The Point: June 24, 2013

Editor's Clarification:
In Friday's issue of The Point, the article titled "NCUA issues final loan participation rule" reported that "A single originator cap has been set at the greater of $5 million or 100 percent of net worth." To clarify, the referenced cap applies to the amount of participations that a credit union can purchase from a single originator.

NYS Legislature passes credit union state charter bill

In a significant victory for New York credit unions, the NYS Legislature has passed legislation that gives state-chartered credit unions the ability to include select employee groups (SEGs), associations and communities within the same field of membership.

The legislation, which was introduced by Sen. Joseph Griffo (R-Utica-Rome/Central New York) and Assemblywoman Annette Robinson (D-Metropolitan), will now advance to Governor Andrew Cuomo's office.

In the past few weeks, several pro-credit union bills championed by the Credit Union Association of New York have been passed or advanced by the NYS Legislature. In addition to the state charter bill, highlights include:

  • Legislation that would allow New York credit unions and other financial institutions to establish prize-linked savings accounts was passed by both the Senate and Assembly and is now awaiting Cuomo's signature.
  • Legislation that would eliminate the requirement of physical fee disclosures on ATMs was passed by the Senate and Assembly and is awaiting Cuomo's signature.
  • The Senate passed legislation that would increase the penalty for robbery of a financial institution and make the crime a class C felony, and the companion bill was referred to the Assembly Banks Committee.
  • Legislation that would create a Credit Union State Funds Deposit Program in New York State advanced to the Senate Finance Committee and the Assembly Ways & Means Committee.

Association provides mid-year regulatory reminders

The Credit Union Association of New York's compliance team has compiled a list of mid-year regulatory reminders for credit unions. The following CFPB regulations have recently become effective or will become effective within the next six months:

  • effective March 28, 2013: final rule eliminating the cap on fees charged prior to account opening, allowing it solely during the first year after account opening;
  • effective May 3, 2013, with a mandatory compliance date of Nov. 4, 2013: revision to the Credit Card Act to allow stay-at-home spouses to obtain credit cards individually;
  • effective June 1, 2013: prohibition of arbitration clauses on loans secured by a dwelling (included in the loan originator compensation rule);
  • effective June 1, 2013: final rule requiring that high-cost mortgage escrow accounts be maintained five years, as opposed to the previous one-year requirement;
  • effective Oct. 28, 2013: final rule containing requirements for credit unions that provide remittance transfer services;
  • effective Jan. 10, 2014: final rule that 1) requires credit unions to determine a member’s ability to repay; and 2) creates a new process for qualifying members through a qualified mortgage;
  • effective Jan. 10, 2014: final rule amending Regulation Z with regard to high-cost mortgage (HOEPA) loans;
  • effective Jan. 10, 2014: final rule amending Regulations Z and X with regard to mortgage servicing;
  • effective Jan. 10, 2014: final rule regarding loan originator compensation;
  • effective Jan. 18, 2014: final rule requiring credit unions to provide members with a copy of appraisals used to determine the value for mortgage loans; and
  • effective Jan. 18, 2014: final rule requiring physical inspections and other requirements for higher-priced mortgages.

NCUA provides guidance on investment regulations

Credit unionists can learn more about NCUA's revisions to investment regulations by viewing NCUA Supervisory Letter 13-03, which was recently shared with examiners and enclosed in a letter to credit unions.

Under the Dodd-Frank Act, NCUA was required to remove references to credit ratings in its regulations and substitute other appropriate standards of creditworthiness. As a result, the agency replaced minimum rating requirements with a requirement that federal credit union investment officials conduct and document credit analyses demonstrating that each issuer has demonstrated a capacity to meet its financial commitments.

The supervisory letter addresses:

  • key factors to consider when analyzing credit risk for various investment types and counterparty agreements;
  • guidance on structured securities analysis; and
  • grandfathered investments.

Helpful Links

CUNA News Now

Don't Tax My Credit Union Website

CUNA Tax Exemption Advocacy Toolkit (CUNA member log-in/ registration required.)

CUNA Regulatory Advocacy Report (CUNA member log-in/registration required.)

CUNA Legislative Update (CUNA member log-in/registration required.)

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