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Washington Archive

Washington

Mortgage regs must ensure consumers access to credit CUNA says

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WASHINGTON (7/25/11)--The Credit Union National Association has urged the Federal Reserve to clarify portions of proposed Truth in Lending Act (TILA) changes to “ensure continued consumer access to mortgage credit at fair rates and to avoid unnecessary regulatory burden and unintended consequences.” The Fed changes, which are required under the Dodd-Frank Act, would expand TILA’s ability-to-repay requirements to cover any consumer credit transaction secured by a dwelling, other than open-end credit plans, timeshare plans, reverse mortgages, or temporary loans. CUNA in a Friday comment letter said it generally supports the proposal, but asked the Fed to clarify portions of the proposal addressing lower-documentation loans. A proposed “evasion” prohibition could also be clarified, as the prohibition, as written, could lead some credit unions to believe they cannot offer many open-end mortgage products to their members. While it backed the Fed’s ability-to-repay analysis standards, CUNA added that these standards will cause few issues for credit unions, as they “have historically engaged in safe and sound mortgage underwriting. “Requiring all mortgage lenders to follow similar ability-to-repay mortgage underwriting criteria will help eliminate abusive practices” and make it easier for consumers to compare mortgage products, CUNA added. CUNA also encouraged the Fed to delay the compliance date for these requirements. For the full comment letter, use the resource link.

Senate approves Year of Co-op resolution

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WASHINGTON (7/25/11)--The U.S. Senate on Friday officially joined the United Nations in observing 2012 as the International Year of Cooperatives (IYC) by passing a resolution. The resolution was introduced earlier this year by Sens. Tim Johnson (D-S.D.) and Thad Cochran (R-Miss). The Credit Union National Association (CUNA) earlier this year wrote senators seeking their support for the resolution, which promotes the establishment of a 2012 International Year of Cooperatives committee and generally highlights the benefits that cooperative businesses provide to the nation. The IYC will officially begin on Oct. 31, 2011 when the U.N. Secretary General gives a speech before the United Nations General Assembly. Recognition events will then extend throughout the remainder of 2011 and into 2012. The theme for the international year is "Cooperative Enterprises Build a Better World." CUNA and the World Council of Credit Unions have already dovetailed that theme with this year's International Credit Union Day on Oct. 18, whose theme is "Credit Unions Build a Better World." CUNA last month approved its own recognition resolution, pledging to "lead efforts to engage the credit union community in the promotion of International Year of Cooperative Activities." CUNA is also taking part in a National Cooperative Business Association-led steering committee that will work to raise the profile of cooperatives, improve access to cooperative business, and reach out to government officials and the youth of the world to educate them on cooperative business. The 7,400 U.S.-based credit unions represent the largest segment of the more than 29,000 American cooperative businesses, holding nearly $1 trillion in assets and serving more than 92 million consumers.

Alternative mortgage changes would not harm CUs CUNA

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WASHINGTON (7/25/11)--The Consumer Financial Protection Bureau’s interim final rule that amends the Alternative Mortgage Transaction Parity Act (AMTPA), which became effective on July 22, would only impact a minimal number of state-chartered credit unions, the Credit Union National Association said. So-called “alternative-mortgage transactions” are transactions in which the interest rate or finance charge may be adjusted or renegotiated. Mortgages that feature adjustable interest rates, negative amortizations, balloon payments, shared equity, or shared appreciation are among these alternative transactions. Under AMTPA, state-chartered credit unions are permitted to take part in these types of mortgages, regardless of their home state’s laws. However, the mortgages must also meet standards set by the National Credit Union Administration. The CFPB’s AMTPA changes would remove portions of the Act that allowed credit unions and other institutions to make negative amortization or balloon payment mortgages. Some other preemption authorities that were granted under the Act would also be scaled back, as AMTPA would only preempt state laws that limit interest rate or finance charge changes. AMTPA also would not preempt state laws addressing late fees, rate increases due to late payment, prepayment penalties, interest-only payment periods, and negative amortization, According to CUNA, state-chartered credit unions that are permitted to follow federal mortgage regulations, or credit unions that elected to opt out of AMTPA, will not be impacted by the changes. CUNA has communicated with credit unions on the issue, and continues to monitor the progress of the AMTPA changes. The CFPB is accepting public comment on the AMTPA changes until Sept. 22. For more, use the resource link.

CDFI Saguache County CU placed under conservatorship

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ALEXANDRIA, Va. (7/25/11)--The National Credit Union Administration (NCUA) assumed control of the operations of $17/7 million-asset Saguache County CU Friday. The credit union is a state-chartered and federally insured credit union, and headquartered in Moffat, Colo. The Commissioner of the Colorado Division of Financial Services appointed the NCUA as conservator for Saguache County and took that step due to the credit union’s declining financial condition. While continuing normal member services, the NCUA will work to resolve issues affecting the institution’s safety and soundness. Saguache County Credit Union was identified as a Community Development Financial Institution by the NCUA, and is described as a full-service credit union that serves the residents of Saguache County, Colo. Its 3,165 members can continue to conduct normal financial transactions at each of Saguache County’s three branch locations during the conservatorship. The Federal Credit Union Act authorizes the NCUA Board to accept appointment as conservator when necessary to conserve the assets of a federally insured credit union, protect members’ interests, or protect the NCUSIF. Saguache County is the ninth federally insured credit union placed into conservatorship during 2011.

Conserved Arrowhead Central CU reports 2Q improvements

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ALEXANDRIA, Va. (7/25/11)—The National Credit Union Administration (NCUA) reported Friday that Arrowhead Central CU of San Bernardino, Calif., operating under conservatorship of the agency, posted improved financial results for the second quarter of the year. As of June 30, reported net income of $11.3 million and improved its net worth to 5.06% of assets, up from 3.44% at Dec. 31, 2010. Total assets at the end of the second quarter were $681 million compared to $808 million for the same period last year. The NCUA said trends are moving upward at an accelerated pace through continued focus on “diligent expense management, operational efficiencies and improved lending results.” Since June 2010, the NCUA said, the agency as interim management team, and Arrowhead Central employees have worked to “dramatically” improve the credit union’s financial condition and maintain services for the credit union’s more than 124,000 members. “The priority has always been to restore the credit union’s net worth and to remain operational for its members,” said Jane Walters, NCUA Region II Director. “We are working to not only improve Arrowhead’s financial condition, but to implement ways to bring more value to its membership. We are working to develop more member-friendly products and service excellence, to maintain a strong presence in the community, and to help our members share in our success with their own financial growth. We see significant progress in all of these efforts, and we are very encouraged by the credit union’s positive financial results.” Arrowhead Central, established in 1949, is a full-service financial institution and one of the area’s largest credit unions.

Inside Washington (07/22/2011)

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* WASHINGTON (7/25/11)--On the one-year anniversary of the Dodd-Frank Act, Democrats and regulators warned Congress that Republican efforts to cut funding and limit regulatory changes would undermine the law’s intent (American Banker July 22). Although the financial industry would prefer to have fewer regulations, regulators need resources to clarify the law’s requirements for financial firms, Rep. Barney Frank (D-Mass.) told the Senate Banking Committee. Frank said “the worst of all worlds” would be to have regulations that regulators did not have resources to hire the right people to enforce or obtain the necessary technology to carry out. Gary Gensler, chairman of the Commodity Futures Exchange Commission (CFTC), said his agency is charged with regulating a market that is seven times larger than it has previously overseen. However without sufficient funds, the CFTC will have fewer resources to police the market, he said. The Securities and Exchange Commission (SEC) also needs more resources for its increased responsibilities or the industry will suffer for the agency’s lack of effectiveness, SEC Chairman Mary Schapiro said … * WASHINGTON (7/25/11)--An audit of the Federal Reserve’s emergency lending programs by the Government Accountability Office (GAO) did not find any significant accounting or financial reporting issues with the emergency programs the Fed took to deploy trillions of dollars to hold up the faltering financial system. The audit, mandated by the Dodd-Frank Act and released Thursday, did reveal some conflicts that arose when the Fed undertook actions during the financial crisis (American Banker July 22). For example, William C. Dudley, the president of the Federal Reserve Bank of New York who was a senior official there in 2008, owned stock in American International Group, one of the financial giants that was bailed out by the Fed during the crisis. Dudley maintained ownership of the shares while working on the bailout. The GAO report did not mention Dudley by name, but Sen. Bernie Sanders (I-Vt.), who led the audit, identified him as the unnamed official in the report. The GAO also recommended that the Fed develop more rigorous policies for hiring independent contractors to manage investments. The report found that lines of authority between the Fed’s Board of Governors in Washington and the 12 regional Fed banks lacked clarity during the crisis …