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CURRENT Newsletter | 22 November 2013

Nov 22, 2013 by Lewis Wood

News and Information For and About Virginia's Credit Union System

Headline News

News About Credit Unions

Compliance/Regulatory Affairs News

Financial Services/Marketplace News

News From Credit Unions

Chapter News

Financial Education News

News About The Competition

Technology News

Headline News

Virginia-Based Credit Unions Set Record With $26.3 Billion in Loan Originations for First Half of 2013

Virginia's 172 member-owned credit unions granted a record total of $26.3 billion in loans in the first six months of 2013, according to data from NCUA. This represented a 25 percent increase over first-half 2012 results. The record-setting performance in loan originations was led by loans for new and used automobiles, with year-over-year growth of 29 percent and 20 percent, respectively.

First mortgage originations totaled $11.3 billion for the first six months of 2013. Virginia's credit unions held more than $40 billion in first mortgages as of the end of June 2013. Membership growth for Virginia's credit unions has exploded in recent years, reaching a record 8 million in June 2013. In total, membership at the state's credit unions has grown by 1 million since year-end 2010.

[read more]

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New Mortgage Disclosure Rule Could Raise Costs to Consumers

The financial services industry generally applauded the Consumer Financial Protection Bureau's final rule on mortgage disclosures, But they are raising concerns that some of the changes need to be fixed or mortgage lenders will have to raise the costs of loans to consumers.

On Wednesday, the CFPB released its much-anticipated final rule that merged federal mortgage disclosure forms. The two-year effort was required under the Dodd-Frank Act and was designed to simplify disclosures and help consumers more clearly understand the total costs of a loan. The rule does not go into effect until Aug. 1, 2015, a win for financial institutions who had lobbied heavily for more time to implement the changes.

A critical change is the shifting of responsibility for the final closing disclosure to the creditor or lender. Depending on the state, closing documents are typically delivered to consumers by attorneys or title agents. When the rule takes effect, consumers will be given new forms, including a loan estimate, within three days of applying for a mortgage, and a closing disclosure form three days before closing the loan.

Those forms replace the current Truth in Lending statements, the good faith estimate and the HUD-1 settlement statement, which is used to itemize fees charged to borrowers by a lender or broker. (American Banker Online, Nov. 22)

[CFPB reg overview]
[Explainer: How the final TILA-RESPA rule differs from the proposal]

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Annual Meeting 2014 Early-Bird Registration Underway

We're celebrating our 80th anniversary in grand style! Your League's 80th Annual Meeting is April 2-4, 2014, in Williamsburg. With 20-plus education sessions, keynotes from former CNBC economist Marci Rossell and corporate lobbyist-turned-comedian Mark Mayfield, plus a half-dozen networking opportunities, you can't afford to miss it!

Register now and save $50 off regular registration costs and take advantage of deep discounts at our host hotel, The Williamsburg Lodge.

[learn more]

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NCUA 2014 Budget Contains 6.7% Increase

The National Credit Union Administration's proposed 2014 budget is $268.2 million, an increase of 6.7% from the 2013 NCUA budget. This is the sixth straight year that the agency's planned expenditures have grown.

"The Credit Union National Association remains very concerned about the size of the agency's budget and the continued budget growth for NCUA, particularly in light of the welcome decline in the assets in troubled credit unions over the past few years," CUNA President/CEO Bill Cheney said. "Credit unions have to manage resources prudently or be subject to sanctions.

The NCUA should not set one standard for itself and another for credit unions. Credit unions remain concerned that they work hard to contain costs and they feel their agency should do so as well," Cheney noted. The total amount of 2014 funding increase is $16.9 million.

[read more]

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Good News: No TCCUSF Assessment In 2014

The National Credit Union Administration will not charge a Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment in 2014. The National Credit Union Share Insurance Fund assessment for 2014 will be between zero and five basis points (bp), the agency added. The Credit Union National Association urged the NCUA to set the range for the TCCUSF assessment as narrow as possible, starting with zero bp.

Credit unions have paid $4.8 billion in TCCUSF assessments since the fund was established. The projected net remaining assessments over the life of the TCCUSF, based on estimates from the second quarter of 2013, now range from -$0.2 billion to $1.6 billion. The NCUA also will receive $1.4 billion through a settlement with JP Morgan announced this week.

[read more]

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NCUA Approves Final CUSO Rule

The National Credit Union Administration's final rule addressing credit union service organization (CUSO) supervision, adopted this week, is revised from the agency's proposal but concerns remain about the authority of the agency to exercise direct authority over CUSOs. Under the proposal released in 2011, CUSOs and their subsidiaries would be required to directly file their financial statements with the NCUA, and to forward those reports to state supervisors. 

The final rule keeps those controversial provisions. However, the NCUA noted that the final rule is more limited in scope than the proposed rule: The final rule is targeted to CUSOs that engage in high-risk or complex activities such as credit lending, information technology and custody, safekeeping and investment management. The final rule will become effective on June 30.

[read more]

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CU4Kids’ Holiday Icon Campaign

The Credit Unions for Kids’ Holiday Icon Campaign benefiting local Children’s Miracle Network Hospitals is underway. This is a free, easy way for credit unions and members to rally behind a great cause which directly helps kids in our local communities. Invite members to donate a dollar, and in exchange, they get to write their name on a paper icon which is proudly displayed in your branch this winter season.

To order the icons available in several winter shapes, go to www.cu4kids.org/holidayicons.

Click on “Order Your FREE Icons Now.” Remember, every dollar raised goes back to each branch’s local Children’s Miracle Network Hospital.

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News About Credit Unions

Bank, Credit Union Defend 'Payday' Products as Crackdown Looms

Any product that remotely resembles a payday loan could be headed for extinction. That is a real fear for executives at First Financial Service (FFKY) in Elizabethtown, Ky., and State Employees’ Credit Union in Raleigh, N.C., who are lobbying hard to protect successful product offerings.

First Financial’s PaySound product looks a lot like a payday loan, but Greg Schreack, the company’s president, refuses to use the term given the potential for political backlash. In nearby North Carolina, SECU President Jim Blaine says the credit union’s Salary Advance Loan is so profitable, and so beneficial to members, that banks should offer the same product. Concerns are mounting that such products are on regulatory life support, industry observers say.

The Consumer Financial Protection Bureau has anything that looks like a payday loan squarely in its sights and there’s very little that financial services providers can do about it, says Stan Orszula, a banking lawyer at Quarles & Brady in Chicago. (American Banker Online, Nov. 18)
[related: Regulators put tougher restrictions on bank payday loans]

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Compliance/Regulatory Affairs News

NCUA: 9.9 Million Hours for CUs Complying With Truth in Savings

The NCUA said on Tuesday that credit unions' continued compliance under the Truth in Savings Act totals 9.9 million hours annually. [read more]

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Financial Services/Marketplace News

Percentage of Underwater Homeowners Plummets

The percentage of underwater homeowners fell at the fastest pace on record in the third quarter, according to data released Thursday. The national negative equity rate fell to 21% of all homeowners with a mortgage in the third quarter, down from its Q1 2012 peak of 31.4%, according to a report released Thursday by Zillow.

In the third quarter, more than 1.4 million homeowners got their mortgages above water, and nearly 5 million have been freed from negative equity since the beginning of 2012, Zillow reported.

[read more]

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As Young People Hunker Down, Homeownership Dips

Americans are changing their housing habits in ways that could affect the U.S. economy. Younger people are becoming less mobile and are less inclined to buy a place to live, while broader homeownership numbers are down, according to recent data from the U.S. Census Bureau.

[read more]

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Housing Affordability Eroded Dramatically by 'Perfect Storm' in Q3

Housing affordability suffered its biggest hit in nearly 10 years during the third quarter of 2013 the National Association of Homebuilders (NAHB) and Wells Fargo said today.  Their Housing Opportunity Index (HOI) for the quarter was 64.5 percent, down from 69.3 percent in the second quarter.

This means that 64.5 percent of new and existing homes sold in the U.S. between the beginning of July and end of September were affordable to families earning the U.S. median income of $64,400. 

"Housing affordability is being negatively affected by a 'perfect storm' scenario," observed NAHB Chairman Rick Judson. "With markets across the country recovering, home values are strengthening at the same time that the cost of building homes is rising due to tightened supplies of building materials, developable lots and labor." "The decline in affordability is the result of higher mortgage rates and the more than year-long steady increase in home prices," observed NAHB Chief Economist David Crowe.

[read more]

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The Outlook for Mortgages

Despite predictions to the contrary, mortgage rates have hovered at historic lows for three years now. After the Federal Reserve spooked the markets last summer over its intentions to stop propping up the mortgage and bond markets, the 30-year fixed rate spiked, to an average of 4.6%.

But by late October it had fallen to 4.1%, according to Freddie Mac. Improvement in the economy will boost rates, but probably not before mid-year. Many forecast that 30-year fixed rates will be above 5% by then. However, Guy Cecala, publisher of Inside Mortgage Finance, thinks rates will bounce around 4%—give or take a quarter-point—for a while.

[read more]

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Auto Loan Balances At Record High $782.9B

Third quarter outstanding auto loan balances are at a record high, according the Experian Automotive, which began recording the data seven years ago. Outstanding balances on automotive loans reached $782.9 billion. Credit unions also showed auto loan growth, according to Credit Union National Association research and statistics.

New-auto loans increased to 10.8% of total loans for the third quarter of 2013, compared with 10.4% in the third quarter of 2012. Used-auto loans rose to 19.8% of total loans, compared with 19.1% for the same period in 2012.

[read more]

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News From Credit Unions

ABNB Raising Funds for Philippine Typhoon Relief Fund; Matching Up To $20,000

ABNB Federal Credit Union is joining the efforts in raising funds for the Philippine typhoon relief. For every dollar raised, ABNB has committed to matching all donations up to $20,000. Donations will be collected at all ABNB branches, online, and over the phone. All proceeds will go directly to the American Red Cross.

[read more]

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Belvoir Federal Named to List of 2014 Best Places to Work in Virginia

Belvoir Federal Credit Union was recently named one of 2014’s Best Places to Work in Virginia. The annual list of the Best Places to Work in Virginia was created by Virginia Business and Best Companies Group.

[read more]

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Virginia Credit Union Named Among the Best Places to Work in Virginia

Virginia Credit Union has been named as one of the 2014 Best Places to Work in Virginia. The annual list of Best Places to Work will include 100 companies of various sizes. Virginia Credit Union has 556 employees.

[read more]

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Chapter News

Richmond Chapter to Host 16th Annual Legislative Breakfast on Dec. 12

The Richmond Chapter will host its annual Legislative Breakfast on Dec. 12 at the Omni Richmond. Del. Kirk Cox will be the featured guest and presenter. Register by Dec. 2 for the early bird rate of$30. RSVP to Dianna Clouse at dianna.clouse@vacu.org or 804-267-1451.

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Financial Education News

Americans Need More Financial Education, Consumer Watchdog Says

Financial service companies spend billions of dollars a year marketing their products and services — credit cards, checking and savings accounts, car loans, mortgages and home equity products. By comparison, very little is spent to provide American children with the tools they’ll need to deal with the financial decisions they’ll face in life. A new study from the Consumer Financial Protection Bureau documented the huge disparity in this spending.

The study found that the industry spends approximately $17 billion annually on consumer marketing. But only about $670 million dollars is spent on financial education each year in this country. Put another way: While $54 a person is spent on financial marketing to American consumers, only $2 per person is spent to educate them on money matters.

[read more]
[related: Warren Buffett: How to teach your kids about money]

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News About The Competition

Big Banks Lag in Social-Responsibility Scores: Report

Big banks have not done enough in the five years since the financial crisis to make themselves more socially responsible corporations, according to a report released Wednesday by a shareholder advocacy group. Bank of America (BAC), Bank of New York Mellon (BK), Citigroup (NYSE: C), Goldman Sachs (GS), JPMorgan Chase (JPM), Morgan Stanley (MS) and Wells Fargo (WFC) all scored 60 or below out of a possible 100 points in a study by the Interfaith Center on Corporate Responsibility.

The study measured the seven banks' performance in responsible lending, risk management, executive compensation and political contributions. (American Banker Online, Nov. 20)

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A Quarter of Community Banks Expect to Sell Next Year: KPMG

A growing number of community bank leaders are finally expressing a willingness to sell. That long-awaited sea change is evident in a new survey by KPMG, an audit, tax and advisory firm. The findings provide evidence that more deals might be struck in the coming year.

"There has been a lot of discussion about M&A and all of the reasons it could happen," says John Depman, KPMG's national leader of regional and community banking. "Part of the disconnect … has been that everyone wanted to be a buyer and there were not enough sellers."

KPMG conducted its survey in October, gathering responses from 105 CEOs and senior executives at banks with $1 billion to $20 billion of assets. (American Banker Online, Nov. 22)

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Technology News

Mobile Devices Add New Complexities for Electronic Signatures

The role of mobile devices in paperless transactions creates additional compliance concerns and precautions that must be considered beyond the existing procedures financial institutions have established for desktop-based electronic documents and signatures. In the past, organizations could create one version of a website or electronic document and know that it would display exactly the same way on all users' desktops.

The varying screen sizes and layout orientations of smartphones and tablets create different end-user experiences, Gregory Casamento, a partner at law firm Locke Lord, noted at a panel during the Electronic Signatures and Records Association Conference, ongoing this week in New York City.

The key to using valid electronic signatures on mobile devices is ensuring customers actually receive, see and understand the disclosures, he said. Financial institutions should inform borrowers they will receive electronic disclosures as early on in the process as possible so they know to be on the lookout for them, he said. (American Banker Online, Nov. 18)

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