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CFPB can cut CU reg burden on TILARESPA form says CUNA

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WASHINGTON (4/18/12)—As the Consumer Financial Protection Bureau (CFPB) moves to the final stages of its project to integrate Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosures into a single form, the Credit Union National Association (CUNA) has provided a number of specific recommendations the bureau could take to reduce the regulatory burdens faced by credit unions.

In a letter to CFPB Director Richard Cordray, CUNA Senior Assistant General Counsel Jared Ihrig said CUNA supports the CFPB's work to consolidate the mortgage disclosures currently required by TILA and RESPA, and added that credit unions will welcome the elimination of the duplication which has been inefficient for consumers and industry for the past many years.

However, CUNA said, the CFPB's stated goals of speeding up the lending process to benefit the consumer and improving the accuracy and clarity of disclosures for consumers are admirable objectives, but added that it will be difficult to achieve both goals through the same regulatory change.

The mortgage form changes will require significant systems, software and operational changes within credit union mortgage lending departments, and the costs of most of these changes will likely be passed on to consumers, CUNA said. "These costs will significantly increase the cost to lenders of originating mortgage loans, and ultimately, the consumer will face these increased costs in either rate or fee adjustments, which will have the end result of further tightening the availability of mortgage credit for consumers," the letter adds.

CUNA in the letter requested that the CFPB give credit unions and other financial institutions at least one year to comply with the TILA/RESPA changes, once they are finalized. The agency should also attempt to minimize implementation costs for credit unions and exempt credit unions from portions of the regulation, where possible.

The letter also urged the CFPB to remove parts of the proposed changes that would require lenders to maintain "standardized, machine-readable" electronic versions of the proposed loan estimate and settlement disclosure forms that are provided to consumers, and recommended that the CFPB not expand its definition of "finance charge" to include currently excludable real estate and other charges.

The CFPB continues to work toward final versions of the combined TILA/RESPA forms, and the agency is required to publish a proposed rule and proposed disclosure forms by July. The regulations are scheduled to be finalized by Jan. 21, 2013.

For the full CUNA comment letter, use the resource link.

Hawaii First FCU joins CDFI leaders program

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WASHINGTON (4/18/12)--Hawaii First FCU, Kamuela, Hawaii, is among the 16 native community development financial institutions (CDFIs) taking part in the CDFI Fund's Leadership Journey, a capacity building initiative designed for Native American organizations.

The program, which the CDFI Fund has named The Leadership Journey: Native CDFI Growth & Excellence, is a two-year training program that aims to help participating organizations develop their staff and organization.

Representatives of the 16 organizations met earlier this year in Albuquerque, New Mexico, to discuss a myriad of business issues, including staff and human resource management, finance, sustainability practices, and succession plans. Three other similar meetings are scheduled for this group, and the first of those meetings is scheduled to be held in New Orleans, La., between May 7 and 11 of this year.

Other participants include the Community Development Financial Institution of the Tohono O'odham Nation, the Citizen Potawatomi Community Development Corporation, the Council for Native Hawaiian Advancement, the Four Bands Community Fund, the Hopi Credit Association, the Indian Land Capital Company and the Karuk Community Loan Fund, Inc. The Lakota Fund, Mazaska Owecaso Otipi Financial, Inc., Native Community Finance, the Navajo Partnership for Housing, Inc., Niijii Capital Partners, Inc., the Northern Shores Loan Fund, Inc., the Northwest Native Development Fund, and Salt River Financial Services Institution are also taking part, according to the CDFI fund.

For the full CDFI Fund release, use the resource link.

LuetkemeyerScott bill would address ATM disclosure problems

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WASHINGTON (4/18/12)--Legislation that would ease current ATM fee disclosure regulations "will protect credit unions and other ATM operators from frivolous lawsuits while at the same time maintaining important consumer protections," Credit Union National Association (CUNA) President/CEO Bill Cheney said.

The bill, H.R. 4367, was introduced by Reps. Blaine Luetkemeyer (R-Mo.) and David Scott (D-Ga.) on Tuesday.

Regulation E currently requires credit unions and other financial institutions that provide ATM services to display a notice on the ATM that a fee will be charged. More detailed ATM fee information must also be provided before the transaction is completed, either by showing it on the ATM's screen or providing the ATM user with a small printed disclosure before the consumer is committed to paying the fee.

Under the legislation, ATMs would only be required to display the ATM disclosures on a screen, and give ATM users the choice of opting in to such a fee. The physical ATM fee disclosure notice requirement would be eliminated.

Cheney thanked the congressmen for offering the legislation, calling the bill common sense legislation that will reduce regulatory burden without harming ATM users. He said CUNA looks forward to working with them as the bill makes its way through Congress.

ATM disclosure requirements have caused issues for credit unions and other financial institutions. CUNA has noted that outside notices on ATMs are, in some cases, being intentionally removed or destroyed, without the financial institution's knowledge, and that pictures are then taken of the ATM to show noncompliance. Some ATM users may then use this as evidence of apparent non-compliance and as grounds for lawsuits, and the number and cost of these lawsuits continues to climb. CUNA recently estimated that the total number of these lawsuits could be in the hundreds.

CUNA this week communicated with the Consumer Financial Protection Bureau on the ATM issue, telling that agency that it has "more than sufficient authority" under the Dodd-Frank Wall Street Reform Act and the Electronic Fund Transfer Act to amend Regulation E and eliminate the requirement for on-machine ATM fee disclosure notices. (See related April 17 News Now story: CUNA details how CFPB could address ATM issue)

Lawsuits brought against credit unions and banks alleging violations of the ATM-fee disclosure regulations are on the increase again, this time on the West Coast with the latest filed against a credit union in Washington state. (See related News Now story: ATM fee-notice lawsuits spread to West Coast)

Inside Washington (04/17/2012)

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  • WASHINGTON (4/18/12)--In early March, the Federal Reserve released 513 of about 7,000 pages of transcripts of the Federal Open Market Committee (FOMC) meetings from 2007 through 2010, according to a March 7 letter from FOMC Secretary William English (The Wall Street Journal April 17). Typically, the Fed releases full transcripts of its policy-making meetings five years after the sessions. But when news organizations requested transcripts of the meetings that centered on the 2008 financial crisis, the Fed released redacted documents that did not reveal any substantive content. The transcripts reflect who attended the meetings, some comments during the meeting, but no discussion of economics or policy. The minutes said Federal Reserve Chairman Ben Bernanke called the meetings to order, introduced staff presentations, honored departing colleagues and adjourned the sessions for lunch …
  • WASHINGTON (4/18/12)--An American Banker article (April 17) described how bank regulators are taking a look at old compliance standards, including the Bank Secrecy Act--a compliance area that also causes angst among credit unions as well as banks. BSA and anti-money laundering (AML) violations decreased to seven in 2011 after reaching double-digits in 2006, according to, a website developed by bank consultants. Violations are expected to increase as regulators concentrate on risk management and compliance, observers said in the Banker article. Earlier this month, the Office of Comptroller of Currency cited Citibank for failing to maintain adequate internal controls and effective independent testing in its AML compliance programs …
  • WASHINGTON (4/18/12)--A coalition of 32 lender, realtor, consumer and civil rights groups on Friday urged the Consumer Financial Protection Bureau (CFPB) to include a broadly defined "qualified mortgage"--or QM--designation as part of its Dodd-Frank Act-mandated ability-to-repay final rule. In a letter to CFPB Director Richard Cordray, the trade groups said: "[A]n unnecessarily narrow definition of QM that covers only a modest proportion of loan products and underwriting standards, and serves only a small proportion of borrowers, would undermine prospects for a housing recovery and threaten the redevelopment of a sound mortgage market." The trade groups noted that Congress intended that all creditworthy borrowers--especially low- and moderate-income borrowers and families of color--should be extended the protections of a QM. "Creating a broad QM, which includes sound underwriting requirements, excludes risky loan features, and gives lenders and investors reasonable protection against undue litigation risk, will help ensure revival of the home lending market," the letter said. The Credit Union National Association (CUNA) supports a proposed safe-harbor rule. This proposal will make compliance less resource intensive for credit unions. CUNA will monitor the progress of the rule and work with the CFPB to ease the compliance burden for credit unions …
  • WASHINGTON (4/18/12)--Thomas M. Hoenig and Jeremiah O. Norton were sworn in Monday as members of the board of directors of the Federal Deposit Insurance Corp (FDIC). Prior to joining the FDIC's board, Hoenig was the president of the Federal Reserve Bank of Kansas City and a member of the Federal Reserve System's Federal Open Market Committee from 1991 to 2011. Norton joins the board after serving as an executive director at J.P. Morgan Securities in New York. He was in government for a number of years before that, most recently as the deputy assistant secretary for financial institutions policy at the U.S. Treasury Department. Norton also was a legislative assistant and professional staff member for Rep. Edward R. Royce (R-Calif.) …
  • WASHINGTON (4/18/12)--The Federal Housing Finance Agency (FHFA) has directed Fannie Mae and Freddie Mac to enhance and align their strategies for facilitating short sales, deeds-in-lieu and deeds-for-lease, in order to help more homeowners avoid foreclosures.  According to an announcement, the effort will be executed in stages with the first taking place in June. A new, aligned timeline will include the requirement that mortgage servicers review and respond to requests for short sales within 30 calendar days from receipt of a short sale offer. Also with the alignment, FHFA said, servicers will be required to do the following: review and respond to requests for short sales within 30 calendar days from receipt of a short sale offer and a complete borrower response package; provide weekly status updates to the borrower if the short sale offer is still under review after 30 calendar days; and, make and communicate final decisions to the borrower within 60 calendar days of receipt of the offer and complete borrower response package. The regulator also noted that by yearend, Fannie Mae and Freddie Mac will announce additional enhancements addressing borrower eligibility and evaluation, documentation simplification, property valuation, fraud mitigation, payments to subordinate lien holders, and mortgage insurance …

Let Congress set privacy rules CUNA tells CFPB

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WASHINGTON (4/18/12)--The Credit Union National Association (CUNA) has urged the Consumer Financial Protection Bureau (CFPB), which sought comments on a proposal that is intended to protect privileged information provided to the agency, to postpone its rulemaking pending action in the Senate on legislation to accomplish similar goals.

A recent CFPB proposal seeks to clarify that protections such as the attorney-client privilege would not be waived when information is provided to the CFPB and when such information is transferred from the CFPB to other federal or state agencies.

However, there is a concern, CUNA said, because the CFPB does not have statutory authority to ensure that will be the case.

Legislation that would provide these types of protections passed the House earlier this year, and similar legislation could soon be considered in the Senate.

CUNA Deputy General Counsel Mary Mitchell Dunn in a comment letter said it is concerned that the CFPB's intent to address privacy issues on its own could encourage the Senate not to act, "thus foregoing an important opportunity to provide a stronger statutory basis for the protection of privilege than the CFPB's rule would afford, given the current uncertain legal foundation."

The letter also noted that the CFPB may not have the statutory authority to alter rules that generally govern when privileged information is and is not protected. "This doubt will persist even in the face of regulatory amendments that purport to have the force of law, even though that is the agency's objective by seeking public comments," the letter added.

If new privacy protections are, eventually, implemented, CUNA encouraged the CFPB to set parameters on the kinds of materials that the agency will request from financial institutions that it supervises and to first seek information that is not privileged.

For the full comment letter, use the resource link.

SBA seeks non-profit lenders for 2nd round of program

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WASHINGTON (4/18/12)—The U.S. Small Business Administration (SBA) has opened its second round of a program intended to provide long-term loans to eligible non-profit intermediary lenders to finance loans to small businesses.

Eligible intermediaries must have at least one year of lending experience; they include state and federal credit unions, certified nonprofit Community Development Financial Institutions, private, nonprofit community development corporations, consortiums of private, nonprofit organizations or community development corporations, or agencies or nonprofit entities established by Native American tribal governments.

Under the Intermediary Lending Pilot (ILP)Program, SBA makes loans of up to $1 million to participating lenders. The lenders then use the funds to make smaller loans to newly established or growing small businesses.

SBA said in a release it anticipates that an ILP Program participant will re-lend the funds approximately 2.5 times over the 20-year term.

The program funded 20 ILP intermediaries in 2011; none of them were credit unions, however. The agency hopes to identify another 20 participants this year in the second round.

Use the resource link for more program information.