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Freddie Mac reports uptick in 30- 15-year mortgage rates

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WASHINGTON (8/17/09)--Freddie Mac late last week reported that the average 30-year mortgage rate rose to 5.29% and the average 15-year fixed-rate loan increased to 4.68% during the week ended Aug. 13. Both average mortgage rates represented increases from 5.22% for the30-year average and 4.63% for the15-year average reported during the previous week, Freddie Mac said. Treasury yields also rose during the week, according to Freddie Mac. The government-sponsored mortgage lender reported inconsistent movement related to adjustable rate mortage (ARM )rates, with five-year ARM averages increasing to 4.75% and one-year ARMs dropping to 4.72%. Freddie Mac chief economist Frank Nothaft cited "better-than-expected economic reports” as reason for the reduced mortgage rates. “High levels of housing affordability" have also recently buffeted homebuyer demand, he added. Nothaft also reported that “declines in some local housing markets” seem to be “nearing an end.” CU Members Mortgage and some of its credit union partners last month reported a sharp increase in the number of closed mortgage loans, with 4,580 closed loans for $756 million during the first five months of 2009. The number of closures over this five-month period rose by 83.2% when compared with the same period in the previous year.

Credit CARD Act a hot topic for CUs back home

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WASHINGTON (8/17/09)--Although legislative action has been halted by the congressional district work period, state credit union representatives have continued to respond to the Credit Accountability, Responsibility and Disclosure (CARD) Act through advocacy and organizational efforts.
Missouri Credit union officials discussed their concerns regarding the CARD Act with district representatives. From left to right, Randy Yeck, Stan Moeckli, Linda Allen, Brian Eyestone, Franz Kohler, Howard Hoemann, Rosie Holub, Lisa Farnen, Brian Bass and State Representative Al Liese. (Photo provided by the Missouri Credit Union Association)
The Missouri Credit Union Association’s (MCUA) newsletter The Missouri difference last week reported that Missouri credit union representatives discussed their concerns regarding the Aug. 20 deadline set forth by the recently passed CARD Act with a representative of Rep. Todd Akin (R-Mo.). Stan Moeckli, president of St. Louis-based Electro Savings CU, during the meeting said credit unions should ensure that their members and legislators “understand” that credit unions support “the original intent of the CARD Act, to protect consumers against less than ethical practices enacted by some credit card issuers.” However, Moeckli added, it is the unintended impact that some language in the CARD Act would have on some credit union loan products that credit unions are working to change. “Ultimately the act as currently written will hurt consumers that use open-ended loans by making it next to impossible for lenders to comply with the law,” he said. The group of credit union representatives also included MCUA President/CEO Rosie Holub and Vice President of Public/Legislative Affairs Amy McLard, American Eagle FCU’s Charlie Waalkes, Anheuser-Busch Employees’ CU’s Dave Osborn, Arsenal CU’s Linda Allen, Southpointe CU’s Brian Eyestone, and Vantage CU’s Randy Yeck. They also discussed open-end lines of credit, member business lending (MBL), interchange fees and the Community Reinvestment Act (CRA) during the in-district meeting. MCUA and related credit unions have planned additional meetings with members of Congress and their staffers in the coming weeks. The Association of Vermont Credit Unions has also sought to actively address the CARD Act. Its Newslines Express on Friday reported that over two-thirds of the association’s member credit unions took part in a midweek conference call on the new rules. The conference call, which included representatives from the CUNA Mutual Group, Vermont State Employees CU, and New England FCU, discussed some of the options for complying with the CARD Act, including the use of multi-featured open-end lending. The assembled representatives echoed many of the sentiments expressed by the Missouri leagues and, more generally, by credit union industry participants. According to the Newslines Express, they also agreed that existing loan due dates should be shifted to the end of the month and that any account late fees and reporting of delinquent accounts by credit bureaus should be temporarily suspended. The Credit Union National Association continues to address the 21-day rule through discussions with legislators and the Fed, and has urged policymakers to limit the scope of the 21-day rule to credit cards or, at a minimum, to grant more time for compliance with the 21-day provision for open-end plans other than credit cards.

Inside Washington (08/14/2009)

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* WASHINGTON (8/17/09)--The Federal Deposit Insurance Corp. (FDIC) is acting quickly to finalize rules governing private-equity ownership of banks while dealing with the expected failures of $25 billion asset Colonial Bank, $14 billion asset Guaranty Bank and $7 billion asset Corus Bank (American Banker Aug. 14). However, many private-equity investors have questioned the “restrictive” nature of FDIC proposals that could increase the FDIC’s resolution costs and limit the number of potential investors. Industry members have questioned the FDIC’s approach, saying it should complete its guidance before any transactions related to the three banks can take place. While some question the FDIC’s future willingness to negotiate separate deals with private-equity investors, others say the agency would have little choice but to cut separate deals with private-equity investors that wish to purchase portions of Colonial, Guaranty, or Corus. There is speculation that many have already bid on Guaranty … * WASHINGTON (8/17/09)--The Federal Home Loan banks (FHLBs) have taken issue with a report commissioned by the system's Office of Finance. The report indicates that the scattered nature of the FHLB system, which spans 12 districts nationwide, is harming the transparency and consistency of accounting within the system. While the report advocated “centralized management and control” of the FHLB system, FHLB Office on Finance CEO John Fisk said that the FHLBs could achieve the needed transparency and consistency “in a combined financial structure within the decentralized structure of the 12 home loan banks" (American Banker Aug. 14). Council of Federal Home Loan Banks President John von Seggern suggested that any decision related to centralization of the bank system should be made by the members ... * WASHINGTON (8/17/09)--As of July, Fannie Mae and Freddie Mac have refinanced almost 1.9 million loans through the Making Home Affordable Refinance Program (HARP), said the Federal Housing Finance Agency (FHFA). Under HARP, borrowers whose loan-to-value (LTV) ratio is 80% up to 105% are able to refinance without added mortgage insurance requirements. FHFA recently announced the expansion of HARP to allow borrowers with LTVs up to 125% to participate. Fannie Mae will begin accepting deliveries of refinanced loans with LTVs over 105% up to 125% as of Sept. 1. Freddie Mac will accept deliveries of these loans Oct. 1 ... * WASHINGTON (8/17/09)--Fannie Mae and Freddie Mac should engage in mortgage buyouts to avoid advancing unpaid interest to investors, which costs taxpayers, according to Ajay Rajadhyaksha, Barclays PLC analyst. About $600 billion of loans at the enterprises are 90 days or more delinquent, which equals $12 billion in interest if the rate is 6%, he said. However, the buyouts would erode the enterprises’ capital because they would write down the mortgages to discounted market prices (American Banker Aug. 13). The losses would force Fannie and Freddie to increase their use of a government backstop. But the buyouts could encourage Fannie and Freddie to modify their mortgages, said Chris Dickerson, deputy director for enterprise regulation at the Federal Housing Finance Agency. Arthur Frank, director of mortgage-backed securities research at Deutsche Bank Securities, said the savings on interest is small next to the amount lost in defaults ... * WASHINGTON (8/17/09)--Plans to overhaul the financial system are on track, according to Treasury Secretary Timothy Geithner. In an interview with The Wall Street Journal, he noted that the Obama administration also will not allow Wall Street to take on more risk than it can handle. The financial system is not reverting back to past practices. The administration “won’t let that happen,” Geithner said (The Wall Street Journal Aug. 14). Some large financial institutions, including Goldman Sachs, have recently recorded record profits. Achieving stability means that people can raise money, equity, and borrow more at lower rates, and it’s good that core parts of the nation’s financial system look profitable, Geithner said ... * WASHINGTON (8/17/09)--Joseph Murin, Ginnie Mae president, is set to step down this week to start a strategic advisory and consulting firm (Reuters Aug. 13). No successor has been named. The agency, the Government National Mortgage Association, guarantees investors payment of principal and interest on mortgage-backed securities that are backed by guaranteed or federally insured loans ...

Minn. CEO gives CU perspective on health care reform

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ROCHESTER, Minn. (8/17/09)--Kelly McDonough, president/CEO of First Alliance CU in Rochester, Minn., was chosen to participate in a roundtable discussion on health care reform Tuesday with U.S. Rep. Tim Walz (D-1). The group, picked by Walz, consisted of six Minnesota constituents who offered their perspectives on America’s health care system. Each constituent provided opinions on the strengths and weaknesses of the current health care system during the private meeting. McDonough noted that each year it is more difficult for her credit union to continue offering the same level of insurance to its staff because of rising health care costs. She explained that while providing quality medical coverage to employees is important to First Alliance, the cost of offering this benefit is “staggering.” “The meeting was an excellent opportunity to meet with Congressman Walz to discuss health care reform,” McDonough said. “It was encouraging to see that he is considering the impact this issue has on not only big businesses but also small, not-for-profit organizations like [First Alliance CU]. “As leaders in the community, [credit unions] need to be informed about legislative issues and the ramifications they will have on our businesses and communities,” McDonough added. “It is our responsibility to be engaged in the political process and to advocate for what we need [to serve members].” Also, McDonough has been a strong supporter of the Minnesota Credit Union Network’s (MnCUN) political initiatives, hosting numerous “meet and greet” events for Walz and visiting elected officials during legislative visits in St. Paul and Washington, D.C. “Through regular communications with elected officials, Minnesota credit unions aim to serve as reliable sources of information on issues that directly and indirectly affect the industry and its ability to serve members,” said Mark D. Cummins, MnCUN president/ CEO. “Kelly’s relationship with Congressman Walz demonstrates the impact credit unions can have on the legislative process by simply meeting and forming relationships with elected officials.”