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Expanded foreclosure protections being considered by CFPB

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WASHINGTON (11/21/14)--A government plan announced Thursday would make sure that if a mortgage borrower dies, surviving family members and others who inherit or receive property have the same foreclosure protections as the original loan holder.

The Consumer Financial Protection Bureau's plan could end up requiring mortgage servicers to  provide certain borrowers with foreclosure protections more than once over the life of a loan, to put in place additional servicing transfer protections, and to take steps to protect borrowers from a wrongful foreclosure sale.

In effect, the CFPB proposal extends the reach of bureau mortgage servicing rules that went into effect Jan. 10 this year and which require servicers to maintain accurate records, give troubled borrowers direct and ongoing access to servicing personnel, promptly credit payments, and correct errors on request.

The CFPB said in a release its proposal also would:
  • Require servicers to notify borrowers when loss mitigation applications are complete;
  • Do more to protect struggling borrowers during servicing transfers;
  • Clarify servicers' obligations to avoid dual-tracking and prevent wrongful foreclosures;
  • Clarify when a borrower becomes delinquent; and
  • Provide more information to borrowers in bankruptcy by requiring periodic mortgage staements.
The proposed rule and disclosures will be open for public comment for 90 days after their publication in the Federal Register.

The CFPB has provided a summary of the rule.

Rep. Hensarling names HFSC subcommittee chairs

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WASHINGTON (11/21/14)--Subcommittee chairs for the House Financial Service Committee were announced Thursday by committee chair Rep. Jeb Hensarling (R-Texas). This will be Hensarling's second term as chair of the committee after taking the position in January 2013.

The subcommittee chairmen for the 114th Congress will be:
  • Rep. Scott Garrett (R-N.J.), capital markets and government-sponsored enterprises subcommittee;
  • Rep. Randy Neugebauer (R-Texas), financial institutions and consumer credit subcommittee;
  • Rep. Blaine Luetkemeyer (R-Mo.), housing and insurance subcommittee;
  • Rep. Bill Huizenga (R-Mich.), monetary policy and trade subcommittee; and
  • Rep. Sean Duffy (R-Wis.), oversight and investigations subcommittee.
Hensarling said in a statement that he looks forward to passing laws to help grow the economy while "promoting sensible solutions that help create jobs and hold both Washington and Wall Street accountable to the American people."

The remainder of the committee leadership team will be announced at a later date.

NEW: Matz: Revised RBC rule could be unveiled Jan. 15, 90-day comment period to follow

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ALEXANDRIA, Va. (UPDATED 6:55 P.M. ET 11/21/14 )--National Credit Union Administration Board Chair Debbie Matz today announced that she will ask the board to consider a revised version of the risk-based capital proposal at its Jan. 15 open board meeting. Matz also said a 90-day public comment period would likely follow.

"During the six months since the comment period closed on the original proposed rule, we've taken the time to carefully review and methodically evaluate the many thoughtful comments received from stakeholders," Matz said. "We've also considered the input received during three Listening Sessions across the U.S. this summer. We're getting closer to issuing the revised proposed rule, which I now anticipate will be presented in January 2015--one year since the original proposed rule.

"To provide the public ample time to review this important safety and soundness rulemaking, I intend to support a 90-day comment period," she added.

The Credit Union National Association has strongly advocated for a reasonable comment period of at least 60 days, given the amount of structural changes that had been mentioned by NCUA, including longer implementation period and revised risk weights for mortgages, investments, member business loans, credit union service organizations and corporate credit unions.

More than 2,000 comments were received from credit unions, members of Congress and other stakeholders during the proposal's original comment period.

Overhead transfer rate, fee scale, NCUSIF addressed at NCUA board meeting

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ALEXANDRIA, Va. (11/21/14)--The National Credit Union Administration modified the overhead transfer rate (OTR) to 71.8%, up from the current 69.2%, at its monthly board meeting Thursday.

The overhead transfer is one of the funding sources for the NCUA's budget, applied to monthly incurred expenses, and does not affect the amount of the budget.

Annual changes to the OTR are based on a methodology that was approved by the NCUA board in November 2003. The methodology considered the following key factors:
  • The value to the National Credit Union Share Insurance Fund of the insurance-related work performed by state supervisory authorities;
  • The cost of NCUA resources and programs with different allocation factors from the examination and supervision program. Allocation factors are reviewed annually;
  • The distribution of insured shares between federal credit unions and federally insured state-chartered credit unions;
  • Operational costs charged directly to the NCUSIF; and
  • The results of the annual Examination Time Survey.
The Credit Union National Association has urged the NCUA to refine its methodology related to the OTR to provide additional clarity.

The rate represents insurance-related costs in the agency's operating budget to be paid for out of the NCUSIF. The rate set at 71.8% means that 71.8% of the budget will be paid out of the NCUSIF, and the remaining 28.2% will be paid for through the federal credit union operating fee.

The operating fee is based on federal credit unions based on Dec. 31, 2014 year-end assets. Credit unions with less than $1 million in assets are not assessed an operating fee. According to the NCUA's call report data from June 2003, annual growth is projected to be 3.8% at year's end.

The fee rate was decreased in part to the July board action to reduce the 2014 operating budget by $1.1 million.

Aside from a minor increase in 2013 the operating fee rate has declined four of the last five years. Last year it was reduced 18%, said Mary Ann Woodson, chief financial officer for the NCUA.

CUNA commends the NCUA's decision for the operating fee to remain at no more than one month's expenses of the agency.

The NCUA also estimated that the NCUSIF assessment for 2015 will be between zero and five basis points, and said there will not be an assessment for the Temporary Corporate Credit Union Stabilization Fund in 2015.

NCUA budget up by 4.2% for 2015, McWatters votes against it

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ALEXANDRIA, Va. (11/21/14)--Two distinct opinions on the National Credit Union Administration's budget emerged at the agency's Thursday's open board meeting.

NCUA Chair Debbie Matz and Vice Chair Rick Metsger said they believe the budget approved by the agency is sufficient to provide the agency with the resources it needs to carry out its mission, while board member J. Mark McWatters said the agency should remain more mindful of spending credit unions' money, examine the necessity of all expenditures and make the process more transparent.

The agency's budget amount is $279.5 million, up $11.187 million (4.2%) from the previous year. While NCUA Chief Financial Officer Mary Ann Woodson said this was the lowest increase in eight years, the Credit Union National Association remains concerned that this is the eighth consecutive year the budget has increased.
Click to view larger imageNCUA board member J. Mark McWatters reads a statement with concerns about the agency's 2015 budget, as NCUA Chair Debbie Matz listens. (CUNA Photo)

"The Credit Union National Association remains very concerned that the National Credit Union Administration board has increased its budget yet again. Rather than reducing expenditures, the agency has continued to bolster its budget for eight straight years," said CUNA President/CEO Jim Nussle.

"Based on my own experience in building budgets, I know that monitoring and modernizing resources to maximize funds--which credit unions have been doing--are among the most effective methods for containing costs. NCUA is not following a similar path and that's a concern for me and credit unions. CUNA will continue pressing the agency to be more efficient with credit unions' funds," he said.

Employee pay and benefits rose by 3.7% million for 2015, which made up the bulk of the increase from 2014. Travel expenses also increased by 2.7%, contracting services increased by 8.5%, administrative expenses increased by 6.1%, and rent, communications and utilities increased by 2.8%.

Matz said it was the lowest budget increase in seven years, and that the 2015 budget allows the NCUA to perform its primary functions, adding that cutting the budget is "not an option" due to the nondiscretionary costs facing the agency.

"The only way to materially cut the budget would be to substantially cut staff," she said, adding, "Let me remind you, this agency made the mistake of cutting staff in the years leading up to the Great Recession. To keep costs down, the agency had a smaller exam force, cut back to 18 months between exams, and had fewer office staff analyzing call reports."

Metsger said the lengthy process the budget goes through ensures that the budget contains needed expenditures.

"Staff, and then the board members, review each and every position, each and every line item, each and every request, and have even reviewed each and every significant outside contract," he said. "Nothing is taken for granted. Each position, and each expenditure, must be justified. As the budget goes through its many drafts it generally goes in only one direction: down."

In casting a dissenting vote, McWatters said he was "dismayed" to see the increase in the 2015 budget, as well as with certain aspects of the budgetary process.

"I cannot in good conscience vote to approve the budget," he said. "I also will find it challenging to vote in favor of another NCUA budget unless the transparency of the budget and the budgetary process is materially enhanced and the credit union community and general public are afforded sufficient opportunity to comment on the proposed budget and the overhead transfer rate prior to action by the board."

See related story: McWatters outlines 11 enhancements for NCUA budget transparency.

McWatters outlines 11 enhancements for NCUA budget transparency

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ALEXANDRIA, Va. (11/21/14)--In casting his "no" vote against the 2015 National Credit Union Administration 2015 budget, board member J. Mark McWatters outlined 11 items he said would "enhance the transparency of the budgetary process."

This is the first year the NCUA will supply additional budget documents, which include several fact sheets, as well as a FAQ document scheduled to be released in the coming weeks.

However, McWatters said he would like to see opportunities for credit union stakeholders to have a seat at the table while the agency is putting the budget together, rather than simply reading documents about a budget that has already been approved.

"Next year, I strongly encourage the board to deliver the proposed budget and calculation of the proposed overhead transfer rate (OTR) to the credit union community and general public at least two weeks prior to a formal budget hearing," he said in remarks at the agency's Thursday open board meeting.

"At that hearing NCUA staff should formally present the proposed budget and OTR to the public in a detailed, understandable and transparent manner supported by written analysis posted on the NCUA website."

He added that the board should not formally act on the proposed budget until it has reflected on the comments.

"This approach, while somewhat cumbersome, will materially enhance the transparency and inclusiveness of the budgetary process," McWatters said. "Unless there's a legal or proprietary reason not to disclose something, the default should be to disclose it. I don't understand why it should be otherwise."

Despite McWatters dissenting vote, the agency approved a 2015 spending plan that is 4.2% higher than the 2014 budget.

For future budgets, McWatters said he would like to see:
  • Additional detail regarding employee pay and benefits travel, rent/communications/utilities administrative and contracted services expenditures;

  • A detailed analysis of how NCUA may reduce those expenditures;

  • Submission of the NCUA's methodology in calculating the OTR for public comment, and a detailed description of the methodology adopted by NCUA following an analysis of the comments received;

  • A detailed analysis of expenditures among NCUA, the National Credit Union Share Insurance Fund, the Temporary Corporate Credit Union Stabilization Fund and the Central Liquidity Facility;

  • A detailed analysis of why NCUA's budget has increased by more than 50% in the past five years, as well as a year-by-year analysis of all such increases;

  • Analysis of all cost savings programs implemented by NCUA over the past five years;

  • Analysis of all expenditures incurred by NCUA to support the Financial Stability Oversight Council;

  • A detailed analysis of all expenditures incurred by NCUA in implementing the Sensitive Compartmented Information Facility;

  • A detailed analysis of all expenditures that NCUA anticipates to incur with respect to the proposed risk-based net worth rule, as well as all other proposed rules;

  • A formal cost-benefit analysis with respect to each rule or regulation proposed by NCUA, as well as a detailed description of the methodology employed by NCUA in conducting such analysis; and

  • A detailed reconciliation of how NCUA plans to allocate budget expenditures to achieve its strategic goals.
"The board's job, in my view, is not merely to follow the script set by other financial regulators, but to lead and to set the standard of transparency and accountability for all such regulators," McWatters said.

See related story: NCUA budget up by 4.2% for 2015, McWatters votes against it.

CFA/CUNA reveal 15th holiday spending survey results Monday

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WASHINGTON (11/21/14)--The results of the annual consumer survey on holiday spending plans--and consumer concerns about debt levels--will be unveiled Monday at 10 a.m. (ET).
 
For the 15th consecutive year, the Consumer Federation of America (CFA) and the Credit Union National Association have joined forces just before the winter holidays to provide fresh findings on consumer attitudes towards their financial conditions and their holiday spending plans.
 
The CFA/CUNA survey was conducted just days ago, and this year's responses document the change in consumers' attitude in spending compared with last year.

The survey asks whether consumers feel their financial situation has gotten better or worse compared with a year ago and, for the first time, benchmarks any changes in household income over last year. The survey also compares spending attitudes of high- and low-income groups.
 
CFA and CUNA representatives will discuss their complete survey findings, including:
  • The latest look at consumers' holiday spending plans;
  • Consumer concern about debt and monthly payoff requirements;
  • How the findings compare with consumer attitudes last year and two years ago at this time;
  • How consumer attitudes have changed over the past 15 years; and,
  • Consumer tips for managing holiday spending this season and next.
The unveiling will be held in the Zenger Room at the National Press Club in Washington, D.C.  Speakers will be Stephen Brobeck, executive director of the Consumer Federation of America, and Mike Schenk, CUNA vice president of economics and statistics.