Dunn also wrote that credit unions should be allowed to aggregate information regarding subordinate organizations and the salaries of the top five employees of those organizations, rather than having to list each salary individually.

In an interview, Dunn said CUNA is concerned because the draft conflicts with the agency's stated goals of more transparency.

"When the IRS originally made changes, they said they wanted a system that was more transparent and fair. When they issued the instructions, however, they set the income level so low that it doesn't get them the information they said they wanted and you placed a burden on employees who shouldn't have their salaries disclosed," she said. "Under these instructions, you could have someone who is implementing decisions being treated, for reporting purposes, as if they were making key policies."

The IRS issued draft instructions on filling out the revised version of Form 1099, which all tax-exempt organizations must file annually in lieu of an income tax return. The regulations were first issued last year and comments on the draft instructions were due June 1. There is no timetable for when the IRS will issue final instructions.

CUNA Skeptical on Good Faith Changes

WASHINGTON — Requiring lenders to include additional information about the lending process on the good faith estimate form would be burdensome for credit unions and confusing for consumers, CUNA told the U.S. Department of Housing and Urban Development recently.

CUNA maintains since this material is educational, rather than specific to the terms of a specific loan, it should be included in the Homebuyer's Guide to Settlement Costs that HUD provides all homebuyers. HUD contends that consumers are less likely to read the material if it not on the actual paperwork they will be reviewing.

CUNA also criticized a proposed change that would require lenders to give borrowers GFEs within three days of their having submitted a GFE application. Also, CUNA urged that the GFE's wording be clarified so that it is clear to the lender that the application has not been approved and that the borrower must submit a mortgage application.

Also, CUNA said requiring lenders to notify applicants that their application has been turned down within a day that the decision was made gives the lender "insufficient time" to do the necessary follow up..

The association also requested that HUD clarify the language that settlement costs be accurate within certain thresholds to ensure that exceptions are made for circumstances that are unforeseen by the borrower.

In the wake of the subprime mortgage crisis and concerns raised by consumer groups about the quality of the information disclosed to consumers, in March HUD issued proposed rules changes to the Real Estate Settlement Procedures Act. Comments were due at the end of May and HUD is reviewing those comments before issuing final regulations.

Federal Banking Regulator Echoes CUs' Appraisal Changes Concerns

WASHINGTON — A real estate appraisal code will disrupt the existing processes that "generally are functioning well for depository institutions and consumers," the government's top banking regulator wrote recently.

Comptroller of the Currency John C. Dugan said in a May 27 letter to Office of Federal Housing Enterprise Oversight Director James B. Lockhart that the best way to ensure that appraisals are conducted free from influence or coercion by a third party is through strong state and federal regulations, not by dictating the internal organizational structures of lenders. Also, he contends may not regulate national bank activities through requirements imposed on third parties.

Although Dugan's office does not oversee credit unions, the interests of banks and credit unions are similar on this issue.

Previously, CUNA and NAFCU said a proposal to ban persons involved in the financial institution's lending activities from doing home appraisals would badly hurt smaller credit unions. They also took issue with a proposal to require credit unions to establish a hotline and email address to receive complaints about the appraisal process.

Both said it duplicates a requirement being imposed on the Valuation Protection Institute, an oversight agency that will be funded by Fannie Mae and Freddie Mac.

The proposed appraisal rules changes were developed by Freddie Mac and Fannie Mae as a result of an agreement with New York Attorney General Andrew Cuomo following his investigation of appraisal fraud. Though both of the government-sponsored mortgage investors denied wrongdoing, they signed an agreement with Cuomo to overhaul their appraisal practices.

–[email protected]