e-Weekly

July 27, 2011

July 29 effective date for credit unions to comply with SAFE Act Registry rule
With the compliance deadline approaching for a statutory requirement that credit unions and their employees who are "mortgage loan originators" (MLOs) must register on the Nationwide Mortgage Licensing and Registration System (NMLS), some credit unions may be contacted by their federal or state regulator just double-checking that they are on top of the requirements, said Kathy Thompson, head of the Credit Union National Association‘s compliance department.

Effective July 29, the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) requires MLOs to have registered on the NMLS, and for MLOs to start putting their unique NMLS-assigned identifier number on appropriate mortgage documents.

If a credit union offers residential mortgage loans and employs individuals required to be federally registered as mortgage loan originators, the credit union must be registered with NMLS. Residential mortgage loans include first mortgages, second mortgages, home equity lines of credit (HELOCs), refinanced mortgage loans, reverse mortgages, and land purchased for the construction of a residence. A credit union must determine what employees meet the definition of mortgage loan originator, a term that is defined as an individual who takes a residential mortgage loan application and offers or negotiates terms of a residential mortgage loan for compensation or gain.

These MLOs must disclose their identifying number to members applying for a loan. The SAFE Act does provide a de minimus exception from registration if someone who would otherwise be an MLO makes five or fewer mortgage loans during a 12-month period.

Beginning on August 1, consumers will be able to access public information about credit union loan officers from the NMLS public website based on the MLO identifier number. Contact the Association office with any questions.

NCUA prepayment plan webinar now available online – participation deadline July 29
There were more than 2,000 participants to the National Credit Union Administration's (NCUA) July 11 webinar on the Voluntary Prepayment of Corporate Stabilization Fund Assessments program and now an archived version of that session has been posted to the agency's website.

The prepayment plan was adopted by the NCUA board June 29 and would permit voluntary prepayments up to a total of $500 million in Corporate Stabilization Fund assessments. The plan responds to credit union stakeholder requests to explore a mechanism that would allow prepaid assessments for the Temporary Corporate Credit Union Stabilization Fund. Credit unions have until July 29 to determine whether to participate in the voluntary initiative.

For more information on the plan and to access the online webinar click here.

CUSOs would file financials to NCUA under proposal
Credit union service organizations (CUSOs) would be required to file their yearly financial reports directly to the National Credit Union Administration (NCUA) under a recently released proposal.

Financials would also need to be forwarded to appropriate state supervisors. Any CUSO subsidiary would also have to comply with the regulation if it is adopted as a final rule.

The NCUA currently has the authority to inspect the financials and records of some CUSOs, but that authority is not universal. The majority of financial information on CUSOs is provided to the NCUA by natural person credit unions that obtain services from the CUSOs. NCUA staff noted that this is an "inefficient" system, and the agency added that the lack of detailed CUSO information "restricts NCUA's ability to conduct offsite monitoring and evaluate systemic risks posed by CUSOs."

The agency in a release said that the proposal, if enacted, would "enhance protections to consumers, credit unions and the National Credit Union Share Insurance Fund (NCUSIF)."

NCUA Chairman Debbie Matz said that while recognized this is a controversial change, it is needed. Board member Gigi Hyland added that this change allows the NCUA to increase its knowledge of the system without adding any new authorities.

The Credit Union National Association (CUNA) said that it will work with its Examination and Supervision Subcommittee, the leagues, and the CUNA CFO Council to analyze the impact of the proposal and develop comments.

The NCUA during the July open meeting also combined the roles of deputy executive director and chief operating officer into a single position and amended its rule to clarify that remittance transfers are permissible financial services for federal credit unions. Both of these changes were required by congressional actions.

For more on the NCUA meeting, click here.