wisc.) on a recent episode of NBC's "Meet the Press" encouraged viewers to pay attention to the House Ways and Means Committee in the first quarter of next year. "The House will continue to pursue tax reform in 2014. And Sen. Max Baucus (D-Mont.) of the Finance Committee shows no signs of slowing down in the release of his tax reform proposals," Donovan noted.

Tax policy writers on Capitol Hill had intended to launch into tax reform and prepare for a vote during this past Fall, but tax reform fell by the wayside as other issues came to the fore.

"Congress is still miles from an agreement on comprehensive tax reform, but we know that important decisions on issues like the credit union tax status and others are being made in these early stages of tax reform, so even if Congress doesn't complete tax reform next year, our efforts now will help put us in a good position when Congress is closer to completing the process," Donovan said. CUNA continues to encourage credit unions and their members to use CUNA and state credit union league resources, social media sites including Facebook, and micro-video site Vine, to tell their legislators, "Don't Tax My Credit Union!"

Another 2013 priority, housing finance reform, has missed a deadline and will also have to wait until 2014, Donovan noted.

The Senate Banking Committee has been very active on this issue this year, holding more than one dozen hearings on the matter. However, committee Chairman Tim Johnson (D-S.D.) said their progress was pushed back somewhat by the government shutdown.

CUNA has been involved in the Committee's discussion, providing advice and testifying at hearings in July and November. "Our read of the Committee is that there is an intense interest in getting housing reform done properly, as opposed to getting it done quickly, because consequences of enacting a bad bill are severe. We now expect a new bill to be released early in the new year, and it is possible that a banking committee mark-up could occur shortly thereafter," Donovan said.

Reassessing, Retooling CU Biz Model in NCUA 2014-2017 Plan

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ALEXANDRIA, Va. (12/19/13)--Reassessing and retooling the credit union business model to stay ahead of the curve is one of many priorities laid out in the National Credit Union Administration's draft 2014-2017 strategic plan.

The agency said the plan outlines how it will address "a growing system where credit unions are offering new services, engaging in greater portfolio diversity, and presenting new risk challenges."

Coming challenges cited in the plan include:
  • More and different products;
  • Diversified holdings;
  • Growing real estate concentration;
  • Rapid changes in technology;
  • Escalating threats to cyber-security; and
  • Increasing member business loan portfolios.
"Each of these are risks that require continual monitoring and mitigation strategies," the NCUA said.

To deal with these risks, the NCUA plans to continue to modernize its regulatory approach to create a framework "that encourages innovation while protecting safety and soundness." Ensuring the progress of the credit union system "while continuously protecting the consumer's rights and benefits, effectively overseeing the credit union system, and insuring nearly 96 million members' deposits in federally insured credit unions" will be another agency focus, the NCUA said.

Legislative goals detailed in the draft plan include:
  • Providing the NCUA with vendor authority through statutory changes that achieve parity with the other federal financial regulatory agencies to regulate, examine, and take enforcement actions against vendors and Credit Union Service Organizations;
  • Restoring the NCUA's access to back-up liquidity by re-establishing NCUA's emergency borrowing authority of $30 billion which sunset on December 31, 2010, and revising Title III of the Federal Credit Union Act to modernize the Central Liquidity Facility; and
  • Improving the NCUA's ability to manage the National Credit Union Share Insurance Fund by providing more flexibility in setting the normal operating level and building retained earnings for the NCUSIF in a manner consistent with the size and complexity of the credit union industry and financial stability goals.
For the full draft plan, use the resource link.

Obama to Nominate McWatters for NCUA Board

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WASHINGTON (12/19/13)--Mark McWatters will be President Barack Obama's pick to fill a National Credit Union Administration board seat when it is vacated by board member Michael Fryzel, whose term ended Aug. 2 this year.

The president announced his intent to nominate McWatters Wednesday. To achieve the NCUA slot, McWatters will go through a process that includes a nomination hearing by the Senate Banking Committee and a confirmation vote by the full U.S. Senate.

McWatters was a member of the TARP Congressional Oversight Panel in Washington, D.C. from December 2009 to April 2011. TARP--or the Troubled Asset Relief Program--refers to the $700 billion fund established in 2008 to help stabilize the economy after the downturn caused by a burst housing market bubble. The supervision panel was charged with overseeing the investment of TARP funds in an array of systemically significant and other institutions including megabanks like Citigroup, Bank of America, Wells Fargo, Goldman Sachs, AIG, GM, GMAC, Chrysler as well as approximately 700 additional financial institutions.

All three NCUA board members welcomed McWatters' consideration in a Wednesday statement.

McWatters served in 2009 as counsel for Rep. Jeb Hensarling (R-Texas), who has been the chairman of the House Financial Services Committee since January 2013. McWatters is currently dean for graduate programs at Southern Methodist University's School of Law in Dallas, Texas.

The NCUA has a three-member board and no more than two members can be from the same political party. The political party occupying the White House generally dominates the board's makeup, although existing NCUA board members are often left in place even after a transition in the Oval Office.

McWatters would fill Fryzel's Republican slot on the board. Fryzel was confirmed for NCUA board member in July 2008 and served as chairman until August 2009. The other members of the regulatory panel are NCUA Chairman Debbie Matz and board member Richard Metsger, confirmed this year.

CUNA Backs Schumer, Hatch Patent Reforms in Senate

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WASHINGTON (12/19/13)-The Credit Union National Association is keeping focus on patent law reforms, even as the U.S. Congress is wrapping up its 2013 session. The latest example of CUNA advocacy came in the form of letters of support to Sens. Charles Schumer (D-N.Y.) and Orrin Hatch (R-Utah), who have introduced bills in their chamber for CUNA-supported changes in the patent system.

One letter supports Schumer's Patent Quality Improvement Act of 2013 (S. 866) which would make the Section 18 program created by the America Invents Act permanent.

The Section 18 program protects credit unions and other businesses from outside claims that some specific customer service, payment and marketing practices have already been claimed under existing business method patents. These patent challenges, which are often brought by non-practicing entities, can become expensive for credit unions and others if they are heard in court.

"By making the program permanent, you ensure that that full spectrum of low-quality business method patents will be subject to review if asserted under the threat of litigation." The bill shines a light on patent quality and patent litigation abuse, "and is critical to clear the landscape of poor quality patents that are most often used by assertion entities in meritless litigation," the letter said.

In a separate letter, the cosigners expressed support for Hatch's Patent Litigation Integrity Act of 2013 (S. 1612.) That bill would enable fee shifting in unsuccessful patent infringement lawsuits, a change that would help to discourage PAEs from filing frivolous lawsuits.

The bill, the letter said, aims to ensure that fee shifting will be effective by empowering the court, on a motion from the defendant, to order the party alleging infringement to post bond to cover the other party's expenses. This change "will hold PAEs financially accountable and ultimately deter them from filing frivolous lawsuits that unnecessarily harm financial services providers and the consumers they serve," the letter added.

The letters are cosigned by the American Bankers Association, American Insurance Association, The Clearing House, Financial Services Roundtable, Independent Community Bankers of America, NACHA--The Electronic Payments Association, National Association of Federal Credit Unions and the National Association of Mutual Insurance Companies.

CUNA witness John Dwyer, who is president/CEO of New England FCU, Williston, Vt., described the growing threat' of patent trolls to Senate Judiciary Committee members this week. (See Dec. 18 News Now story: CUNA Describes 'Growing Threat' of Patent Trolls to Lawmakers.) CUNA and others have also written to Senate Committee on Commerce, Science and Transportation members, urging them to protect businesses of all sizes from the "smash and grab tactics" employed by patent trolls. (See Dec. 12 News Now story: CUNA Urges Hill Action on 'Main Street' Patent Reform.)