(July 30, 2021) Meanwhile, state credit union examiners from around the country can participate in the Aug. 16 Kentucky Examiner School, developed to help examiners build skill sets and enhance their knowledge around a core area of topics. The program starts 9 a.m. and runs until 4 p.m., ET; cost is $200 for NASCUS members, $300 for all others. Among the scheduled speakers are Mark DeBree, managing principal, and Aaron Martini, director ALM services, both of Catalyst Strategic Solutions; Rayleen Pirnie, NEACH; Glory LeDu, president, LeagueInfoSight LLC; Kevin Chiappetta, president, QuantyPhi; and Brian Knight, NASCUS executive vice president and general counsel.
LINK:
Agenda, registration, KY Examiner School Virtual Event
(July 30, 2021) The virtual 2021 NASCUS State System Summit (S3) is fast approaching – just less than three weeks away, Aug. 17-18 – and registrations are being taken now.
Key sessions scheduled at the two-day event include:
- Employment Trends: What is the New Reality?
- The Changing World of Real Estate and Mortgage Lending
- Economic Landscape: 2021 and Beyond
- Appraisal Industry in Conflict: Implications for Credit Unions
Also on the agenda: A “state of the state system” address by NASCUS President and CEO Lucy Ito, and comments from NASCUS state regulatory and credit union leadership.
New this year at S3 is an attendee hub (for registered participants in S3), via NASCUS.org, that provides access to presentation downloads and on-demand videos of each session. Also new will be “gamification,” in which attendees earn points just by visiting the hub and interacting with the website. The top 10 participants with the greatest number of points win a prize.
The NASCUS 2021 S3, the flagship event for the state credit union system, is a unique event which brings together credit union regulators and practitioners for a mutual exchange of dialog, problem-solving, and shared resources within the system. For more information, including registration, see the link below.
LINK:
Agenda, registration for NASCUS 2021 State System Summit (S3)
(July 30, 2021) Chalk up the Washington Department of Financial Institutions–Credit Union Division as another state regulatory agency that has undertaken the rigorous process of earning re-accreditation through the NASCUS program. Under the process, the state agency undergoes a series of in-depth reviews and assessments by a panel of veteran state supervisors, assembled by NASCUS.
“Our department examines state-chartered credit unions operating in Washington to ensure their compliance with our laws,” said Charlie Clark, director of the WA Department of Financial Institutions. “The value of NASCUS accreditation is that it shows our stakeholders that as examiners and as an agency we meet the highest standards nationally and are following best practices. I am proud of our team for receiving accreditation.”
To earn accreditation, a credit union state supervisory agency must demonstrate that it meets standards in agency administration and finance, personnel and training, examination, supervision, and legislative powers. The process includes disciplined self-evaluation, peer review, and ongoing monitoring. It is administered by the NASCUS Performance Standards Committee (PSC).
The program was developed in 1989; it is modeled on the university accreditation concept, applying national performance standards to a state’s credit union regulatory program.
LINK:
Washington State DFI Receives 2021 NASCUS Re-Accreditation
(July 30, 2021) Slightly more Americans were not concerned about qualifying for a mortgage during the application process in 2019 (compared to the year before) before the COVID-19 pandemic began, according to updated mortgage loan-level data published this week by the CFPB and the Federal Home Financing Administration (FHFA).
In a joint release, the agencies said the data is aimed at providing insights into borrowers’ experiences in obtaining resident home loans. The data is collected, the agencies said, through quarterly surveys sent to borrowers who had recently obtained mortgages.
This latest data was collected before the financial impact of the coronavirus crisis became apparent in 2020, when economic conditions changed abruptly, and the process for applying for mortgages largely shifted to on-line. Thursday’s release adds two additional years of new mortgage data through 2019, the agencies aid.
Regarding the data point about concern among borrowers qualifying for a mortgage loan, those borrowers not concerned about qualifying during the application process increased somewhat from 2018 to 2019 (from 48% to 51% for home purchase mortgages and 57% to 66% for refinances).
Other points revealed by the data, the agencies said, included:
- The percent of survey respondents who applied directly through a credit union or bank decreased from 2018 to 2019 (from 54% to 49% for home purchase mortgages and 67% to 61% for refinances).
- The percent of survey respondents who reported applying for a mortgage through a mortgage broker increased from 2018 to 2019 (from 42% to 46% for home purchase mortgages and from 30% to 38% for refinances).
- The percent of survey respondents who reported a paperless online mortgage process being important in choosing the mortgage lender/broker remained relatively high and unchanged from 2018 to 2019 (40% for home purchase mortgages and 44% for refinances).
LINK:
CFPB and FHFA Release Updated Data from the National Survey of Mortgage Originations for Public Use
(July 30, 2021) Market participants now “have every tool they need to transition from LIBOR,” the vice chair of the Federal Reserve said this week, as a Fed-backed group developing an alternative to the widely used reference rate announced it had made a formal recommendation for the replacement, the Secured Overnight Financing Rate (SOFR). The recommendation came after a change in interdealer trading conventions that were adopted Monday (July 26), which outlined loan conventions and use cases for how best to use the SOFR. Federal Reserve Board Vice Chair for Supervision Randal Quarles also said that “all firms should be moving quickly to meet our supervisory guidance advising them to end new use of LIBOR this year.” LIBOR will no longer be used for new contracts beginning Jan. 1 and will be discontinued for existing contracts after June 30, 2023. Separately, the federal banking regulators Thursday jointly published FAQs concerning the regulatory capital treatment of capital instruments whose terms reference LIBOR … The Treasury Department and IRS Thursday announced that eligible employers can claim tax credits equal to the wages paid for providing paid time-off to employees to take a family or household member or certain other individuals to get vaccinated, or to care for a family or household member or certain other individuals recovering from the vaccination. Comparable tax credits are also available for self-employed individuals, the agencies said. In April, Treasury and the IRS announced eligible employers, such as businesses and tax-exempt organizations with fewer than 500 employees and certain governmental employers, could receive paid leave tax credits available under the American Rescue Plan Act of 2021 (ARP) for providing leave for each employee receiving the vaccine and for any time needed to recover from the vaccine.
LINKS:
ARRC Formally Recommends Term SOFR
OCC — Libor Transition: Regulatory Capital Rule Frequently Asked Questions
To Enable More Vaccinations, Treasury Expands Paid Leave Tax Credit
(July 30, 2021) NCUA gets a chance to share its views with the Senate next week when Board Chairman Todd Harper is scheduled to testify before the body’s Banking Committee. He will be joined for the Tuesday (Aug. 3) hearing on a panel by federal banking regulators, including FDIC Chairman Jelena McWilliams and Acting Comptroller of the Currency Michael J. Hsu. According to the committee’s website, the title of the hearing is “Oversight of Regulators: Does our Financial System Work for Everyone?” Sen. Sherrod Brown (D-Ohio) chairs the Senate Banking Committee. The hearing is scheduled to get underway at 10 a.m., and will be live-streamed via the Internet.
LINK:
(July 30, 2021) Credit unions should review a June 30 rule temporarily amending certain mortgage servicing requirements under the Consumer Financial Protection Bureau’s (CFPB) Regulation X to assist borrowers affected by the COVID-19 emergency, NCUA said this week in a “regulatory alert.”
The agency’s alert noted that the CFPB rule only applies to servicers that service mortgages secured by a borrower’s principal residence. The rule – which takes effect Aug. 31 — does not apply to small servicers, the agency said.
Key provisions of the rule, NCUA said, are that it:
- Defines a COVID-19 related hardship as “a financial hardship due, directly or indirectly, to the national emergency for the COVID-19 pandemic” declared March 13, 2020 (beginning on March 1, 2020) and continued Feb 24 of this year.
- Modifies early intervention requirements of live-contact messages and reasonable diligence obligations to “help ensure that borrowers experiencing a COVID-19 related hardship have timely and accurate information about their loss mitigation options.” That includes that servicers must take additional actions, until Oct. 1, 2022, during live contacts related to a COVID hardship.
- Permits servicers to offer loan modifications to borrowers facing a COVID-19 related hardship based on an evaluation of an incomplete application if specified criteria are met.
- Sets up temporary COVID loss mitigation procedural safeguards to ensure a borrower has a “meaningful opportunity to pursue loss mitigation options.” NCUA said that, from Aug. 31 through Dec. 31 – unless an exception applies – a servicer must meet at least one of the specified safeguards before initiating any judicial or non-judicial foreclosure process where a borrower became more than 120 days delinquent on or after March 1, 2020, and the applicable state statute of limitations regarding foreclosures expires on or after Jan. 1, 2022.
NASCUS will prepare and post a summary of the alert (available to members only).
LINK:
(July 30, 2021) Just a reminder that the next episode of NASCUS 101 — the series of webinars that covers the many ways NASCUS members can reap the most of their memberships – is coming up Aug. 12. In just 30 minutes, the concise, but detailed, overview touches on NASCUS legislative and regulatory (L&R) resources, educational offerings and webinars, member engagement, as well as news and data.
Additionally, the program shows members how to volunteer for a committee or working group, personalize member communications and sign up for regulatory and security alerts – as well as how to connect with other members to exchange ideas and collaborate. Also highlighted during the session: NASCUS’ latest product, Campus 365 (powered by BAI), which helps members hone their compliance and professional skills training, and more.
The bi-monthly series — free and open to all NASCUS members — illustrates how collaboration among all 45 regulatory agency members, committees, credit unions, leagues, corporates, trade associations, and CUSOs can support the credit union system.
In addition to the August session, NASCUS 101 is also scheduled for Oct. 14 and Dec. 9. See the link below for more details, including registration.
LINK:
NASCUS 101 (via the NASCUS Member Portal)
(July 30, 2021) Any discussion about the normal operating level (NOL) of the federal credit union share insurance fund must acknowledge that the actual equity ratio of the fund is inextricably tied to NCUA’s budget and the overhead transfer rate (OTR), NASCUS wrote in a comment letter this week.
Further, NASCUS wrote, if an elevated NOL is deemed necessary by the agency, NCUA should take steps to reduce the OTR, restoring millions of dollars toward maintaining the NOL and increasing the potential for distributions to stakeholders.
NASCUS was responding to a comment call by NCUA, issued in May, on the agency’s policy guiding determination of the NOL. Now, the NOL (the target equity ratio set for the insurance fund by the NCUA Board) is set at 1.38%. Under the law, the board may set the NOL at anywhere between 1.2% to 1.5%. If the equity level is greater than the NOL, the NCUA Board may vote to make a distribution back to credit unions of the equity in the fund above the NOL (as it did two years ago).
The agency said in May that its re-evaluation of NOL policy was prompted by two events: the current economic landscape (along with the impact of current forbearance programs ending, and likely evictions rising – both perhaps leading to loan underperformance), and pending events related to the corporate asset management estates and end of the NCUA Guaranteed Notes (NGN) Program. Staff noted then that the NOL will no longer have to take into consideration the NGNs after June, since the last of the notes will have been, by then, liquidated (which they were).
The agency sought comments in a variety of different areas, including when public comment should be sought when a change to the NOL is proposed, and the basis for evaluating the insurance fund’s performance.
NASCUS also wrote that it supported continuing the opportunity for stakeholders to participate in considerations of even modest 1 basis point adjustments to the NOL, as well as on the OTR and other adjustments or changes to the NCUSIF.
“Given the cost of maintaining the NCUSIF’s equity ratio at the NOL as determined by the NCUA Board is borne by credit union stakeholders, we believe the policy of notice and public comment before any change of 1 basis point or greater in the NOL should be maintained,” NASCUS wrote.
Writing that the state system supports a “counter-cyclical approach to funding the NCUSIF based on annual modeling utilizing scenarios developed by the Federal Reserve,” NASCUS stated that it supports a moderate recession as the model, with the use of the Federal Reserve baseline and adverse (when available) scenarios to test the model. “NASCUS encourages NCUA to factor into its modeling the historical performance of the NCUSIF and the credit union system to better calibrate the true needs of the SIF while returning as much money to credit unions as prudent for deployment in service of members,” NASCUS wrote.
But discussion of the NOL is not complete, NASCUS asserted, without admitting that the actual equity ratio of the SIF is inextricably tied to NCUA’s budget and the Overhead Transfer Rate (OTR).
“The simple fact is that NCUA has withdrawn over $1.7 billion from the SIF in the past decade ($1 billion of that in just the past five years) to fund agency operations,” NASCUS wrote. “Without question, the NCUSIF should fund its own administration and a robust supervisory program that identifies and mitigates material risk in the federally insured credit union system. But the fact remains that an elevated NOL, combined with the OTR, cannibalizes SIF investment earnings and denies credit unions SIF distribution opportunities.”
The association indicated that the agency should reduce the OTR, which would restore millions of dollars toward maintaining the NOL and increase the potential for distributions to stakeholders.
“Next to setting the OTR, establishing the NOL is one of the most consequential policy determinations administered by the NCUA,” NASCUS wrote. “Over the past several years, NCUA has taken steps to bring more transparency to the OTR and NCUSIF. NASCUS applauds and supports those efforts. We encourage NCUA to continue enhancing the transparency related to the accounting of the NCUSIF, the OTR, and modeling and factors contributing to the determination of the NOL.”
LINK:
NASCUS Comment: Policy for Setting the Normal Operating Level