NWCUA Regulatory Advocacy Update
January 26, 2012
January 26, 2012
Association Responds to Oregon DOJ Interim Proposal on Mortgage Loan Servicing
The Northwest Credit Union Association (NWCUA) sent a letter to the Oregon Department of Justice (DOJ) in response to a concerning interim proposed rulemaking on mortgage loan servicing. Developed in an effort to hold those predicating predatory mortgages and credit scams accountable, the proposal would sweep credit unions into this rulemaking as well. While this is a proposed interim rulemaking, the DOJ is looking to implement it as an emergency rulemaking.
The rulemaking would create new duties for mortgage servicers, such as the obligation to follow the borrower’s “reasonable and lawful instructions, consistent with the terms of the underlying note and mortgage.” However, a servicer’s primary duty is to the financial institution it services and to appropriately credit payments and responding to inquiries or errors in compliance with the Real Estate Settlement Procedures Act (RESPA).
The proposal also leaves multiple terms and timelines vague and subject to some degree of interpretation, such as performing certain duties “promptly” and prohibiting actions which are “likely to mislead” a borrower. Without more clear definitions these terms could confusion and unintentional violations of this proposed regulation. Also, without a clear definition of what is “reasonable and lawful,” there becomes a large gray area for interpretation, as current notes and mortgages don’t include such instructions.
The rulemaking would also impose a new duty between the servicer and borrower, making simple negligence a violation of Oregon’s Unlawful Trade Practices Act (UTPA), opening the servicer to punitive damages for such errors.
“Overall, we believe this proposal is overreaching and have serious concerns,” said NWCUA Director of Regulatory Advocacy Jaycee Winn. “The Association has met with representatives from the DOJ and Department of Consumer and Business Services to discuss these concerns as well as issuing a formal comment letter. The Association is also working in partnership with organizations sharing these concerns.”
Fed Will Maintain Low Rates Through 2014
In its first meeting of the year, the Federal Reserve’s Federal Open Market Committee (FOMC) announced that in order to maintain an economy that has been “expanding moderately, notwithstanding some slowing in global growth,” it will keep the target range for federal funds rate between 0 and 0.25 percent “at least through late 2014.”
The FOMC has a dual mandate to foster maximum employment and price stability. To help bolster the economy and meet this dual mandate, the FOMC “expects to maintain a highly accommodative stance for monetary policy.”
The FOMC will also continue its “Operation Twist” program to extend the average maturity of its holdings of securities. It will continue to reinvest principal payments from holdings of agency debt and agency mortgage-backed securities into agency mortgage-backed securities as well as rolling over maturing treasury securities at auction. The FOMC will regularly review and adjust the size and composition of its securities holdings as appropriate.
Read the full FOMC statement here.
NCUA Reduces Operating Fee
The National Credit Union Administration (NCUA) announced that the 2012 operating fee for natural person credit unions will be 0.9-percent lower than in 2011. Citing a growth in federal credit union assets and a slight overhead transfer rate increase as the impetus for this reduction, the NCUA will send invoices for this fee as well as any adjustment needed to maintain National Credit Union Share Insurance Fund (NCUSIF) capitalization at 1 percent of insured shares.
The NCUA will charge no fees for assets up to $500,000 and $100 for assets from $500,001 to $750,000. Operating fees will be charged on a sliding scale for credit unions with assets greater than $750,000.
Also, don’t forget to register for the Feb. 8 NCUA/CFPB town hall, which will feature Consumer Financial Protection Bureau (CFPB) Director Richard Cordray.
Cordray Unveils CU Advisory Council Concept
CFPB Director Richard Cordray testified before the House Subcommittee on the Troubled Asset Relief Program (TARP), Financial Services and Bailouts of Public and Private Programs this week in a hearing aptly titled “How Will CFPB Function Under Richard Cordray?”
Cordray cited the bureau as the “first agency whose sole mission is making sure the consumer financial markets work for American families” and expressed interest in working closely with Congress and other agencies to accomplish this goal. When addressing credit unions and community banks, he said “their importance to our communities and to the national economy cannot be overstated” and expressed that leveling the playing field is a priority.
He also said the bureau will establish an advisory council for credit unions to help the agency gauge the impact of its actions on the industry.
“We’re pleased by this announcement and will continue to engage with CFPB on these and emerging regulatory matters,” Winn said.
The NWCUA Regulatory Advocacy team works with state and federal regulators to help reduce the regulatory burden on credit unions and protect the credit union movement. The Association encourages members to participate in the regulatory process. If you have any questions regarding any regulatory issues, please contact Director of Regulatory Advocacy Jaycee Winn at email@example.com, or at 800.995.9064 x209.