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Mortgage SARs up in 2011 crimes could be declining

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WASHINGTON (4/24/12)--The total number of mortgage loan fraud suspicious activity reports (MLF SARs) increased by 31% between 2011 and 2010, mainly due to mortgage repurchase demands, the Financial Crimes Enforcement Network (FinCEN) reported.

The agency released its MLF SARs report on Monday, and FinCEN Director James Freis Jr. also discussed these latest mortgage fraud numbers and other FinCEN issues at the Mortgage Bankers Assocation's National Fraud Issues Conference on Monday.

Financial institutions submitted 92,028 MLF SARs in 2011 and 70,472 in 2010, FinCEN said. MLF SARs accounted for 12% of all SARs filed in 2011, the FinCEN report said, representing an increase from the 10% share of total shares they represented in 2010.

However, the report added, the total number of MLF SARs filed in the fourth quarter of 2011 was lower than the 2010 fourth quarter total. While it is too soon to call this a trend, Freis in the report said initial numbers for the first quarter of 2012 appear to show a continued decline in MLF SAR filings.

Around 84% of the MLF SARs reported involved amounts below $500,000, according to the FinCEN report. Some of the types of suspicious activity reported included: Overstated income on loan applications, loan workout or debt elimination attempts, questionable refinance or loan modification attempts by borrowers or others targeting distressed homeowners, and Social Security number discrepancies submitted in the original loan application and the workout request.

Income misrepresenations and invalid documents are, in some cases, being spotted and rejected before they can cause any damage, and FinCEN said the 2011 annual roundup indicates that due diligence by mortgage lenders has improved significantly since the height of the housing bubble. Financial institutions are "spotting activity that appears to be fraud before it happens and in the process, helping to prevent it," Freis said in the release.

California, Hawaii, Florida, Nevada, and the District of Columbia had the highest amounts of SAR filings, per capita.

Fries said that FinCEN's recently enacted rule that requires non-bank residential mortgage lenders and originators to establish anti-money laundering programs and file SARs "will augment FinCEN's initiatives in the mortgage fraud area." FinCEN is also considering adding "a range of consumer and commercial finance businesses" to the list of businesses that are required to file SAR reports, and will also consider regulations for settlement related businesses, Freis added in his remarks.

For the full FinCEN report and Freis's remarks, use the resource links.

Cybersecurity postal bill on tap this week in Congress

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WASHINGTON (4/24/12)--Credit unions remain on the lookout for a potential vote on a Senate bill that would increase member business lending authority, and while that vote could come at any time, it is unlikely to occur before the next Senate recess begins on April 30 because of a busy legislative schedule.

However, there is still plenty to watch in Washington this week.

Debate on the 21st Century Postal Service Act of 2012 (S. 1789), which would reduce postal service days from six to five and give the postal service greater flexibility in how it increases its rates, is expected to begin again today and could conclude this week.

A group of cyber-security bills are also expected to come up for discussion in the U.S. House. Those bills are:

  • The DATA Act (H.R. 2146);
  • The Advancing America's Networking and Information Technology Research and Development Act (H.R. 3834);
  • The Cybersecurity Enhancement Act of 2011 (H.R. 2096); and
  • The Federal Information Security Amendments Act (H.R. 4257).
The Cyber Intelligence Sharing and Protection Act (H.R. 3523) is also expected to be discussed in the House this week. That bill would task the Office of the Director of National Intelligence with developing cyberthreat information sharing guidelines between public- and private-sector organizations. The Credit Union National Association supports this legislation. (See related NewsWatch story: What is Congress doing about Cyber-Security)

The Small Business Credit Availability Act (H.R. 3336), which would preserve the rights of credit unions and other small financial institutions to use swaps to hedge interest rate risk, is on the House schedule for Wednesday, and CUNA also supports this bill.

The committee calendar is also busy this week. The House Homeland Security subcommittee on oversight today will hold a hearing entitled: "America is Under Cyber Attack: Why Urgent Action is Needed." Oversight of the U.S. Securities and Exchange Commission will be covered during a Wednesday House Financial Services capital markets subcommittee hearing.

Wednesday will also feature home refinancing discussions during a Senate Banking housing, transportation and community development subcommittee hearing, and the Senate Homeland Security and Governmental Affairs' oversight and government management subcommittee has scheduled a Thursday hearing on financial literacy. 

Thursday will also feature a House Ways and Means select revenue measures subcommittee hearing on tax extenders.

ATM bill sponsors urge support

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WASHINGTON (4/23/12)--Reps. Blaine Luetkemeyer (R-Mo.) and David Scott (D-Ga.) are asking their House colleagues to sign on in support of their bill, introduced last week, that would ease current ATM fee disclosure regulations to cut bogus lawsuits against ATM operators.

Current law requires all ATM operators to display both a physical placard on the machine and to provide an electronic disclosure of a fee that an ATM user may incur.

The lawmakers' joint letter explains, "Recently, some have found it advantageous to remove the physical placard and sue (or threaten to sue) financial institutions and merchants for noncompliance of the requirement.

"This is despite the fact that the electronic disclosure goes above and beyond the physical disclosure in that it not only informs the user there is a fee, but what that fee is, and then requires the user to affirmatively accept the fee."

Under H.R. 4367, supported by the Credit Union National Association (CUNA), 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.

"Our bill eliminates an outdated and unnecessary regulatory burden on all financial institutions while continuing to ensure consumer protections for all ATM users through mandated on-screen fee disclosures," Luetkemeyer and Blaine wrote, urging support.

CUNA last week sent a etter of support to Luetkemeyer and Scott, calling the bill common sense legislation that will reduce regulatory burden without harming ATM users.

The bill currently has the following six co-sponsors: Reps. Francisci Canseco (R-Texas, Michael Grimm (R-N.y.), Ted Poe (R-Texas), David Schweikert (R-Ariz.), Scott, and Lynn Westmoreland (R-Ga.)

Senate leader reiterates support for MBL vote

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WASHINGTON (4/24/12)--Senate leadership remains committed to a floor vote on credit union legislation to increase the member business lending (MBL) cap, a pledge reiterated Monday by Sen. Charles Schumer (D-N.Y.), the third-ranking Democrat in the Senate.

"If the banks want to go to sleep on this legislation, that's fine with us," said Credit Union National Association (CUNA) President/CEO Bill Cheney Monday in response to a report started by the New York Bankers Association that claimed Schumer had said the MBL bill has been pulled from the Senate voting calendar.

Sen. Schumer's office yesterday reiterated that the legislation is still on the Senate's agenda, with a voting date yet to be determined, and nothing procedurally has changed. Banks have been waging war against the MBL bill as CUNA, credit unions, small businesses, and consumer and businesses groups have ramped up their advocacy efforts in advance of a vote that Senate Majority Leader Harry Reid (D-Nev.) also has said is coming.

"The fact is, Senate leadership remains committed to a floor vote on this bill, a promise Sen. Schumer reiterated again today," Cheney said. "Senators recognize our bill would create hundreds of thousands of jobs and inject billions of dollars into the economy--at no cost to taxpayers.

"Credit unions will continue to advocate for this bill with no letup. The bill remains on the Senate calendar, and we know that small business will continue to join us in the push for approval. After all, small business continues to need help finding credit--and more jobs are certainly needed in this economy."

Schumer has said that lifting the "job-killing" lending cap "would be a win" for small businesses.

S. 2231, like its counterpart introduced in the House (H.R. 1418), would increase the MBL cap to 27.5% of a credit union's assets, up from 12.25%. 

Within the first year of enactment, the increased MBL authority would help to inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA estimates show.

CUNA does not anticipate the MBL vote will come up for a vote this week.  The House and Senate both begin a one-week Spring District Work Break on April 30, but then return for a three-week work session in Washington, D.C.

Inside Washington (04/23/2012)

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  • WASHINGTON (4/24/12)--The Federal Housing Finance Agency (FHFA) will provide a final answer this month on whether Fannie Mae and Freddie Mac would offer principal reductions as part of a Treasury Department proposal that would use funds from the Troubled Asset Relief Program, FHFA Edward DeMarco, the acting director of the FHFA said. DeMarco indicated that forbearance plans and short sales already serve as forms of principal reduction without saddling taxpayers with further losses. "This is not about some huge difference-making program that will rescue the housing market," Demarco said. "It is a debate about which tools, at the margin, better balance two goals: maximizing assistance to several hundred thousand homeowners while minimizing further cost to all other homeowners and taxpayers" …
  • WASHINGTON (4/24/12)--In recent public remarks, Federal Reserve Chairman Ben Bernanke has emphasized the central bank's focus on maintaining financial stability. In a recent American Banker article (April 23), Margaret Tahyar, a partner at Davis Polk & Wardwell, described financial stability as an "unofficial third goal," along with price stability and unemployment, of the Fed. The emphasis on financial stability appears to have created when Dodd-Frank gave the Fed the task of regulating all systemically important banks and nonbanks. Dodd-Frank law required the Fed to write new rules on, including living wills, capital and liquidity requirements. Karen Shaw Petrou, a managing partner at Federal Financial Analytics Inc., said financial stability will be part of Bernanke's legacy …
  • WASHINGTON (4/24/12)--Effective May 7, the U.S. Treasury Department's Community Development Financial Institutions Fund (CDFI Fund) will be in a new location: 1801 L Street, N.W., 6th Floor, Washington, D.C., 20220. Treasury said the fund will do its best to maintain normal operations during the transition period from May 4 to May 7, but warned some patience might be required of those communicating during this period. Parties sending correspondence to the new address should anticipate slight internal delivery delays and should account for this in timing the delivery of correspondence. Also, the CDFI Fund's new office space is in a secure federal building that requires visitors to be escorted to the office by CDFI Fund staff. Visitors should anticipate short security screening delays as part of the process. Items not affected by the relocation include the submission of electronic applications through Grants.Gov or the myCDFIFund portal; the submission of other electronic reports (e.g. the Allocation Tracking System, the Community Investment Impact System, or through the myCDFIFund portal); or the submission of CDE Certification Applications, which should continue to be submitted to the Bureau of Public Debt. …