ALEXANDRIA, Va.—The NCUA board this morning passed a final rule to assist underwater homeowners by allowing federally insured credit unions to refinance or modify real estate loans without obtaining an additional appraisal, and also OK’d an 8.9% reduction in the Temporary Corporate Credit Union Stabilization Fund oversight budget for 2015.
NCUA Board Chairman said the agency will also be setting up working groups on issues related to field of membership and secondary capital. Finally, at the meeting, the board also approved a notice for request for comment under the Economic Growth and Regulatory Paperwork Reduction Act of 1996 to identify rules for possible modification, simplification or repeal.
The go-ahead to FICUs to provide relief where appropriate to members who are underwater in their mortgages through no fault of their own is included in the final rule on appraisals (Parts 701 and 722) approved by the board.
That rule, part of the agency’s Regulatory Modernization Initiative, is aimed at encouraging federally insured credit unions to modify or refinance real estate loans they hold in areas where home prices have declined. A federally insured credit union could modify or refinance a real estate loan without a new appraisal if new monies are not being advanced or if there is a new advance with adequate collateral protection, according to NCUA.
“We want to keep members in their homes,” said Matz during the meeting at its headquarters office today. “We want to cut unnecessary paperwork, and we want to encourage credit unions to modify or refinance mortgages in markets where home values have fallen. This final rule does exactly that.”
The rule will also eliminate a duplicative requirement that federal credit unions provide members copies of appraisals for loans secured by a first lien on a dwelling. The Consumer Financial Protection Bureau has a regulation to that effect, making an NCUA provision unnecessary.
Other news out of the final board meeting of 2014:
FOM & Secondary Capital Working Groups
* The NCUA working groups on FOM and secondary capital will consult with credit union representatives as part of the agency’s ongoing Regulatory Modernization Initiative. That announcement was made as part of the new Notice and Request for Comment under the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA). Matz said the agency working groups would review stakeholders’ suggestions from the first Notice, which was published in June 2014.
“We’re also committed to listening to ideas from stakeholders about how to improve those regulations we have authority to change, as long as safety and soundness isn’t compromised,” said Matz. “NCUA is not required to perform the regulatory review under EGRPRA, but we do that voluntarily, as it aligns perfectly with my Regulatory Modernization Initiative. The review process has generated useful comments from the credit union system, and we are taking action to address those issues, including setting up these two working groups.”
Matz said Matt Biliouris of NCUA's Office of Consumer Protection will lead the field-of-membership working group that will consider suggestions for enhancing federal charters and consult with representatives from federal credit unions. The group intends to identify obstacles facing federal credit unions seeking to expand their fields of membership, and evaluate rule changes the Board could consider to ensure the federal charter remains competitive while complying with the Credit Union Membership Access Act.
Bill Myers of NCUA's Office of Small Credit Union Initiatives will lead the secondary capital working group that will consider ideas for raising the value of secondary capital for low-income credit unions. That working group will consult with representatives from low-income credit unions, both federally and state-chartered. Secondary capital investors will also be consulted as the working group identifies which investment models are likely to be most successful in the marketplace.
Second Notice for Comment
* The second Notice will open 17 rules for comment in three regulatory categories: agency programs, capital and consumer protection. To eliminate unnecessary burdens and outdated rules, EGRPRA calls for federal banking agencies and the Federal Financial Institutions Examination Council to conduct reviews of their regulations every 10 years.
“Over the next three months, we are eager to hear new ideas about the rules that are being opened for comment today,” Matz said, “and we will consider every one of them.”
Stabilization Fund Oversight Budget
The Board approved a proposed $4,121,519 budget for the Temporary Corporate Credit Union Stabilization Fund for 2015, an 8.9% reduction over this year’s budget.
NCUA noted the TCCSF is funded by the Stabilization Fund, and the oversight budget has no impact on the agency’s 2015 Operating Fund budget.
“We’re becoming more reliant on the expertise of our staff and less on contractors, leading to a 14% reduction in the contracting budget, said Matz. “We are managing more than $22 billion in complex securities and legacy assets with just five full-time employees, yet we have reduced administrative costs by 63%.”
The Stabilization Fund oversight budget finances activities of the NCUA Guaranteed Notes Securities Management and Oversight Committee. The budget also covers expenses incurred by other NCUA offices in support of the Corporate Resolution Plan. Those costs include retaining services of external valuation experts, tax consultants, financial specialists, attorneys and accountants.