Archive of Comment Letters

Comment Letters: 2010

NCUA

2010 NCUA Regulatory Review
August 6, 2010
This letter responds to the request for comments under the National Credit Union Administration (NCUA)’s Regulatory Review for 2010. By way of background, CUNA is the largest credit union advocacy organization in this country, representing approximately 90% of our nation’s 7,700 state and federal credit unions, which serve 93 million members. Many of these comments draw on past letters to the NCUA Board and comment letters we filed with the agency on pending proposals.

CUNA CEO Bill Cheney Writes to NCUA on Supervisory Concerns and Other Issues (sent to all three (3) Board Members)
August 3, 2010

CUNA Comments on Notice of Proposed Rulemaking – Short-term, Small Amount Loans
July 2, 2010
In our comment letter to NCUA, CUNA supports the ability of credit unions to provide beneficial short-term, small amount loans as alternatives to predatory payday lending. However, CUNA requests that NCUA provide additional flexibility for those credit unions that want to offer these types of programs. This includes allowing credit unions to charge an annual percentage rate of 36% that incorporates other fees, as an alternative to the proposed 28% in which only a $20 application fee would be permitted; flexibility to “roll-over” the loan beyond the stated maturity date under certain, limited circumstances; allowing loans for less than the proposed minimum of $200; and recognizing that a $25 application fee may be appropriate, instead of the proposed $20 limit. CUNA also believes that other features should be at the discretion of the credit union, including the imposition of a length of membership requirement, using payroll deduction or direct deposit, and the specific lending caps that should be used for these programs.

Fiduciary Duties at Federal Credit Unions; Mergers and Conversions of Insured Credit Unions
May 28, 2010
CUNA has a number of significant concerns on NCUA's proposed rule for fiduciary duties at federal credit unions, and mergers and conversions of insured credit unions. With respect to federal credit union fiduciary duty, we recognize that in a limited number of conversions, and in at least one credit union takeover attempt, the members’ interests did not seem to be the primary concern. A better approach to fiduciary duty would be to issue a regulation clarifying in what ways state corporate law applies to federal credit unions, as the Office of the Comptroller of the Currency (OCC) has done for national banks. The proposed prohibition on director indemnification is unnecessary because of existing state law and FCUA provisions and may have the unintended consequence of making it difficult for federal credit unions to find qualified, volunteer board members. We support ensuring directors should understand the finances and balance sheet of the credit union they serve. However, it should be the credit union board's collective responsibility to ensure this is the case for each board member and not an authority that an examiner could enforce against an individual director. While we support adequate due diligence and integrity in the voting process, the proposed rules would increase the complexity and lead times of the affected transactions, especially for credit union to credit union mergers. In general, we strongly urge NCUA to support greater regulatory relief for credit unions because credit unions continue to face a challenging business and regulatory environment.

Comments on NCUA's Proposed Rule on Part 742, Regulatory Flexibility Program
May 24, 2010
As outlined in our comment letter to the NCUA, CUNA does not support the proposed rule to amend certain provisions of NCUA's regulations as they apply to federal credit unions that participate in the Regulatory Flexibility Program. Specifically, the proposal would eliminate RegFlex authority for credit unions in regard to requirements for fixed asset investments, member business lending, stress testing of certain investments, and discretionary control of investments. As explained in our letter, CUNA does not support the proposal as issued for comment, and we urge that the NCUA Board not adopt it, or at least substantially revise it before it is approved in final form. If the Board feels changes to the RegFlex program are warranted, we urge a more targeted approach. We believe such an approach would facilitate the agency's ability to address problem situations for individual credit unions as opposed to eliminating key aspects of the RegFlex program for all federal credit unions, regardless of whether NCUA has concerns about their activities or not.

Proposed Rule on Chartering and Field of Membership of Community Credit Unions
April 15, 2010
In CUNA’s comment letter responding to NCUA’s proposed changes to its current field of membership policy, CUNA urges NCUA not to adopt the changes without making important amendments. The comments incorporated in this letter were developed by CUNA’s Field of Membership Task Force. CUNA does agree with the proposal that NCUA should retain its current treatment of single political jurisdictional areas and believes use of statistical data for multiple jurisdictional areas can be useful, but does not agree that applicants should have to meet all of the criteria proposed to establish a “well-defined local community” for multiple political jurisdictional areas. CUNA strongly opposes changes restricting credit unions’ use of narrative information. CUNA also comments on changes to the grandfathering provision as well as to provisions defining rural districts. CUNA urged changes to the current requirements on underserved areas. CUNA opposed allowing examiners to review marketing plans and subject credit unions to possible sanctions if they are not complying with their marketing plans. CUNA urges NCUA to resume processing FOM applications as expeditiously as possible.

NCUA's Proposed Changes to Part 704, Corporate Credit Unions
March 5, 2010
See the special Corporate Credit Union Report page.

Reverse Mortgage Comments
February 16, 2010
In our comment letter in response to proposed guidance for reverse mortgages, CUNA generally supports the guidance, especially since reverse loans are very complex, often with significant fees, and which will become more prevalent as the population ages and seeks to use their current home equity to supplement their retirement income. CUNA specifically supports the requirement for financial counseling and believes that, with limited exceptions, such counseling should be done in-person, as opposed to telephone conversations. However, although consumers should receive general information and guidance about reverse mortgages before the application is submitted, much of the required counseling should occur after the application is submitted for a proprietary reverse mortgage loan, since the counseling will be more targeted and, therefore, more beneficial after the consumer applies for a specific loan. CUNA also supports the provisions addressing conflicts of interests, as well as the provisions addressing the policies, procedures, and internal controls that lenders should have, including the requirements with regard to managing third-party relationships.

Department of Housing and Urban Development

Real Estate Settlement Procedures Act – Strengthening the “Required Use” Prohibition
September 1, 2010
In our comment letter, CUNA encourages HUD in its efforts to ensure that consumers are protected when they are encouraged to use a specific lender or settlement service provider that is affiliated with the homebuilder. CUNA is concerned that the benefits provided to consumers are illusory and that consumers are not provided with an adequate amount of time to shop for mortgage loans and settlement services, either from credit unions or other financial service providers. CUNA also believes that the disclosures required in these situations can be improved. For example, we would support enhanced disclosures in these situations for first-time homebuyers since they may be more likely to rely on the homebuilder for objective advice.

Federal Housing Administration

Federal Housing Administration Risk Management Initiatives
August 16, 2010
In our letter, CUNA supports the proposed changes that would impose down payment requirements, based on the borrower’s credit scores as developed by the FICO Corporation, and would support even more stringent requirements if imposed on a graduated basis. In the proposal, the FHA indicated it would consider a temporary exemption to the credit score requirements for borrowers who refinance current loans, and we agree with this approach. CUNA also supports the proposed changes that would reduce the amount of the buyer’s closing costs that may be paid by the seller from 6% to 3% of the purchase price of the home.

Federal Reserve Board

Home Mortgage Disclosure Act
August 20, 2010
Although CUNA does not at this time advocate that specific, additional information be reported under the Home Mortgage Disclosure Act (HMDA), credit unions could support additional changes to the HMDA requirements if it is demonstrated that the new information would further the goal of ensuring fair lending and antidiscriminatory practices, while minimizing the additional burdens of providing the new information. CUNA also suggests that certain information reporting be deleted, suggests other changes to current HMDA requirements, and notes the need to clarify certain HMDA changes that are included in the new financial reform law. In addition, CUNA requests that credit unions be given at least two years to implement any changes and that additional meetings be conducted as this review process unfolds, which should include credit unions.

Proposed Rule on Implementation of the CARD Act
April 14, 2010
In our letter to the Fed, CUNA expresses concern because credit unions will only be able to use one of the three alternatives for determining penalty fees, namely the list of specific fees that will be determined by the Fed at a later time. This is because the other alternatives will be too burdensome for smaller financial institutions. For these specific fees, we suggest they be no lower than the upper range of fees that credit unions currently charge. CUNA is also concerned with the provisions that would prohibit the imposition of multiple penalty fees based on a single event or transaction in certain situations. In addition, CUNA believes that the provisions requiring six-month reviews of rate increases be limited to the first two years after the initial increase and requests that the Fed provide guidance on what would be considered “reasonable” policies and procedures that credit unions need to develop with regard to this review process. CUNA also believes credit unions should have 45-days to implement any rate decrease that would result from this review process.

Proposed Clarifications to Regulations E and DD for Overdraft Protection Plans
March 31, 2010
In our comment letter to the Fed, CUNA expresses concern with the situations in which credit unions are not able to avoid paying certain ATM and one-time debit transactions but will not be able to charge a fee under these rules for an overdraft, unless the member opts-in. We strongly urge the Fed to reconsider this position and to also become involved in industry efforts to address these situations. The Fed should also provide additional clarifications, beyond those addressed in this proposal, in response to the numerous questions that credit unions and others have raised.

Establishment of Term Deposits
February 1, 2010
As indicated in our comment letter, CUNA generally supports the Federal Reserve Board's proposed amendments to Regulation D, Reserve Requirements of Depository Institutions, to authorize the establishment of term deposits at Federal Reserve Banks. CUNA believes the authorization of term deposits may provide a favorable option for credit unions to earn interest on short term investments without credit risk. However, we are concerned that the proposed auction method for determining which eligible institutions participate in each round of deposits may be dominated by the larger institutions. We encourage the Board to address this concern in the final rule, such as by allowing for aggregation by smaller institutions.

Proposed Rule to Amend Regulation Z for Closed-end Mortgage Loans
January 19, 2010
As outlined in our comment letter to the Federal Reserve Board, CUNA has no objections to the intent of the provisions of the interim final rule, which is to provide notification to borrowers when their loans are sold. However, we urge the Board to expand the exception provided for participation loans to include those in which legal title is transferred to some portion, but not for the entire loan, especially when the servicer does not change.

Federal Trade Commission

Mortgage Assistance Relief Services
March 25, 2010
This comment letter responds to a proposed rule that is intended to protect consumers from those who offer loan modification and foreclosure rescue services to consumers at a very high cost without any tangible benefits. As proposed, the rule would, in effect, exclude state-chartered credit unions that are subject to the FTC’s jurisdiction under the FTC Act, while federal credit unions would be excluded since they are not subject to FTC jurisdiction. The comment letter strongly supports this approach.

FinCen

Amendment to the Bank Secrecy Act-Reports of Foreign Financial Accounts
April 27, 2010
CUNA generally supports FinCEN's proposal. However, CUNA believes additional clarification is needed regarding the exemption provided for officers and/or employees of financial institutions that have a federal regulator and where the officer and/or employee has signature or other authority over a foreign financial bank account but no financial interest in that account. While this exemption may exempt most of our institutions, we believe that some of our state-chartered credit unions would be negatively by the exemption in its current form.

Treasury

Notice and Request for Information: Public Input on Reform of the Housing Finance System
July 23, 2010
In our comment letter in response to the Treasury's Department request for input on a new housing finance plan, CUNA urges that such a plan recognize that credit unions perform, and can continue to perform, a valuable role in the mortgage lending system. The plan must ensure that all segments of the financial services industry can take full advantage of the opportunities to sell their loans into the secondary market and to receive services from the Federal Home Loan Banks or other entities that may be created under a new housing plan. Also, the overriding goal of a new housing finance system should not be on increasing home ownership, but ensuring that consumers receive mortgage loans that they can afford and that any new housing finance plan that is developed must minimize additional legislative and regulatory burdens for credit unions, which are already subject to very substantial burdens that have escalated in recent years. As the process of developing a new housing finance system unfolds, CUNA will be working closely with our member credit unions to develop specific positions in response to the proposal that will be issued at a later date by the Obama Administration and in response to future legislative proposals.

Garnishment of Accounts With Federal Benefit Payments
June 18, 2010
In our comment letter, CUNA expresses serious concerns with the provisions that would require credit unions to review the account history during a 60-day period preceding the receipt of the garnishment order. Many credit unions do not have the data processing capability to perform such a review. A better alternative would be to permit credit unions to provide a flat amount in which the member would have access. CUNA also supports the provisions that would not require further review if funds are transferred to a second account but opposes the provisions that would exclude garnishment orders in which the United States is a plaintiff. CUNA also requests that credit unions have at least five days to provide the required garnishment notices to consumers.