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CURRENT Newsletter | 22 October 2020

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Advocacy / Governmental Affairs

Compliance / Regulatory Affairs

Financial Services / Economic News

Member Service / Technology


Free Compliance Update Webinar Oct. 28

Join attorney Jay Spruill, who coordinates the League Compliance Hotline through the Woods Roger law firm, for a free webinar Oct. 28 on compliance updates and hot topics. Jay will cover recent regulatory changes and issues that should be on your radar in 2020 and beyond.

Register here

Fraud Trends During COVID-19; Free Webinar Oct. 29

Join us Oct. 29 for a session with Fiserv’s Joe Schwartz on key fraud trends during the pandemic and how credit unions can best position themselves to combat that fraud.

Register here

CUNA Mutual Group’s ULEND Academy Set for Nov. 2-6

Your League is proud to offer CUNA Mutual Group’s popular ULEND Academy Nov. 2-6 as a virtual learning experience for credit union lenders looking for real-world solutions to today’s toughest lending challenges.

The curriculum guides lenders from foundational to advanced skill levels in all lend­ing communication channels and across all stages of the loan process - origination, underwriting, and closing - with cross-selling, consultation, and compliance woven throughout. ULEND Academy is set up as a virtual learning workshop within six, 60-to-90-minute daily sessions where participants will discuss, learn, and then apply.

Learn more | Register

Ignite 2021 Set for April 14-16 in Virginia Beach

We’re excited to announce the return of IGNITE, the League Annual Meet­ing! Slated for April 14-16, 2021 in Vir­ginia Beach, we’ve secured the new­ly opened Marriott Virginia Beach Oceanfront as our host hotel.

You can make hotel reservations now at this location: http://bit.ly/VACUL2021-hotel

Registration information for the event will be distributed in the coming weeks, so stay tuned!

Safety is our priority! We will continue to monitor guidance from local, state and federal officials regarding the safe­ty of meetings during the COVID-19 pandemic.

The Marriott is hosting meetings and has established safety protocols based on guidance from state and federal officials.

You can learn more on their website: http://bit.ly/VACUL2021-hotel2

Virginia Credit Union Services Announces New Partnership with Credit Union Mortgage Association

Virginia Credit Union Services, Inc., the wholly owned subsidiary of the Virginia Credit Union League, is proud to announce its new partnership with Credit Union Mortgage Association (CUMA). The partnership will enable credit unions to offer mortgage loan products to their members.

CUMA is owned and operated by credit unions and boasts a 40-year track record of providing best-in-class mortgage-related services to credit unions of all asset sizes. CUMA services include origination, processing, underwriting, servicing, closing and secondary market access.

“We’re proud to bring CUMA’s exceptional service, extensive mortgage product line, and unmatched experience to Virginia’s credit unions,” said Virginia Credit Union Services Vice President David Deacon. “CUMA’s seasoned mortgage professionals deliver a mortgage experience that mirrors the same great service members have come to expect from your credit union, while eliminating many of the more time-intensive tasks faced by your staff.”

Among CUMA’s many benefits:

• State-of-the-art web technology allowing members to apply for a mortgage online and receive a decision in as little as 10 minutes.
• Wide variety of loan products and programs, including FHA/USDA, VA and Reverse Mortgages.
• Correspondent relationships with five of the nation's largest wholesalers.
• Approved partner with Fannie Mae.

Learn more

Fed Creates Pilot Program for FedNow Instant Payments

The Federal Reserve announced the creation of the FedNow Pilot Program to support development, testing and adoption of the FedNow Service. CUNA supports the ongoing development of FedNow, a 24x7x365 interbank settlement service.

According to the Federal Reserve, this pilot program continues efforts to foster industry partnerships in the development of the new instant payments service.

Over the coming weeks, the Federal Reserve will accept expressions of interest in the pilot program from eligible members of the FedNow Community, including financial institutions, as well as service providers and payment processors that partner with financial institutions.

Learn more

Advocacy / Governmental Affairs

Bipartisan Coalition of Lawmakers, with CUNA/League Support, Call for TDR, CLF Extension

A bipartisan group of lawmakers Tuesday sent a letter to Speaker of the House Nancy Pelosi (D-Calif.) and House Minority Leader Kevin McCarthy (R-Calif.) calling for a one-year extension to existing Troubled Debt Restructuring (TDR) and Central Liquidity Facility (CLF) regulations, an issue championed by CUNA, the Leagues, and credit unions.

In the letter led by Rep. Danny Davis (D-Ill.), members ranging from progressive Democrats to conservative Republicans recognized the efforts that credit unions are making to help as many Americans as possible, underscoring that TDR and CLF extensions will aid in that economic support to credit union members.

“We appreciate the leadership and support the signatories have shown,” said CUNA Chief Advocacy Officer Ryan Donovan. “This group of members coming together sends a strong signal that these provisions are critical to credit unions and their members as we all work toward recovery from this horrible virus and the ensuing economic crisis.”

The letter, which was also sent to House Financial Services Committee Chairwoman Maxine Waters (D-Calif.), recognized the leadership of NCUA in campaigning for the CLF in the pandemic’s early days.

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Compliance / Regulatory Affairs

Agencies Propose Rule on Role of Supervisory Guidance

Federal financial regulators including NCUA released a joint proposed rule on the role of supervisory guidance Tuesday. The proposal codifies a September 2018 statement from the same agencies that supervisory guidance does not have the force and effect of law.

“By codifying the 2018 Statement, the proposed rule is intended to confirm that the agencies will continue to follow and respect the limits of administrative law in carrying out their supervisory responsibilities,” the proposal reads. “The 2018 Statement reiterated well-established law by stating that, unlike a law or regulation, supervisory guidance does not have the force and effect of law. As such, supervisory guidance does not create binding legal obligations for the public. The proposal would also clarify that the 2018 Statement, as amended, is binding on the agencies.”

NCUA, as well as the other agencies, will accept comments on the statement for 60 days following its publication in the Federal Register.

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State Regulators Offer Several Recommendations on NCUA’s CECL Proposal

While saying it is generally supportive of NCUA’s efforts to mitigate the day-one effect of the current expected credit loss (CECL) methodology on capital levels, the National Association of State Credit Union Supervisors (NASCUS) said it would like to see several changes made to the proposal.

In a comment letter to NCUA, NASCUS’ list of recommendation includes:

  • Very small credit unions (those with less than $10 million in assets) that implement CECL should be given the option to phase in the day-one effect
  • Credit unions that reach $10 million in assets after Jan. 1, 2023, should be afforded the opportunity of a three-year phase-in of the day-one effect
  • Credit unions with assets of $10 million or greater should have the option of recognizing the full day-one effect of CECL immediately
  • NCUA should consider how CECL will be incorporated into stress testing requirements after implementation

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Fannie and Freddie Extend COVID-19 Loan Flexibilities

The FHFA has announced that Fannie Mae and Freddie Mac will extend several of their loan origination flexibilities until the end of November 30, 2020. The changes are to ensure continued support for borrowers during the COVID-19 national emergency. The flexibilities were set to expire on October 31, 2020.

The extended flexibilities include:

  • Alternative appraisals on purchase and rate term refinance loans;
  • Alternative methods for documenting income and verifying employment before loan closing; and
  • Expanding the use of power of attorney to assist with loan closings.

Learn more

GSE Exemption to Stay in Place until Underwriting Rule Finished: CFPB

The Consumer Financial Protection Bureau confirmed that loans backed by Fannie Mae and Freddie Mac will remain exempt from the agency's Qualified Mortgage standard until the bureau finishes rewriting the QM rule.

The bureau's decision announced Tuesday is intended to provide breathing room for the mortgage market that had feared a quick end for the exemption before the CFPB makes key changes sought by the industry to the underwriting rule.

For the past seven years, loans approved by the government-sponsored enterprises' underwriting engines have been considered ultrasafe qualified mortgages that automatically meet the bureau’s ability-to-repay underwriting requirements. QM loans give lenders a safe harbor from legal liability. (American Banker, Oct. 21)

CFPB Seeks Input on Designing Rules for Consumer Access to Financial Records

The Consumer Financial Protection Bureau issued an advance notice of proposed rulemaking seeking comments on how it might most efficiently and effectively develop regulations relating to consumer access to financial records.

The CFPB said providers of financial products and services accumulate data on consumers and their use of those products and services, which, if accessible, could allow consumers to better manage their financial accounts and enhance the control of their financial matters. Specifically, consumer authorized data can be used for personal financial management, making and receiving payments, improving consumer savings outcomes, and underwriting credit, according to a CFPB news release.

The bureau is seeking comments and information on costs and benefits of consumer data access; competitive incentives; standard-setting; access scope; consumer control and privacy; and data security and accuracy.

Comments on the matter are due within 90 days of the ANPR's publication in the Federal Register.

Learn more

Financial Services / Economic News

Credit Unions Should Expect Gentler Dip in Mortgage Originations: MBA Report

The Mortgage Bankers Association still expects a drop in mortgage originations next year, but the fall will be cushioned as the refinance boom maintains more momentum than it expected a month ago.

And MBA said its estimates released Wednesday are premised on controlling the pandemic and further relief for struggling households and businesses in 2021.

MBA expects purchase mortgages to surge by 28% in the fourth quarter and 32% in the first quarter, with diminishing gains continuing through 2023. For 2020, it expects purchase originations to rise 16% to $1.42 trillion, and 9% to $1.54 trillion next year — eclipsing the previous all-time high of $1.51 trillion in 2005.

MBA chief economist Mike Fratantoni expects 2021 to be “a strong year for the mortgage market, fueled by low rates, an increase in homebuilding, sizable demand from Millennials, and a desire — as a result of the pandemic — of more households seeking larger homes.”

Learn more

Member Service / Technology

FICO Survey Finds ‘Bad Digital Experience’ Can Be Costly, With FIs Acknowledging They Are Struggling With the Process

FICO has released its latest Customer Identity Management Survey, which found banks across the U.S. and Canada are struggling to meet consumers’ digital banking expectations, particularly around identity management.

The impact of a bad digital banking experience can be “costly” to financial institutions, According to FICO, which pointed to an earlier consumer study it conducted that found 23% of consumers would abandon opening an account if forced to prove their identity via another channel.

Among the study’s findings:

  • Only 49% of North American banks presently use digital methods to capture or verify identity when opening personal bank accounts (i.e., checking accounts).
  • 75% of banks in the U.S. and Canada are planning to invest in an identity management platform within the next three years.

Despite COVID-19 quickly turning online banking into an essential service, the survey found financial institutions struggling with how to establish practices that combat online identity fraud and money laundering, without negatively impacting customer experience.

For example, FICO said 51% of North American banks are still asking customers to prove their identities by visiting branches or posting documents when opening digital accounts. This also applies to 25% of mortgages or home loans and 15% of credit cards opened digitally, FICO reported.

Learn more

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