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Flood insurance may get temporary reprieve loan limits pending

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WASHINGTON (9/28/11)--Congress appears ready to give the National Flood Insurance Program (NFIP) another temporary reprieve, this time until November 18, after a Senate agreement to continue to fund the government was reached earlier this week. The NFIP extension is part of a Senate bill that provides billions in additional funding to cover Federal Emergency Management Administration disaster relief and to continue funding the government. Speaker of the House John Boehner (R-Ohio) will reportedly back the bill, which is scheduled to be taken up when the House returns to session next week. Legislation that would fund the government until the House returns will be considered by a voice vote later this week. A voice vote does not require all members to be present to be taken. The NFIP is set to expire on Sept. 30, and separate pieces of legislation that would extend coverage for another five years have been approved by both the Senate and the House. However, there are differences between the House and Senate bills, and representatives of the two congressional bodies have not worked out differences between their respective bills. Another item of interest to credit unions is set to expire on Sept. 30: Language that allows the Federal Housing Administration (FHA), Fannie Mae, and Freddie Mac to guarantee mortgages up to $729,750, or 125% of single family homes. Legislation that would extend these loan limits until Dec. 31, 2013, was offered earlier this year, but is not part of the funding bill at this time. The maximum guaranteed loan amount would drop to $625,500, or 115% of local median home prices, if the extension is not approved. However, loans guaranteed by the Veterans Administration will continue to have the increased $729,750, or 125% of single family homes, loan limit until the end of this year.

NASCUS urges NCUA to hone CUSO proposal

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WASHINGTON (9/28/11)--The National Association of State Credit Union Supervisors (NASCUS) has urged the National Credit Union Administration (NCUA) to reconsider its proposed additions to rules governing credit union service organizations (CUSOs) and adopt a more targeted approach to CUSO oversight. In a comment letter to the agency, NASCUS said that instead of adopting its proposed rule, the NCUA should work with state regulators “to enhance supervision by improving existing authority and monitoring programs, and minimize regulatory burden by adopting a targeted approach to CUSO oversight.” The NASCUS letter mirrored some of the key points made in a similar letter by the Credit Union National Association (CUNA) recently. CUNA also urged a more targeted approach to CUSO governance than that proposed by the agency and also argued the NCUA should implement “existing requirements, such as due diligence." The NCUA's proposal, released in July, would require CUSOs and their subsidiaries to directly file their financial statements with the NCUA. Financial reports would also need to be forwarded to appropriate state supervisors under the rule. The agency has argued that the proposal, if enacted, would "enhance protections to consumers, credit unions and the National Credit Union Share Insurance Fund." The NASCUS comment letter said that complying with these requirements would “unnecessarily drain the resources of both regulators and the industry by capturing information from CUSOs engaged in non-financial services which may have minimal balance sheet safety and soundness implications.” Rather than focusing on supervisory oversight of CUSOs, state and federal credit union regulators “should focus on the credit union's relationship with its CUSO,” NASCUS suggested. One way this relationship could be evaluated is by paying greater attention to credit union due diligence during regulators’ routine credit union examinations. Examiners could then work to unearth additional information on a credit union’s relationship with its CUSO if any potential issues are exposed. Overall, existing rules and regulations that apply directly to federally insured credit unions “provide ample authority to review relevant information” on the credit union/CUSO relationship, NASCUS said. The association added it is “confident that NCUA and state regulators can develop a targeted CUSO supervision program that addresses legitimate regulatory concerns while preserving the benefits CUSOs provide the credit union system.” CUNA, in its letter, said the NCUA should withdraw--or at least substantially modify--the CUSO rule because CUSOs do not pose a risk to the credit union system nor do they pose overall concerns to the National Credit Union Share Insurance Fund. For the NASCUS and CUNA comment letters, use the resource links.

National composite mortgage rate is 4.52 FHFA reports

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WASHINGTON (9/28/11)--The national average contract rate on the composite of all fixed- and adjustable-rate mortgages decreased to 4.52% in August, a three-basis point decrease below the previous month's total, the Federal Housing Finance Agency (FHFA) reported on Tuesday.
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The FHFA reported that the interest rate for conventional 30-year fixed-rate mortgages was 4.63% in August, down six basis points from 4.70% in January. The FHFA reported that the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders was 4.56% in August, the FHFA added. That rate is used as an index in some adjustable-rate-mortgage (ARM) contracts, the FHFA said. The FHFA did not include separate information on ARMs. Mortgage totals averaged $214,300 during August, a $500 increase from July's total. One-time fees and other mortgage origination charges accounted for an average of 0.9% of the balance of all mortgage loans, and the average term of these mortgages was 27.6 years. The average loan-to-price ratio was 77.2%, the FHFA added. The FHFA rate survey reflects loans that closed between Aug. 25 and Aug. 31.

CFPB has mortgage rules on its near-term agenda

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WASHINGTON (9/28/11)--The Consumer Financial Protection Bureau (CFPB) will soon take on mortgage rules, and plans to publish those mortgage regulations alongside simplified homebuyer disclosure forms next July, according to CFPB Assistant Director for Mortgage and Home Equity Markets Pat McCoy. McCoy said the agency will begin developing the new mortgage rules as soon as the ongoing mortgage disclosure form revision project is completed. McCoy made her remarks before a Mortgage Bankers Association conference, Bloomberg reported Tuesday. Reuters last week reported that de facto CFPB leader Raj Date said the new standards will require lenders to ensure their borrowers will have the ability to repay their mortgages. The mortgage disclosure project is scheduled to undergo its final revision later this year. The project, which started earlier this year, seeks to produce a combined form for Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosures. The most recent draft is the fourth of five planned draft disclosure releases, and that draft asks finance industry insiders and consumers to compare two different types of loan products using the same version of the revised mortgage form. For more on the CFPB mortgage disclosure project, use the resource link.

Inside Washington (09/27/2011)

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* WASHINGTON (9/28/11)--Sen. Richard Shelby (R-Ala.) recently introduced the Financial Regulatory Responsibility Act of 2011 (S. 1615), a bill that would force federal financial regulators, including the National Credit Union Administration, to provide a “rigorous, consistent economic analysis” of new regulations they propose. The economic impact of the rules, “including their effects on growth and net job creation,” would also need to be reported, according to a release. Reducing credit union regulatory burden is a Credit Union National Association (CUNA) priority and will be providing further analysis of this bill. … * WASHINGTON (9/28/11)--The Treasury Department’s Office of Inspector General (OIG) is attributing lack of regulatory control on the part of the Office of Thrift Supervision for many recent thrift failures. The reviews indicate how Treasury envisions the role of the Office of Comptroller of Currency (OCC), which took over the regulation of thrifts in late July (American Banker Sept. 27). In 18 of 23 material-loss reviews of failed thrifts through Sept. 20, the OIG cited regulatory inadequacy as the primary reason for failure. The most-cited issue was the time OTS took to enforce a formal action after identifying a problem. In comparision, one of the 13 reviews of failed thrifts regulated by the OCC mentions a lack of timeliness from the regulator, according the Banker … * WASHINGTON (9/28/11)--Freddie Mac used a faulty loan review process to generate data for its landmark settlement with Bank of America Corp. (BofA), the Federal Housing Finance Agency’s (FHFA) inspector general said Monday (American Banker Sept. 27). Freddie’s failure to properly evaluate the underwriting of interest only and option adjustable-rate mortgages underwritten by Countrywide--now a part of BofA--are cited in a report. Although Freddie was warned it was not accounting for defaults that would likely follow the expiration of the mortgages’ teaser rates, the government-sponsored enterprise still made the $1.35 billion settlement with the FHFA’s approval. The settlement was “appropriate and reasonable” FHFA said in its written response to the inspector general’s report. … * WASHINGTON (9/28/11)--Following Hike the Hill visits from the League of Southeastern Credit Unions (LSCU), Reps. Allen West (R-Fla.) and Kathy Castor (D-Fla.) became the sixth and seventh representatives from Florida to co-sponsor HR 1418, legislation to raise the member-business lending (MBL) cap to 27.5% of assets from 12.25%. The other co-sponsors from Florida include Reps. Gus Bilirakis, Jeff Miller, Bill Posey, Dennis Ross and Bill Young, all Republicans. The league is following up on all of its visits to make sure those that would like to co-sponsor the bill are well informed. House Financial Services Committee Chairman Spencer Bachus (R-Ala.) told credit unions that there will be a sub-committee hearing on HR 1418 on Oct. 12 at 2 p.m. Sen. Bill Nelson (D-Fla.) is one of 20 co-sponsors for the Senate version of the same legislation. The Credit Union National Association estimates that lifting the MBL cap would inject more than $13 billion in new funding into the economy, at no cost to taxpayers. These funds could create 140,000 new jobs in the first year after enactment. Pictured, from left, are: John Deese, CEO, PBC CU, West Palm Beach, Fla.; Art Wood, CEO, Railroad and Industrial CU, Tampa, Fla.; Mary Wood, CEO, Florida West Coast CU, Brandon, Fla.; West; Pat Mason, CEO, Sun CU, Hollywood, Fla.; and Patrick La Pine, CEO, LSCU. (Photo provided by League of Southeastern Credit Unions). …

Federation offers streamlining advice to CDFI Fund

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WASHINGTON (9/28/11)--The U.S. Treasury's Community Development Financial Institutions (CDFI) Fund could limit burdens on credit unions and other institutions by making its certification of CDFI Fund approved institutions permanent, the National Federation of Community Development Credit Unions has said. The federation recommended that certifications remain permanent unless they are withdrawn by the fund. “The CDFI Fund could ensure continued eligibility as a Certified CDFI more efficiently through an updated, electronic Material Events form coupled with a simple annual data report, and customary monitoring of compliance” through the periodic collection of certain types of data. If this data shows a credit union or institution is no longer meeting CDFI certification requirements, appropriate corrective action, including decertification,” could be taken as needed, the federation said. The comments came in response to the CDFI Fund’s recently request for public comment on ways the agency could reduce burden and ease the certification process. The CDFI Fund could eliminate paperwork by automating several aspects of its registration and certification processes. The federation also recommended the CDFI Fund examine its certification process to determine if the value of the documentation required for each certification test “justifies the cost of collection, preparation, submission and review.” “CDFI certification is a valuable asset and, although we agree that certification applications must be carefully evaluated, we also believe that credit unions applying for certification deserve a timely response,” the Federation added. The federation is confident that the CDFI Fund can streamline its certification process, reduce its administrative burden, and meet the needs of CDCUs looking to qualify for this important designation. The Treasury's CDFI Fund helps locally based financial institutions offer small business, consumer and home loans in communities and populations that lack access to affordable credit. Credit unions that are certified to take part in the CDFI program may apply for as much as $2 million in funding to help maintain their credit union's presence in the community. CDFI Fund distributions are merit-based, and a total of $25.7 million in funds were awarded to 25 credit unions under the fiscal year 2011 round of the CDFI Fund Program.