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All CUs get some RegFlex

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ALEXANDRIA, Va. (5/25/12)--The enhanced management and investment rights given to some credit unions under the National Credit Union Administration's regulatory flexibility (RegFlex) program will soon be extended to the 1,770 credit unions that are not covered under the RegFlex designation after the agency approved expansion of that program on Thursday.

According to the agency, the new rule will permit all credit unions to:
  • Donate funds to the charities of their choosing;
  • Accept non-member deposits, subject to predetermined limits, from local governmental entities or other credit unions;
  • Purchase private-label commercial mortgage-related securities, subject to certain net worth constraints and safety and soundness rules;
  • Purchase whole loans from other federally insured credit unions, in some cases;
  • Enter into borrowing-repurchase transactions in which the purchased securities have maturities exceeding the maturity of the borrowing-repurchase agreement, provided the investment value does not exceed net worth and subject to certain constraints;
  • Invest in zero-coupon securities, subject to certain net worth and investment maturity limits; and
  • Use a six-year time horizon to partially occupy unimproved property that is acquired for future expansion.
"By lifting unnecessary restrictions, granting additional powers, and increasing management flexibility, this RegFlex relief expansion advances NCUA's Regulatory Modernization Initiative and complements [President Barack Obama's] efforts to ease regulatory burdens where appropriate," NCUA Chairman Debbie Matz said.

Matz said the NCUA decided to expand its RegFlex program to cover all credit unions after seeing the success of the limited RegFlex program. However, the agency noted, some of the new RegFlex authorities will be limited to well-capitalized credit unions.

The NCUA said it would lay out information on the new authorities in an easy-to-reference table format, in a bid to help credit unions more easily determine which elements of RegFlex apply to them.

The RegFlex final rule will become effective 30 days after it is published in the Federal Register.

NCUSIF equity ratio up to 1.32

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ALEXANDRIA, Va. (5/25/12)--The latest National Credit Union Share Insurance Fund report, which was unveiled at Thursday's open board meeting, reflects the positive trends the credit union system is experiencing, the Credit Union National Association noted.

National Credit Union Administration (NCUA) Chief Financial Officer Mary Ann Woodson reported that the NCUSIF's equity ratio stood at 1.32% as of March 31, 2012. If the NCUSIF's equity ratio is above its normal operating level of 1.30% at year-end the excess must be transferred to the Temporary Corporate Credit Union Stabilization Fund to repay its borrowings. However, in response to a question from NCUA Board Member Gigi Hyland, Woodson said the agency anticipates the equity ratio will be 1.30% at the end of 2012.

The NCUA also reported that there were 396 CAMEL 4 and 5 credit unions, representing 2.98% of insured shares, or approximately $23.7 billion in assets, as of March 31. This is a decline from the 409 troubled credit unions that were reported as of December 31, 2011. CAMEL 4 and 5 credit unions held 3.31% of total insured shares at that time, totaling $26.3 billion in total assets, the NCUA said.

CAMEL 3 credit unions held 15.13% of insured shares as of March 31, and those shares represented $120.3 billion in funds.

Combined, insured shares in CAMEL 3, 4, and 5 credit unions represent approximately 18.1% of total insured shares, down from the 19.2% total reported at the end of 2011.

There have been 7 total credit union failures thus far in 2012, as compared to a total of 16 during 2011, the NCUA report said.

The Temporary Corporate Credit Union Stabilization Fund's total net position remained constant at negative $5.2 billion, and the fund recorded a net operating income of $20.8 million as of March 31, the agency said.

For more on the NCUA meeting, use the resource link.

TDR rule model of collaboration CUNA NCUA

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ALEXANDRIA, Va. (5/25/12)--The National Credit Union Administration's (NCUA) new Troubled Debt Restructuring (TDR) rule, which was approved at Thursday's open board meeting, is "a model of collaboration among the agency, the Credit Union National Association (CUNA), leagues and concerned credit unions," CUNA President/CEO Bill Cheney said, and he urged the agency to use this collaborative approach in future rulemakings.

Click to view larger image NCUA Director of Examinations and Insurance Larry Fazio (center left) tells NCUA Chairman Debbie Matz (center right) that the agency soon will issue a supervisory letter to credit unions to explain elements of the new TDR rules, and train examiners on the rules. The agency will also hold separate training webinars for examiners and credit union staff. Shown to Matz's right is NCUA board member Michael Fryzel; to the chairman's left is NCUA board member Gigi Hyland. (CUNA Photo)
TDR loans, which have very specific accounting and reporting requirements, include certain loan modifications where a credit union or other lender grants a concession to a borrower and modifies the terms of a loan based on the borrower's financial situation. The financial statement notes and call report data associated with TDRs are also unique.

Under the new rules, credit unions will soon be allowed to modify TDR loans without having to immediately classify those loans as delinquent. The new TDR rules, which will go into effect 30 days after they are published in the Federal Register, will set consistent standards for the management of loan workout arrangements that assist borrowers, and eliminate confusion between TDRs and other loan modifications. The rules also make some changes to loan status calculations, and require credit unions to to discontinue interest accrual on loans that are 90 days or more past their due date.

Credit unions will need to establish their own written policies for TDR management and loan workout arrangements, and NCUA Chairman Debbie Matz during the meeting said that credit unions will be given some freedom to design their own policies and plans.

Credit unions will need to develop new written loan workout policies by Oct. 1. Consistent with finance industry practices, credit unions will also need to discontinue interest accrual on loans that are 90 days or more past due, and establish requirements for returning such overdue loans to accrual status, the agency added.

The NCUA will revise its own call report data requirements to reflect the new TDR standards by Dec. 31.

Many credit unions have struggled to work with homeowners that cannot pay their mortgage due to financial difficulties, and Matz credited credit union trade associations and volunteers with first bringing this TDR issue to the agency's attention. Overall, she said fixing these issues was a "community effort."

The agency in its final rule adopted CUNA-recommended changes to the treatment of TDRs -- including ensuring the rule is consistent with U.S. generally accepted accounting principles--called GAAP-- and clarifying certain confusing terms.

NCUA Director of Examinations and Insurance Larry Fazio said the agency would soon issue a supervisory letter to credit unions to explain elements of the new TDR rules, and train examiners on the rules. The agency will also hold separate training webinars for examiners and credit union staff.

CUNA staff are reviewing the new TDR rule, with a particular eye on its treatment of member business loans.

For more on the NCUA meeting, use the resource link.

Inside Washington (05/24/2012)

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  • WASHINGTON (5/25/12)--The Federal Reserve Board on Wednesday announced the availability of a new video that explains how borrowers who believe they were financially harmed during the mortgage foreclosure process in 2009 and 2010 can apply for a free, independent foreclosure file review. Both English and Spanish versions of the video are available for viewing on the Federal Reserve Board's website and on YouTube. The brief announcement reminds borrowers that, as part of the enforcement actions taken in April by federal banking regulatory agencies, they may be eligible to receive compensation if the independent review finds evidence of direct financial injury due to servicer error. Borrowers are eligible for a review if their primary residence was in the foreclosure process in 2009 or 2010 and their mortgage loan servicer is participating in the Independent Foreclosure Review. The list of participating servicers can be found at: or at The deadline to request a foreclosure review is July 31 …
  • WASHINGTON (5/25/12)--The Senate on Thursday approved legislation that would extend the National Floor Insurance Program (NFIP), which is set to expire on May 31, until the end of July. It is uncertain if the U.S. House will schedule a vote on the 60-day extension when House members return from their district work period next week. However, the House did approve legislation that would extend the NFIP until the end of June last week. House and Senate members have both called for a long-term extension of the NFIP program, and for aspects of the program to be reformed...