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NEW: CUNA: CUs Need Relief Found In PATH Act Draft

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WASHINGTON (7/17/13, UPDATED 1:55 p.m. ET)--Credit unions strongly support the regulatory relief provisions found in a new draft bill on housing policy reform unveiled last week by House Financial Services Committee Chairman Jeb Hensarling (R-Texas), and also back many other positive aspects of the legislation, according to the Credit Union National Association.
 
In a statement to be submitted Thursday for a hearing on that bill, called the "Protecting American Taxpayers and Homeowner (PATH) Act of 2013," CUNA President/CEO Bill Cheney wrote that credit unions' strong support includes a provision to delay the mandatory implementation of all Dodd-Frank Act mortgage rules for an additional year.
 
"The compliance obligations imposed by the mortgage rules are simply overwhelming to many credit unions, especially America's smallest credit unions, and the tight timeframe for compliance puts the availability of mortgage credit--and thus America's nascent housing recovery--at risk. 
 
"Another year would ensure that mortgage credit remains available to millions of credit union members while credit unions all over the country continue to understand how to implement the most sweeping regulatory changes to mortgage lending in U.S. history, and would be welcome relief to credit unions," the CUNA leader wrote.
 
Cheney also said credit unions appreciate that the PATH Act recognizes that portfolio lending should not be treated the same for purposes of designing a regulatory framework for a housing finance system, a recognition that would provide "extraordinary relief for credit unions." Historically, credit unions have been portfolio lenders, holding 60-75% of the mortgages they write on the books in most years prior to the financial crisis. 
 
The PATH Act would exempt any residential mortgage held on the balance sheet of the originating creditor from the Home Mortgage Disclosure Act, eliminate the requirement to set up an escrow account for higher-priced mortgage loans held in portfolio, and relieve credit union portfolio loans of many of the requirements of the Dodd-Frank Act that will be very burdensome and costly to implement. This importantly includes the ability-to-repay and Qualified Mortgage requirements. 
 
However, Cheney added, CUNA does have preliminary concerns on behalf of credit unions regarding some provisions of the PATH Act. For example, CUNA has serious concerns that the PATH Act may not provide credit union members with a sustainable secondary market that can provide the necessary liquidity and structure which will ensure the continuation of long term fixed rate mortgage products.
This is of particular concern for credit unions because more than 83% of credit union mortgages issued since 2008 have been fixed-rate mortgages; this signifies particularly strong member demand for a fixed-rate mortgage product. 
 
The PATH Act hearing start at 1 p.m. (ET) July 18. In general, the bill seeks to minimize government involvement in the secondary market, limit taxpayer liability, foster innovation and allow for more private-sector capital in the marketplace.  Additionally, the bill strives to provide equal access to all financial institutions regardless of asset size. 
 
Use the resource links to access the CUNA letter when it is posted to the CUNA website and to read more about today's hearing.

CUNA Urges Congress To Get Tough On Patent 'Trolls'

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WASHINGTON (7/17/13)--The Credit Union National Association says there is a deep need for patent reforms due to the growing impact of abusive litigation, and the group has signed on to a letter to Congress supported by 42 trade associations in Washington, D.C., urging statutory changes.
 
"We are concerned with the issue because credit unions have become a target of patent trolls," CUNA Deputy General Counsel Mary Dunn said Tuesday. "The past year has seen an increase in litigation and demands involving low-quality patents in an effort to extract settlements from credit unions.  This is an abuse of the patent system.  Credit unions aren't out there stealing someone's ideas--they are buying technologies from vendors in order to better serve their members. They should not be sued for doing that." 
 
The volume of lawsuits against credit unions related to patents is on the rise.  For example, four Texas credit unions were sued in late May over certain check processing technologies by a company that has spent years targeting the nation's largest banks (News Now May 30).  Last year, credit unions were sued over certain Internet security technologies for mobile transactions on smartphones (News Now July 13, 2012). 

CUNA is aware that many more credit unions have received demand letters, Dunn said.  These letters will claim that the credit union has infringed a patent, and offer a credit union the opportunity to settle, threatening litigation if the credit union doesn't agree.  CUNA is aware of demands against credit unions for patents ranging from ATMs to WiFi offered to members in a credit union's lobby.

The joint trade group letter shares some disturbing statistics:
  • Since 2005, the number of defendants sued by patent trolls has quadrupled;
  • Last year, patent trolls sued more than 7,000 defendants and sent thousands more threat letters;
  • The activity cost the U.S. economy $80 billion in 2011, and productive companies made $29 billion in direct payouts; and
  • Moreover, trolls no longer sue only large tech corporations. Small and medium-sized businesses of all types, including start-ups, are now the most frequent targets.
The trades said they are pleased to see bills that have been introduced in Congress to address the problem, but warned "(t)here is no single solution to this complex question."
 
In addition to CUNA, the joint letter was signed by the Financial Services Roundtable, American Bankers Association, the Independent Community Bankers Association, and groups as diverse as the American Gaming Association, Food Marketing Institute, Motion Picture Association of America, National Retail Federation, and Retail Industry Leaders Association.

CUNA Offers Detailed ATR/QM Webinar On July 18

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WASHINGTON (7/17/13)--A July 18 Credit Union National Association webinar on the Ability-to-Repay rule and its associated Qualified Mortgage rule will reach well beyond an overview and help credit unions understand the "fine print" of the new Consumer Financial Protection Bureau requirements.

The two-hour session that starts at 2 p.m. (ET) will also detail the rules' practical implementations, its "points and fees" issue, and more.

The CFPB's finalized corrections, clarifications, and amendments to its Ability-to-Repay and mortgage servicing rules, issued July 10, will also be covered during the webinar.

Use the resource link for more information or to register.
 

Magill: No Bankers' Holiday On CU Attacks

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WASHINGTON (7/17/13)--The banks will not take a holiday from their attacks on the credit union tax status as the July 26 deadline for all suggestions for tax reform legislation nears, and their fervor, says John Magill, who heads up the Credit Union National Association's government affairs department, must be more than met by credit union advocates who understand the public policy value of the tax exemption.

CUNA sent a letter to all senators Tuesday to keep up the steady hum of voices that urge "Don't tax my credit union." CUNA and the state credit union leagues launched an advocacy campaign of that name in May and it has sparked more than 340,000 Capitol Hill contacts by credit union supporters to date.

"Credit unions and their members must keep up this momentum on the tax issue because the banks will turn themselves inside out trying to get traction at this critical time," Magill said Tuesday. He noted that the American Bankers Association sent another screed to lawmakers just this week.

"Although the banks' anti-credit union rhetoric may be seen as time-worn, weary, and debunked by many, it is up to credit unions and their members to make sure every policymaker sees clearly that a tax on credit unions would be a tax on 96 million Americans who belong to credit unions."

Magill emphasized that the tax treatment of credit unions continues to serve the purpose for which it was created--promoting financial choices for consumers and small businesses. Credit unions return any benefits to members through higher returns on savings, lower rate on loans, and most importantly, low or no fees.

"These benefits, combined, can result in more than $8 billion in direct financial benefits each year to the 96 million Americans who belong to credit unions and others who derive benefits due to the competitive force credit unions provide in the financial market place," Magill reminded.

The CUNA letter sent Tuesday, which made all the points above, also underscored to lawmakers that while the benefits of the credit union tax status to American taxpayers is great, taxing credit unions would only account for 0.06% of this year's deficit.

In other words, CUNA wrote, it would take 1,600 other such sources of a similar size to eliminate the deficit: It would fund the federal government for barely more than one hour.

Senate Confirms Cordray For Five-year Term

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WASHINGTON (7/17/13)--It is official: the U.S. Senate voted last night 66 to 34 to confirm Richard Cordray to be the director of the Consumer Financial Protection Bureau for a five-year term.

Cordray was first nominated in July 2011 and has been serving as director since President Obama placed him in the position as a recess appointment in January 2012.
 
The president took that route after many Senate Republicans vowed they would oppose any nominee unless the CFPB's funding and leadership structure were changed.  However, the vote went forward Tuesday after the GOP agreed to allow a vote as part of a broader Senate deal on other pending nominations.
 
In a letter to the director, Credit Union National Association President/CEO Bill Cheney immediately congratulated Cordray on his confirmation and noted that CUNA and credit unions look forward to continue working with him and his senior staff to protect consumers while minimizing credit unions' regulatory burdens.  

In a statement  Cheney added, however, "We remain very concerned about the impact that a number of the Consumer Financial Protection Bureau's regulations and proposals will have on credit unions, which were never the focus for the creation of the agency in the first place."

He added, "Director Cordray has proven himself to be receptive to credit unions and particularly our concerns about the impact of the actions on our cooperative financial institutions. In fact, on a number of occasions, he has been willing to make positive rule changes even after a regulation has been adopted--a very rare occurrence for a regulator.

"Nevertheless, we urge the CFPB to utilize its broad exemption authority for credit unions given that 'we didn't cause the problem,' and recommend to Congress that it support broad exemption authority for credit unions."

Metsger Nomination Vote Moved To Thursday

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WASHINGTON (7/17/13)--Senate Banking Committee staff have confirmed that the panel moved yesterday's expected vote on the nomination of Richard Metsger to be a member of the National Credit Union Administration to Thursday. 

Also on that day's agenda are the nomination votes for Rep. Mel Watt (D-N.C.) to be director of the Federal Housing Finance Agency, Jason Furman, to be a member and chairman of the Council of Economic Advisers; Kara Stein, Michael Piwowar, and Mary Jo White, to be members of the Securities and Exchange Commission.

House, Senate Keep Housing-GSE Reform As Hot Topic

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WASHINGTON (7/17/13)--The chairman and the ranking member of the Senate Banking Committee have released a discussion draft of a bill intended to ensure stability in the nation's mortgage market and protect taxpayers.
 
Also in the housing-policy reform arena, legislation that would wind down government-sponsored enterprises Fannie Mae and Freddie Mac and make other changes to the housing finance system has been introduced in the U.S. Senate, and House Financial Services Committee Chairman Jeb Hensarling (R-Texas) unveiled a similar House bill late last week.
 
A hearing on the Hensarling bill is scheduled today.
 
Sens. Tim Johnson's (D-S.D.) and Mike Crapo's (R-Idaho) new draft bill is titled the Federal Housing Administration Solvency Act of 2013.
 
When he released the discussion draft Tuesday, Johnson said in a release, "Our bill will give the FHA the tools it needs to get back on stable footing and strengthen a program important to many Americans."
 
The Johnson-Crapo bill seeks to give the Federal Housing Administration (FHA) tools to improve its financial condition, including strengthened underwriting standards, enhanced lender accountability measures, and reforms to the FHA's reverse mortgage program.

The bill also would:
  • Create a higher minimum capital reserve requirement for the Mutual Mortgage Insurance Fund of 3%. If certain targets are not met as the ratio builds, the FHA's parent agency, the Department of Housing and Urban Development (HUD), would be required to take immediate action to address the shortfall while keeping Congress fully informed;
  • Require that minimum annual mortgage insurance premiums improve the long-term solvency of the FHA program by covering FHA loans' expected risk and maintain the capital reserve ratio; and
  • Require HUD to evaluate and revise as needed underwriting standards using criteria similar to the Consumer Financial Protection Bureau's Qualified Mortgage rule.

NEW: CUNA To Testify July 23 On Housing Reform In Senate

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WASHINGTON (7/17/13, UPDATED 9:04 a.m. ET)--Bill Hampel, chief economist of the Credit Union National Association, is scheduled to testify July 23 before a Senate Banking subcommittee on the topic of  "Creating a Housing Finance System Built to Last: Ensuring Access for Community Institutions."
 
The hearing, called by the subcommittee on securities, insurance and investment, is scheduled for 90 minutes starting at 3 p.m. (ET).
 
There will be two sets of witnesses.  The first panel includes a single witness:  Sandra Thompson, deputy director, Division of Housing Mission and Goals, Federal Housing Finance Agency.
 
In addition to CUNA's Hampel, the second panel is expected to include : Jack A. Hartings, president/CEO, The Peoples Bank Company on behalf of the Independent Community Bankers of America; Andrew J. Jetter, president/CEO, Federal Home Loan Bank of Topeka; and Michael Middleton, chairman/CEO of Community Bank of Tri-County, on behalf of the American Bankers Association.
 
CUNA has told housing policy makers, through letters to the Obama administration and in earlier congressional testimony, that the needs of credit unions and other small mortgage lenders must be considered as the country moves forward on needed reforms.