Financial Crisis News Center

NCUA Releases Final Rule on Exception to Maturity Limit on Second Mortgages

This story appeared in Bank Digest.

The National Credit Union Administration has released a final rule confirming without change amendments made by an interim final rule published on June 24, 2009, modifying the NCUA’s lending rules to create a limited exception to the 20-year maturity limit on second mortgage loans. The amendment will permit federal credit unions participating in the Treasury Department’s Making Home Affordable Program to modify a second mortgage loan, beyond 20 years, to match the term of a modified first mortgage loan.

Congressional Spending Bill Responds to NCUA Priorities

This story appeared in Bank Digest.

The NCUA issued a release noting that Congress removed the borrowing cap on Central Liquidity Facility (CLF) borrowing for another fiscal year and increased the appropriation for the Community Development Revolving Loan Fund (CDRLF) as part of H.R. 3288, a broad 2010 spending package approved on Dec. 13, 2009. NCUA Chairman Debbie Matz hailed the weekend Congressional action, noting that “yesterday's passage of the FY2010 Financial Services Appropriation is a continuing sign that Congress is committed to working with NCUA to mitigate the effects of the economy on credit unions and their 90 million members. I commend Congress for lifting the CLF cap and authorizing NCUA to fulfill the essential role of providing additional liquidity for the credit union system.”

Matz Calls for Consumer-Focused Capital Reform

This story appeared in Bank Digest.

NCUA Chairman Debbie Matz has called for changes in the credit union capital regime that would enable credit unions to promote consumer savings while maintaining rigorous safety and soundness standards. In a Dec. 7, 2009, letter to House Financial Services Committee Chairman Barney Frank, D-Mass, Chairman Matz noted a trend in the credit union industry where well-capitalized credit unions were discouraging consumer deposits because of a potentially negative impact on established regulatory capital levels. “Some financially healthy, well-capitalized credit unions that offer desirable products and services are discouraged from marketing them too vigorously out of concern that attracting share deposits from new and existing members will inflate the credit union's asset base, thus diluting its net worth for purposes of prompt corrective action (“PCA”),” stated Matz. “Surely it was never the objective of PCA to discourage manageable asset growth by financially healthy credit unions in times of economic distress. To the extent PCA does so now, it does not contribute to the statutory objective of resolving problems in insured credit unions; it unintentionally creates a problem for them, which redounds to the detriment of consumers.”

Matz Calls for Lifting of Statutory Member Business Lending Cap

This story appeared in Bank Digest.

NCUA Chairman Debbie Matz urged the Treasury Department to support increasing or eliminating the statutory cap on credit union member business lending and allow NCUA to establish the regulatory parameters. In a letter responding to Treasury Counselor Gene Sperling's request for policy suggestions, Matz asserted that any lending limitations should be regulatory, not statutory. She further stated, “NCUA is best positioned to set requirements and maintain limits on member business lending, utilizing our direct supervisory knowledge and application of firm safety and soundness standards.”

NCUA Chairman Matz: Greater Supervision Will Help Manage Heightened Risks

This story appeared in Bank Digest.

In address to the American Association of Credit Union Leagues in Naples, Fla., National Credit Union Administration Chairman Debbie Matz told the attendees that the NCUA is strengthening supervision to help credit unions manage areas of heightened risk. She noted examiners are reviewing call reports to look for “red flags,” such as, concentrations of fixed-rate mortgages, and increased delinquencies in indirect lending portfolios, member business lending and loan participations. Matz added, “Whenever necessary, NCUA examiners will be taking public administrative actions to ensure compliance.” For example, Matz explained, “if a credit union has not addressed NCUA recommendations in a private Document of Resolution, examiners will likely follow up with a public Letter of Understanding and Agreement—or in more severe cases, a public Cease and Desist order.”

http://www.ncua.gov/GenInfo/Members/Matz/MatzSpeechdeliveredtoAACULAnnualMeeting11-13-09.pdf

Letter to Credit Unions Addresses Premium Assessments

This story appeared in Bank Digest.

The NCUA has issued a Letter to Credit Unions on recent action it took to maintain the strength of the National Credit Union Share Insurance Fund (NCUSIF) and begin the repayment of the Treasury borrowing for the corporate credit union stabilization plan. It noted that, as projected in prior guidance to credit unions, the resulting combined premium collection to credit unions is 15 basis points of insured shares. The invoice for the assessment will be sent in the fourth quarter of 2009 with payment due within 30 days of the invoice date.

09-CU-20 at http://www.ncua.gov/Resources/Letters/09-CU-20.pdf

Stress Testing Results at http://www.ncua.gov/Resources/Letters/09-CU-20(Attachment1).pdf

Corporate Credit Union Reserve at http://www.ncua.gov/Resources/Letters/09-CU-20(Attachment2).pdf

Credit Union Letter Addresses Loan Modification Programs

This story appeared in Bank Digest.

The NCUA has issued a Supervisory Letter on evaluating residential real estate loan modification programs. The Letter notes that, during this economic downturn, many credit unions are offering some type of loan modification, or other workout solution, to their distressed residential mortgage borrowers. The loan modifications will vary by credit union and by loan. The Letter lists “fundamental components” that examiners should look for in any loan modification program.

US Central CEO Replaced

This story appeared in Bank Digest.

The National Credit Union Administration  has announced that the US Central Conservatorship Advisory Board voted to replace US Central Federal Credit Union Chief Executive Officer James Nance. The action was taken due to divergent views about how to move US Central forward. Effective immediately, US Central Senior Vice President and General Counsel Francois Henriquez will assume the role of Interim CEO, and a search committee will begin a process to  determine a successor.

http://www.ncua.gov/news/press_releases/2009/MR09-0925a.htm

DeMarco Addresses National Association of Federal Credit Unions

This story appeared in Bank Digest.

In remarks before the National Association of Federal Credit Unions 2009 Congressional Caucus on Sept. 21, 2009, FHFA Acting Director Edward J. DeMarco commented on credit unions' role in restoring the housing market, stating that “credit unions continue to have an important role to play with respect to the country's recovery from the housing market mess of the past few years. And this is true for all credit unions, whether they make mortgage loans or not.” He added that, “The core of credit unions' mission, and their long history, speaks to working with households, especially households of modest means, to gain financial literacy and build a solid financial foundation that leads to economic opportunity. All of us need to refocus our energies on such a mission.”

Matz Sounds Themes of Urgency and Involvement at NAFCU Caucus

This story appeared in Bank Digest.

NCUA Chairman Deborah Matz on Sept. 21, 2009, noted the credit union industry's resilience and commitment to cooperative principles in the midst of economically difficult times in her address to the National Association of Federal Credit Unions (NAFCU) Congressional Caucus in Washington D.C. Identifying important tasks on the NCUA's agenda, Matz said, “Revising the corporate credit union rule is imperative. I cast the lone dissenting vote against the corporate rule when it was revised in 2002. I did not believe the crucial issue of risk concentration was adequately addressed. I also believed the investment authority being granted was overly broad and permissive, particularly in light of the complexity of financial instruments available to corporates. These issues must now be dealt with in NCUA's new rule.”