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CUNA monitoring several hearings this week

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WASHINGTON (5/20/08)--The Credit Union National Association (CUNA) is following several congressional hearings scheduled for this week that are relevant to credit unions. Today, the Senate Banking Committee is scheduled to hold a confirmation hearing for Steven Preston, who has been nominated by President Bush to be the Secretary of Housing and Urban Development. Preston currently serves as the administrator of the Small Business Administration. The Senate Banking Committee today also is expected to mark up a housing bill that includes significant reform for government-sponsored enterprises (GSEs). CUNA last week wrote a letter to committee head Sen. Christopher Dodd (D-Conn.) regarding the bill (see related story). Other hearings this week:
* The Housing Oversight and Government Reform Committee Wednesday is slated to hold a hearing entitled, “Neighborhoods: The Blameless Victims of the Subprime Mortgage Crisis”; * The House Small Business Committee Thursday is scheduled to hold a hearing on the Real Estate Settlement Procedures Act and its impact on small business; * The House Financial Services Committee Thursday is expected to hold a hearing on the impact of conforming loan limit increases on homebuyers and housing markets; and * The House Financial Services Committee and the House Oversight and Government Reform Committee Thursday is scheduled to hold a joint hearing entitled, “Targeting Federal Aid to Neighborhoods Distressed by the Subprime Mortgage Crisis.”

CUNA comments on flood-insurance-QandA changes

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WASHINGTON (5/20/08)--The Credit Union National Association (CUNA) yesterday submitted a comment letter on proposed changes to the National Credit Union Administration’s (NCUA) questions and answers (Q&A) regarding flood insurance. The proposed changes include new questions and answers on second lien mortgages, civil money penalties, loan participations, construction loans and condominiums. The changes are intended to provide clearer guidance and clarify areas of potential misunderstanding. CUNA’s comments on the proposed changes include a clarification of the term “overall value,” which is referenced in Questions 7, 10 and 12. NCUA currently defines the term as the overall value of the property securing the designated loan minus the value of the land on which the property is located. CUNA suggested a modification of Question 31, which references flood insurance requirements for home equity loans, lines of credit, subordinate liens and other security interests in collateral. The question should be clarified to indicate that a loan application does not trigger a flood determination, CUNA said. CUNA also encouraged NCUA to ensure that the Q&A is easy for credit unions to find on the website. “Credit unions are increasingly relying on NCUA’s website for regulatory and other information that affects them, and their reliance is expected to increase,” wrote Jeffrey Bloch, CUNA senior assistant general counsel. The Q&As, originally published in 1997 by the NCUA and other federal financial institution regulators, are meant to serve as a guideline on flood insurance requirements for financial institutions, agency personnel and the public. For the full text of CUNA’s letter, use the link.

Senate Banking Committee to mark up GSE reform bill today

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WASHINGTON (5/20/08)--The Senate Banking Committee today is expected to mark up a housing bill, the Federal Housing Finance Regulatory Reform Act of 2008, which includes significant reform of the government-sponsored enterprises (GSEs). Yesterday, Senate Banking Committee Chairman Christopher Dodd (D-Conn.) and Sen. Richard Shelby (R-Ala.) announced an agreement that would create a new regulator for Fannie Mae and Freddie Mac, and a multi-billion dollar mortgage rescue fund (Reuters May 19). "To have Chairman Dodd and Ranking Member Shelby come to agreement on an issue as important as GSE reform is very significant,” said Ryan Donovan, CUNA vice president of legislative affairs. “It certainly makes the prospects of enactment of comprehensive housing legislation more realistic. We will be reviewing this legislation closely." Last week, CUNA President/CEO Dan Mica wrote a letter to Dodd and Shelby commending the committee for ensuring the safety and soundness of Fannie Mae and Freddie Mac. In the letter, Mica noted that credit unions rely on access to the secondary mortgage market--Fannie Mae and Freddie Mac--and the 12 Federal Home Loan Banks. He said CUNA believes changes in oversight of the GSEs must ensure that:
* Changes do not curtail the use of the automated underwriting systems developed by Freddie Mac and Fannie Mae and the arrangements in which lenders enter into commitments with the GSEs for the purchase of a fixed amount of mortgage loans at a particular rate before the specific loans are identified or closed; * Restrictions on the ability of the GSEs to offer new programs do not result in a regulatory process that hinders the development of programs, activities or products that benefit the marketplace or the participation of credit unions in the marketplace; and * Guarantee fees are not based on factors such as capital or volume of lending activity that may have the effect of favoring large lenders.
For the full text of the letter, use the link.

Inside Washington (05/19/2008)

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* WASHINGTON (5/20/08)--The Federal Deposit Insurance Corp. (FDIC) is closely monitoring financial institutions that rely mostly on deposits for growth, FDIC Chairman Sheila Bair said after a speech Friday at the Brookings Institution (American Banker May 19). Brokered deposits can help institutions that perhaps shouldn’t be growing fast, grow quickly, she said. Earlier this month, ANB Financial of Bentonville, Ark., failed after losing money on a number of development and construction loans. It had backed the loans with $1.6 billion in brokered deposits, which equaled roughly 86% of its total deposits. The bank was closed by the Office of the Comptroller of the Currency ... * WASHINGTON (5/20/08)--National Credit Union Administration (NCUA) Vice Chairman Rodney Hood Thursday visited with more than 65 New Jersey credit union leaders to discuss current issues at NCUA and trends in the credit union movement. During the interactive session, Hood acknowledged the safety and soundness of New Jersey’s credit unions, noting that they have the highest capital level in the country at 12.3%. He said he is hopeful for the passage of the Credit Union Regulatory Relief Act and also acknowledged the burden of the Bank Secrecy Act (BSA). “If I could wave a wand on BSA I would,” he said. He also addressed several projects including, “Blueprint for 2020: A Plan to Strengthen the Future of Credit Unions.” The program aims to increase student membership, employment and participation in the credit union industry through credit union internships and mentoring opportunities for college students. “It is refreshing to see a regulator be so open about very important issues facing New Jersey credit unions and all credit unions,” said Paul Gentile, New Jersey Credit Union League president/CEO. Pictured are: (from left) Steve Schlundt, chairman of the New Jersey Credit Union League, Hood, and Gentile. (Photo provided by the New Jersey Credit Union League) … * WASHINGTON (5/20/08)--President Bush Monday said he will not support legislation to bail out lenders. Laws shouldn’t bail out lenders; rather, the government should help people stay in their homes, he said (The New York Times May 19). Senate leaders are working on a bipartisan bill that would help troubled borrowers receive government-backed mortgages. Bush also noted that it’s too early to tell if a second economic stimulus is needed. Stimulus checks began arriving for Americans earlier this month ...