WASHINGTON -- Consumers should be allowed to opt-out of a creditunion's overdraft protection program, but proposed rules requiringextensive notification of this right would be burdensome, CUNA andNAFCU told the Federal Reserve System.

In separate letters, the trade associations said forcing creditunions to go to greater lengths to advise members of their optionscould hurt smaller credit unions and overwhelm consumers with toomuch information.

The Federal Reserve has proposed that financial institutions berequired to tell consumers that they can opt-out of overdraftprotection during any statement period in which the consumer usesthe service. Also, the Fed wants financial institutions to giveconsumers the option of only opting out of overdrafts at ATMs andfor debit card transactions.

NAFCU Senior Counsel and Director of Regulatory Affairs CarrieHunt wrote that the language regarding disclosure requirements is"overly specific and unnecessarily lengthy." She urged the FederalReserve to do consumer testing to come up with language thatresults in the information being "presented in a more succinctmanner."

CUNA Senior Assistant General Counsel Jeffrey Bloch wrote thatif credit unions have to provide the opt-out information as oftenas the Federal Reserve suggests, it will "increase the risk thatconsumers will ignore this information, while increasing burdensfor financial institutions, which include higher postage andprocessing costs."

Hunt also objected to the proposal to extend the requirementthat financial institutions regularly include on statementsaggregate amounts charged for overdrafts and returned checks to allinstitutions, whether or not they promote or advertise theoverdraft protection program.

Institutions should "continue to have the option of mitigatingtheir disclosure obligations by choosing not to promote the paymentof overdrafts," she stated.

He praised the part of the regulatory proposal that requiredfinancial institutions to only disclose the amount of fundsavailable for a customer's immediate use or withdrawal in theiraccount. Currently, when a customer makes a balance inquiry, thefinancial institution can include funds available through theoverdraft protection plan on top of the amount in the customer'saccount.

In a separate letter, Hunt took issue with the proposal tochange the language on credit card billing statements from thecurrent "grace period" to the phrase "How to Avoid Paying Intereston Purchases." The change will confuse consumers and be costly forcredit unions, which would have to spend money to maintainuniformity in their disclosures.

She also said that a proposed change that sets a minimum cutoffhour of at least 5 p.m. for making payments could place a burden oncredit unions that are only open for a limit number of hours.

Feds Clarify Disclosure Requirements On Subprime,Adjustable Mortgages

WASHINGTON -- Disclosure forms being given to potentialborrowers will more prominently feature the inherent and potentialrisks of subprime and adjustable-rate mortgage products, as resultof regulations issued by NCUA and other federal agencies.

The forms explicitly tell consumers not to assume that they canrefinance their ARM at a lower rate.

Also, lenders are required to tell consumers whether monthlypayments include taxes and insurance, whether there is a prepaymentpenalty or balloon payment, and whether obtaining a "fulldocumentation" loan is more cost effective.

The regulations also include sample mortgage comparison forms,which NCUA Chairman JoAnn Johnson said in an accompanying letter tocredit unions "are not required disclosures or model forms."

Credit unions can choose whether to use the examples or devisean alternative format that they think is more appropriate for theirmembers, she added.

The final regulations explained the divide among the 25 groupsand individuals that issued comments. Most of the tradeassociations that filed comments on the proposals, which were firstdrafted last year, said using the model forms should be voluntaryfor financial institutions. A community organization said the formsshould be mandatory to prevent consumer confusion.

The regulations were issued by NCUA, the Office of theComptroller of the Currency, the Federal Reserve System, the FDICand the Office of Thrift Supervision.

Wolters Kluwer Offers Tool Kit To Help With Red FlagCompliance

WASHINGTON -- Credit unions seeking help to combat identifytheft, as required by federal law, can look to a Red Flag Tool Kitbeing offered by Wolters Kluwer Financial Services.

The material includes forms, checklists, computer software,instructional videos and an online training course for employees.Credit unions have until Nov. 1 to put together, and inform theFederal Trade Commission of their plans. The FTC has devised RedFlag rules to help credit unions and other financial institutionscome up with ways to avoid identity theft of their depositors.

"Not only is it far more cost-effective to purchase thesolutions in one package, but the complete Red Flags Tool Kit alsoprovides financial institutions with the essential resources neededto help ensure they are prepared for the Red Flag rulescompliance," said Todd Cooper, vice president of Wolters Kluwer'sFinancial Intelligence Unit.

For additional information, go to:www.wolterskluwerfs.com/redflaginfo.

Financial Industry Solutions OffersWebinars on BusinessContinuity

WASHINGTON -- Risk assessment and developing a businesscontinuity plan are among the subjects of Webinars being sponsoredin the coming weeks by Financial Industry Solutions.

On July 30, the subject will be business impact analysis andrisk assessment: foundation of the continuity plan.

On August 6, the topic will be testing and maintaining yourplan.

On Aug. 12, the discussion topic is five keys to a successfulbusiness continuity plan.

All sessions begin at 1:00 p.m. EDT and last for 45 minutes. Thefirst two sessions are $149 each, and there is no charge for thethird session.

To register, contact Randall Smith, the company's senior vicepresident of business development, at [email protected] or go towww.fislov.com.

Financial Industry Solutions is an Indianapolis-based consultingfirm that provides companies with business continuity and disasterrecovery services.

[email protected]

NAFCU and Fannie Mae Will Hold Foreclosure PreventionWorkshop

WASHINGTON -- With foreclosures rising to record levels, creditunions can learn some tools for helping members avoid losing theirhomes at a seminar sponsored by NAFCU in conjunction with FannieMae.

The two-hour session, "Credit Union Foreclosure PreventionStrategies," is scheduled to be held in the Chicago offices ofFannie Mae on Aug. 6.

Fannie Mae's Affinity Relationship Manager Tammy Trefny willdiscuss the state of the housing market and explain what declininghome values are doing to increase foreclosure projections. She willalso give advice on how credit unions can position themselves tohelp keep members in their homes. Trefny has over 19 years ofexperience in the mortgage industry, 12 of which were spent in theprimary mortgage market.

NAFCU Senior Vice President of Communications Jay Morris willmoderate the event.

All credit unions are invited to attend the regional meeting andcan register by calling 800-344-5580. NAFCU members can alsoregister online at www.nafcu.org/ChicagoRegional.