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Sherry selected as NCUA deputy CFO

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ALEXANDRIA, Va. (1/27/15)--Peggy Sherry is the National Credit Union Administration's new deputy chief financial officer, the agency announced Monday. Sherry, who joins the NCUA from the IRS, began her duties with NCUA Monday.

NCUA Executive Director Mark Treichel said of Sherry: "Her deep experience in financial management, in both the private and public sectors, has been marked by her intelligence, professionalism, innovation and sound judgment, all of which will serve NCUA and the credit unions we regulate and insure very well."

Sherry was deputy commissioner for operations support at the IRS. Her previous experience also includes serving as chief financial officer at the Department of Homeland Security and senior financial management positions at the U.S. Holocaust Memorial Museum and the Government Accountability Office.

She is a certified public accountant, certified government financial manager and a chartered global management accountant.

NCUA, CFPB to host Feb. 11 TILA-RESPA disclosure webinar

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ALEXANDRIA, Va. (1/27/15)--Credit unions can tune in Feb. 11 to the latest from regulators on how to prepare for the significant changes to disclosures and forms required under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA).

The National Credit Union Administration Monday announced a free, 2 p.m. (ET) webinar on the changes scheduled to go into effect Aug. 1.

Staff from the agency's Office of Consumer Protection and the Consumer Financial Protection Bureau will provide a high-level overview of the changes, as well as details on:
  • The new loan estimate and closing disclosure forms;
  • What types of mortgage transactions are covered by the new rules; and
  • The new timing requirements for the disclosures.
Online registration is available. Participants will use the same link to log in to the webinar. The NCUA recommends that registrants should allow pop-ups from this website.

Participants can submit questions in advance at The subject line of the email should read "TILA-RESPA Integrated Disclosures Webinar."  For technical questions about accessing the webinar, email queries can be sent to

The webinar will be closed captioned. It is expected to be archived on the NCUA's website approximately three weeks after the live event.

NEW: April 27 is RBC2 comment deadline

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WASHINGTON (1/27/15, UPDATED 9:30 a.m. ET)--The comment deadline is April 27 for the revised risk-based capital plan proposed Jan. 15 by the National Credit Union Administration.
As expected, the proposal was printed in today's issue of the Federal Register , thereby kicking off the 90-day comment period set by the agency.
The Credit Union National Association has noted "significant improvements" in the agency's revised plan and is seeking credit union comment on how the new proposal will affect their operations, and what further improvements are necessary. CUNA soon will issue a Comment Call for credit union views.

See related story in today's issue for more details: RBC2 changes, improvements, outlook detailed in CUNA webinar.

Inside Washington (1/27/15)

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  • WASHINGTON (1/27/15)--The Consumer Financial Protection Bureau (CPPB) has appointed several people to leadership positions within the bureau. Anthony Alexis will serve as the bureau's assistant director of enforcement, Leandra English will serve as deputy chief operating officer, Agnes Bundy Scanlan will be Northeast regional director of supervision examinations and Jeffrey Sumberg will serve as chief human capital officer. Alexis and English have previously held positions at the CFPB, while Scanlan and Sumberg are new to the bureau ...

Fed unveils strategies for U.S. payments system improvements

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WASHINGTON (1/27/15)--A paper released Monday by the Federal Reserve features the agency's recommendations for improving the payment system in the United States from the perspective of payment system service providers.

"Strategies for Improving the U.S. Payment System" examines ways to create a "safe, efficient and broadly accessible" system, which the Fed says is vital to the American economy.

The Fed previously released a consultation paper on this topic in 2013. The Credit Union National Association filed a comment letter in response to that paper, praising the agency's approach at looking into ways to improve the payment system.

"CUNA appreciates the Fed's willingness to work with CUNA and listen to the concerns of credit unions in developing its paper on the future of the payments system. I have asked my staff to review it in detail and work with our Payments Subcommittee on follow-up," said CUNA President/CEO Jim Nussle. "As the next generation of a payments framework is developed, credit unions need the ability to access the latest technology without undue regulatory restrictions or high implementation costs."

According to the Fed, the payment system in this country is at a "critical juncture in its evolution," with a changing technological landscape that features high-speed data networks, sophisticated mobile devices and increasing real-time information processing. While this is changing the nature of commerce, rapid and evolving threats threaten security of data and the payment system itself.

To achieve these goals, the Fed has identified the following strategies to improve the payments system:
  • Actively engage with stakeholders on initiatives, including establishing and improving mechanisms for stakeholders to provide input and provide additional opportunities for those groups to stay informed about the latest developments;
  •  Identify effective approaches for implementing a safe, faster, ubiquitous payments capability. This will include establishing a faster-payments task force in the coming months and creating a framework for implementing faster payments by 2016;
  •  Work to reduce fraud and advance the safety, security and resiliency of the payment ssystem. This includes establishing a payments security task force to provide advice and determine priorities, as well as explore improvements to the Fed's anti-fraud and risk-management capabilities;
  •  Achieve greater end-to-end efficiency for domestic and cross-border payments, including developing a strategy to accelerate secure electronic business-to-business, person-to-person and person-to-business payments; and
  •  Expand the operating hours and other capabilities of Fed payments, risk-management services and interbank settlement for check payments. This includes same-day automated clearinghouse capabilities.
Nussle said CUNA looks forward to continuing to work with its payments system partners, which includes the Fed, NACHA--The Electronic Payments Association, the National Credit Union Administration and others.

RBC2 changes, improvements, outlook detailed in CUNA webinar

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WASHINGTON (1/27/15)--Well over 600 credit unions tuned into the Credit Union National Association's webinar on the National Credit Union Administration's revised risk-based capital proposal (RBC2) Tuesday, as CUNA President/CEO Jim Nussle highlighted the advocacy strength of the organization's three-tiered system.

CUNA officials and NCUA's Larry Fazio prepare to discuss the agency's revised risk-based capital proposal duirng a CUNA webinar Monday. From left: CUNA's Chief Policy Officer Bill Hampel, Chief Operating Officer Rich Meade, President/CEO Jim Nussle, Fazio and CUNA Deputy General Counsel Mary Dunn. (CUNA Photo)
That system, comprised of CUNA, the state credit union leagues and credit unions, helped spark positive changes in the NCUA's initial risk-based capital proposal, and are present in RBC2, Nussle said.

"Our work has paid off by greatly reducing the impact and reach of NCUA's risk-based capital proposal," Nussle said. "Over the last 10 days, we here at CUNA have had a chance to look very carefully at the RBC2 rule, and while we still believe it may be a solution in search of a problem, there's been some substantial improvements over where we were a year ago, and we're pleased about that."

The proposal is expected to be published in the Federal Register today, which marks the start of the 90-day comment period.

NCUA Director of Examination and Insurance Larry Fazio gave a presentation during the webinar and broke down some of the reasoning behind the agency's changes to the proposal.
Fazio said the risk weights were better calibrated in the RBC2 proposal to recognize that credit unions perform better in a financial crisis. The weights were also fine-tuned to better identify only outlier credit unions when it comes to risk.

Based on CUNA's analysis of the proposal using September 2014 data, 14 credit unions would be downgraded in their risk-based capital standard in the RBC2 proposal, a "significant improvement," Nussle noted, over the 163 that would have been downgraded under the first plan. The original proposal would have have increased by $6.4 billion the amount of capital credit unions would need to hold in order to remain well-capitalized.  With RBC2, that amount would fall to $632 million.
"CUNA continues to question the need for a new risk-based capital proposal," said Mary Dunn, CUNA's deputy general counsel, during the webinar, but added,  "Having said that, we are very pleased about the number of changes included in the revised proposal."

A few of the many notable changes include:
  • Removal of interest-rate risk, the entire allowance for loan and lease losses being included in the risk-based capital ratio numerator;
  • Concentration tiers for first liens, junior liens and commercial loans reduced from three to one;
  • Separate risk weights for share secured, secured and unsecured consumer loans; and
  • No separate risk weight for credit union service organization loans or investments.
Although the NCUA did not add a provision on supplemental capital to RBC2 as advocated by CUNA, the agency board has asked stakeholders to comment on whether supplemental capital should be permitted in the context of this rule.
CUNA's Chief Advocacy Officer Ryan Donovan has stated CUNA's strong support for the ability of credit unions to use supplemental capital, both for this proposal and for the purposes of meeting prompt corrective action requirements. "This will be one of the issues we raise in our comment letter," he noted after the webinar.

CUNA flagged its ongoing concerns regarding the RBC2 plan.  They include: whether or not the two-tiered risk-based capital system is permitted under the Federal Credit Union Act; the question of whether the NCUA should consider more factors than asset size when determining a credit union to be "complex;" and the need for complex credit unions to continually assess their overall capital adequacy on an ongoing basis.

Credit union stakeholders are encouraged to submit questions about the proposal to CUNA, and the organization will be posting an updated frequently-asked-questions document with answers as they become available.

For those who missed the webinar, or had trouble calling in, a recording will be available later this afternoon. Follow the Twitter-based @NewsNowLiveWire to get an alert as soon as the webinar is available.

Hybrids 'dominate' ARM offerings: Freddie survey

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McLEAN, Va. (1/27/15)--Hybrid adjustable-rate mortgages (ARMs) are the most popular ARM offerings from lenders, according to Freddie Mac's annual Adjustable-Rate Mortgage Survey. This is the 31st year of the survey, which was conducted Jan. 5-8 on prime loan offerings.

Hybrid ARMs combine elements of fixed- and adjustable-rate mortgages. It has an initial fixed-interest rate period (generally three to 10 years), followed by an adjustable-rate period, which is adjusted annually.
Click to view larger image Click for larger view

According to Freddie Mac, the 5/1 hybrid is the most popular ARM. This means the rate is locked in for five years, then it will reset annually. The average 5/1 rate is 2.83% compared with 3.63% for a 30-year fixed. After 5/1 loans, 7/1, 3/1 and 10/1 are the next most common.

Freddie's survey found that the initial interest rate was lower for all ARM products compared with last year. One-year ARMs and 5/1s were down 0.2 percentage points, while 10/1s were down 0.3 percentage points.

In early January, the interest rate savings for a 5/1 with a 30-year term, the most common ARM offered, was 0.75 percentage points better than a 30-year fixed rate loan. For a loan of $250,000, the monthly principal and interest payment for a 5/1 would be about $103 less than the 30-year fixed over the first five years of the loan.

"The average loan size for a conventional ARM for home purchase was more than $400,000 during 2014 and about double the size of an average fixed-rate loan, according to data from the Federal Housing Finance Agency (FHFA)," said Frank Nothaft, Freddie Mac vice president/chief economist. "On a $400,000 loan, a family would save about $9,000 during the first five years of a 5/1 hybrid compared with a 30-year fixed-rate loan, based on interest rates collected in our survey."

During 2014, ARMs comprised about 10% of home purchase loans, according to FHFA data.

Click to view larger imageAbove is a five-year history of credit union reports on balloon/hybrid first mortgages outstanding and originated year to date. (Source: CUNA)
"If fixed-rate loans become more expensive and home values rise further, we expect more consumers to take another look at ARMs and project the ARM share rising to 12% of the conventional home-purchase market in 2015," Nothaft said.

Credit unions have seen growth year-over-year in balloon/hybrid mortgages. The average such loan has risen to $274,879 from $194,094 in 2010, according to Credit Union National Association data. The value of outstanding loans rose 20.8% from 2010 to 2011, 11.8% from 2011 to 2012, 28.4% from 2012 to 2013 and 12.7% from December 2013 to September 2014.