Trades Praise Reg on Second Mortgages but Give Premium Regs Mixed Reviews
FCUs would be allowed modify a second mortgage to match the first one, even if that mortgage extends beyond the 20 years allowed by the agency's lending rules. The rules place such a limit on second mortgage loans secured by the borrower's primary residence.
In separate letters to NCUA, the trade associations also suggested that the NCUA should expand the rule to all mortgage modifications, not just those under the administration's program.
CUNA Senior Assistant General Counsel Jeffrey Bloch wrote that many CUs aren't participating in the administration's program "because of the complicated requirements and onerous paperwork" but are still helping members.
NAFCU Associate Director of Regulatory Affairs Tessema Tefferi urged the agency to clarify its regs to allow FCUs to make second mortgages if they are secured by the borrower's future residence.
The trades offered a mixed assessment of a proposed rule clarifying what a CU owes upon joining or leaving the NCUSIF during the year.
Under the proposal, if a CU enters the system one day after an impairment takes effect, it does not have to pay the impairment. When a premium is levied as of a specific date, an exiting CU's premium would be pro rated to cover its entire time within the system. The changes would impact credit unions that convert to other forms of governance or convert to private insurance or change their status from privately insured to being part of the NCUSIF.
Both CUNA and NAFCU praised the portions requiring credit unions converting to NCUSIF coverage to immediately fund their 1% deposit based on the number of insured shares on the last day of the recent reporting period.
NAFCU's Tefferi wrote that the agency's proposed approach for dealing with credit unions that leave the NCUSIF-based on insured shares of the last day of the last reporting system-"raises questions of fairness" because such a credit union wouldn't have to pay its portion of the assessment to replenish the NCUSIF after losses from its rescue of the corporate credit union system.
Tefferi also urged the agency to modify its invoices to federally insured CUs to include detailed information about the need for assessments.
CUNA Regulatory Counsel Luke Martone suggested giving federally insured CUs "a full accounting as to the cause, nature, and extent of the NCUSIF's expenses." He also urged the agency to revise the section in the proposed rule about allowing delayed payments so that it authorizes "limited waivers or delayed payments of any penalties, based on exigent circumstances at the credit union."