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Washington

FHFA Reaches Out To More HARP-eligible Homeowners

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WASHINGTON (9/24/13)--HGTV personality and star of "Power Broker" Mike Aubrey has signed on with the Federal Housing Finance Agency to help spotlight the agency's nationwide effort to better educate underwater homeowners about the mortgage relief that may be sought through the Home Affordable Refinance Program (HARP).
 
"To date, more than 2.8 million homeowners have refinanced through HARP," said FHFA Acting Director Edward J. DeMarco. "With the launch of this campaign we look forward to reaching those homeowners who may not know about the program or understand the eligibility criteria to take advantage of today's low interest rates by refinancing through HARP."
 
As part of this campaign, FHFA has launched a new website, www.HARP.gov, and is working with mortgage companies across the U.S.


To be eligible for a HARP refinance, homeowners must meet the following criteria:
  • The loan must be owned or guaranteed by Fannie Mae or Freddie Mac;
  • The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009;
  • The current loan-to-value (LTV) ratio must be greater than 80%; and
  • The borrower must be current on their mortgage payments with no late payments in the last six months and no more than one late payment in the last 12 months.
The FHFA and the U.S. Department of the Treasury introduced HARP in early 2009 as part of the Making Home Affordable program.

NEW: NCUA, Fed Agencies Release Elder Abuse Prevention Guidance

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WASHINGTON (9/24/13, UPDATED: 12:35 P.M. ET)--The National Credit Union Administration today joined six other federal financial regulators to clarify that financial institutions may report suspected elder financial abuse to appropriate authorities.

This reporting authority is provided under the Gramm-Leach-Bliley Act, the agencies said in a release. The NCUA and others emphasized that financial institution employees can report suspected irregular transactions, account activity, or other behavior that signals financial abuse. Suspected elder financial abuse may be reported to local, state or federal agencies, they said.

"Older adults can be attractive targets for financial exploitation and may be taken advantage of by scam artists, financial advisors, family members, caregivers, or home repair contractors," and recent studies have shown that a small number of financial abuse acts are in fact reported, the agencies noted.

The Federal Reserve, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, Federal Trade Commission, Office of the Comptroller of the Currency and the Commodity Futures Trading Commission joined the NCUA in issuing guidance.

For more, see Wednesday's News Now.

Oct. 2 Is Virtual Rally On 'Don't Tax My CU'

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WASHINGTON (9/24/13)--A national virtual rally--where credit union members and advocates from across the country will light up social media in support of the "Don't Tax My Credit Union" campaign via Twitter and Facebook--has been announced by the Credit Union National Association for Oct. 2.

There will be an accompanying physical rally at Credit Union House in Washington, D.C., between 2 p.m. and 3 p.m. (ET), and that event will be live streamed at www.DontTaxMyCreditUnion.org and on The Hill newspaper website.

CUNA is expecting tens of thousands of supporters to be in virtual attendance. "Rather than rallying supporters at the National Mall--like so many campaigns do--this movement will rally tens of thousands of credit union members nationwide online," said Bill Cheney, president/CEO of CUNA.  CUNA and the state credit union leagues launched the Don't Tax My Credit Union Advocacy campaign in May, across the backdrop of national political debate on revising the country's tax code.

Participants will be encouraged to use the various Take Action tools at www.DontTaxMyCreditUnion.org to show their support via  tweets, pictures, vine videos, and e-mails to their members of Congress, all with the #DontTaxMyCU hashtag. The physical rally at Credit Union House will feature several speakers, including Steve Pociask of the American Consumer Institute.

The event will be moderated by Paul Berry, an award-winning journalist and radio and television personality in the Washington, D.C., area--and long-time Govermental Affairs Conference MC--and also will feature remarks by Cheney, Paul Gentile, Bill Hampel, John Magill, and Ryan Donovan of CUNA. Other participants, speakers and interviews from all over the country will join in remotely using video conferencing.

The initiative urges lawmakers as part of any final tax reform plan to preserve the federal tax exemption credit unions receive as not-for-profit, member-owned cooperatives. To date, the campaign has generated over 900,000 messages to members of Congress--15,000 of which have come via social media.

CUNA Analysis Details CFPB Mortgage Amendments

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WASHINGTON (9/24/13)--Details of the Consumer Financial Protection Bureau's (CFPB's) final rule that amends its Ability-to-Repay, Mortgage Servicing and Mortgage Loan Originator Rules are laid out in a new Credit Union National Association Final Rule Analysis.
 
The CFPB amended and clairified parts of the mortgage rules to ensure a smoother implementation process in 2014.

 Topics outlined in the final rule analysis include:
  • The small creditor exemptions;
  • How credit insurance premiums are "financed" by a creditor when the creditor allows the consumer to defer payment of the premium past the month in which it is due;
  • Specific procedures for servicers to follow if they fail to identify and inform a borrower upon an initial review that certain information is missing from a borrower's loss mitigation application;
  • Modifications that make it easier for servicers to offer short-term forbearance plans for delinquent borrowers who need only temporary relief without going through a full loss mitigation evaluation process. Servicers, upon reviewing an incomplete loss mitigation application, may provide a 6-month forbearance to a borrower who is suffering a short-term, temporary hardship; and
  • The circumstances under which a loan originator's or creditor's administrative staff acts as loan originators.
For the full CUNA analysis of the CFPB final rule, use the resource link.
 
CUNA members can also access a compilation of CUNA compliance resources available to help credit unions work through all the regulations' requirements.

NCUA Sues 13 Alleging LIBOR Manipulation

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ALEXANDRIA, Va. (9/24/13)--The National Credit Union Administration Monday filed suit in federal district court in Kansas against 13 international banks, including J.P. Morgan Chase. The suit alleges violations of federal and state anti-trust laws transacted by manipulation of interest rates through the London Interbank Offered Rate (LIBOR) system.
 
The NCUA said in a release that manipulation of LIBOR, the benchmark for setting interest rates around the globe, resulted in a loss of income from investments and other assets held by five failed corporate credit unions: U.S. Central, WesCorp, Members United, Southwest and Constitution.  
 
"We have a responsibility to pursue recoveries through every available avenue against those who caused billions of dollars in losses to credit unions," NCUA Chairman Debbie Matz said, announcing the suit. "Some firms were manipulating international interest rates in a way that cost the five corporates to lose millions of dollars. Just as we are doing in our other suits, we are seeking to hold responsible parties accountable for their actions."
 
NCUA claims the defendants in today's action individually and collectively gave false interest-rate information through the LIBOR rate-setting process "to benefit their investments that were tied to LIBOR, to reduce their borrowing costs, to deceive the marketplace as to the true state of their creditworthiness, and to deprive investors of the interest rate payments to which they were entitled." The false information created the impression the defendant banks were borrowing money at a lower interest rate than they were actually paying, the NCUA said.
 
The agency said that although more than 40 suits have been filed in relation to the LIBOR manipulation, the  CUA is one of the first federal financial regulators to sue in this area.  
 
LIBOR is the average daily interest rate a group of leading financial institutions pay when they borrow from one another. The rate is set daily for 10 currencies around the world and affects interest rates on trillions of dollars of financial transactions of various kinds.
 
Recoveries from NCUA's legal actions will further reduce the total losses resulting from the failure of the corporate credit unions. Losses from those failures must be paid from the Temporary Corporate Credit Union Stabilization Fund. All federally insured credit unions repay expenditures from the stabilization fund through assessments, so any recoveries would help reduce future assessments on credit unions, the NCUA noted.
 
Corporate credit unions are wholesale credit unions that provide various services to retail credit unions, which in turn serve consumers, or "natural persons." Retail credit unions rely on corporate credit unions to provide them such services as check clearing, electronic payments, and investments.

See related story: NCUA Sues Morgan Stanley and Eight Others over Faulty Securities.
 
Use the resource link to access the NCUA website.

Myra Toeppe To Be Region III Director

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ALEXANDRIA, Va. (9/24/13)--Myra Toeppe will replace Region III Director Herb Yolles when he retires at the end of this year, the National Credit Union Administration reported today.

Toeppe is the NCUA's current acting director of supervision in the Office of Examination and Insurance. She joined the NCUA in 2011 as associate regional director for operations in Region III. She has also served at the Office of Thrift Supervision and the Federal Home Loan Bank of Atlanta during her 25-year government career.

NCUA Chairman Debbie Matz said Toeppe is "a highly experienced financial services regulator" who "has quickly established herself as a leader and a problem solver." Her skills and experience, combined with a dedication to excellence, will make her a terrific regional director, Matz added.

New NCUA board member Rick Metsger noted he and Toeppe "have both taken new positions at NCUA during a time of opportunity and challenge for the industry. "I'm confident that Myra will bring new ideas, a fresh set of eyes and a balanced approach to address the problems facing federally insured credit unions in Region III," he said.

The agency also thanked Yolles for his 35 years of service to the NCUA. He has worked with every NCUA board member since Congress created the NCUA Board in 1978, the agency noted.

"During more than three decades at NCUA and especially the last three-and-a-half years in Region III, Herb has truly seen it all and practically done it all. To ensure continued access to affordable financial services for millions of Americans, Herb has been tireless in his efforts to make the credit union industry safe and sound," Matz said.

NCUA Sues Morgan Stanley and Eight Others Over Faulty Securities

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ALEXANDRIA, Va. (9/24/13)--Morgan Stanley & Co. Inc. and eight other institutions were the subjects of nine lawsuits filed Monday by the National Credit Union Administration in federal district court in New York. The lawsuits were over the sale of nearly $2.4 billion in mortgage-backed securities to Southwest and Members United corporate credit unions.
 
The agency also filed suit in federal district court in Kansas Monday against 13 international banks, including J.P. Morgan Chase. That suit alleges violations of federal and state anti-trust laws transacted by manipulation of interest rates through the London Interbank Offered Rate--LIBOR--system. (See related story: NCUA Sues 13 Alleging LIBOR Manipulation.)
 
Both actions, said NCUA Chairman Debbie Matz in releases announcing the suits, reflect the agency's responsibility to pursue recoveries against those whom the NCUA charges caused billions of dollars of losses to credit unions.
 
"All the credit unions we supervise and insure are sharing those costs. The people who are responsible should be required to shoulder that burden, as well," Matz said.
 
According to the NCUA, in all, five corporate credit unions failed as a result of the purchase of faulty mortgage-backed securities. The agency said the defendants in the cases file in New York--Morgan Stanley & Co., Inc. and Morgan Stanley Capital I Inc., Barclays, J.P Morgan/Bear Stearns, Credit Suisse, Royal Bank of Scotland and UBS--sold faulty securities to both corporate credit unions. And Goldman Sachs, Wachovia and Residential Funding Securities LLC, now Ally Securities, sold faulty securities to Southwest. The suits make claims under either federal or state securities laws. 
 
Southwest and Members United corporate credit unions paid more than $416 million for the securities in question in the Morgan Stanley suit and more than $1.9 billion for securities sold by the other defendants, the NCUA said.
 
The agency said its suits allege the firms made misrepresentations in connection with the underwriting and subsequent sale of the mortgage-backed securities. The corporate credit unions became insolvent, were subsequently placed into NCUA conservatorship and later liquidated as a result of losses from these faulty securities. These failures subsequently caused significant losses to the credit union system.
 
NCUA's complaints allege the offering documents of the securities sold to the failed corporate credit unions contained statements that were not true or omitted material facts. The originators systematically abandoned the stated underwriting guidelines in the offering documents, according to the complaints, with the result that the securities were significantly riskier than represented.
 
NCUA was the first federal regulatory agency for depository institutions to recover losses from investments in faulty securities on behalf of failed financial institutions. The agency has settled claims worth more than $335 million with Citigroup, Deutsche Bank Securities, HSBC, and Bank of American. 

The NCUA said that as liquidating agent for Southwest and Members United corporate credit unions, it has a statutory duty to seek recoveries from responsible parties in order to minimize the cost of any failure to its insurance funds and the credit union industry.

The Credit Union National Association strongly commends the agency's aggressive, leading efforts to pursue those that irresponsibly sold mortgage-backed securities. The agency has had a good record of wins in the cases it already has been suing, CUNA said.

'Inside Exchange': How To Debunk Bankers On CU Tax Issue

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WASHINGTON (9/26/13)--The Credit Union National Association and state leagues continue to address top issues like the credit union tax status when bills are introduced at the state level, and they often coordinate their advocacy efforts with varied state-by-state legislative schedules. In the latest edition of CUNA's "Inside Exchange" video series, Pat Sowick, CUNA senior vice president of league relations, details the resources that her department provides to help credit union leagues in these efforts.



"The leagues developing relationships at the state level is very important, because almost half of state legislators are sitting up the Hill right now, on Capitol Hill, as members of Congress. So fostering those relationships really benefits credit unions in the long run. If they can start in Congress with some type of knowledge about credit unions, and appreciation for credit unions, we're going to do a lot better here in D.C., too," Sowick said in the latest "Inside Exchange" video segment.
 
This latest video, hosted by CUNA Executive Vice President of Communications Paul Gentile,  is part of CUNA's "Inside Exchange" series, which offers periodic, topical videos on issues important to credit unions. CUNA suggest members can use this resource for education purposes and as a great tool to keep staff and board informed on important issues.

This Week In Congress: TRIA, Continuing Resolution

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WASHINGTON (9/24/13)--The Senate Banking Committee has scheduled a hearing on "Reauthorizing TRIA (Terrorism Risk Insurance Act): The State of the Terrorism Risk Insurance Market" for Wednesday at 10 a.m. (ET).
 
TRIA, which requires property and casualty insurers to offer coverage for foreign acts of terrorism on U.S. soil and provides a federal backstop for that coverage, is scheduled to expire at the end of 2014. The Senate panel hearing follows one last week by the House Financial Services Committee on the same topic. 
 
The Credit Union National Association also will be following these other committee sessions this week:
  • A Senate Budget Committee hearing on "The Impact of Political Uncertainty on Jobs and the Economy"  today;
  • A Senate subcommittee on national security and international trade and finance hearing on "Assessing the Investment Climate and Improving Market Access in Financial Services in India" on Wednesday; and
  • A House Budget Committee hearing on "The Congressional Budget Office's (CBO) Long-Term Budget Outlook" Thursday.
Of course the scheduled committee actions occur to a back drop of debate on a continuing resolution to fund government agencies in lieu of a formal appropriations bill. A continuing resolution must be enacted before Oct. 1 to avoid a shutdown of the federal government.

CUNA Seeks Comment On Charitable Accounts Proposal

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WASHINGTON  (9/24/13)--Credit unions can now comment on the National Credit Union Administration's proposal to allow federal credit unions to invest in charitable donation accounts (CDA) while creating safeguards to ensure the donations are used for their intended charitable purposes.
 
The NCUA plan would limit total investment in CDAs to 3% of the credit union's net worth for the duration of the accounts. A minimum of 51% of the total return from such an account would have to be distributed to one or more qualified charities. Distributions could be made to qualified charities no less frequently than every five years.
 
The National Credit Union Foundation is one of these approved charities, the Credit Union National Association noted.

CUNA in a Comment Call asks credit unions to comment on whether:
  • NCUA should consider reducing the minimum donation requirement of the investment proceeds;
  • The agency should require trust companies regulated by the Office of the Comptroller of the Currency to be investment advisors registered with the Securities and Exchange Commission; and
  • The proposed 3% net worth limitation should be increased. 
Credit unions that believe this threshold should be increased should suggest an appropriate level that would ensure safety and soundness.
 
CUNA supports the NCUA proposal and has commended the agency for its willingness to create a novel structure to facilitate credit unions engaging in charitable activities. These engagements benefit the credit union system and their local communities, CUNA said.
 
The NCUA proposal was released for public comment at the September open board meeting.
 
Use the resource link to access the CUNA Comment Call. Comments are due to CUNA Oct. 15 and to NCUA Oct. 21.