Senate Banking Committee Chairman Christopher Dodd urged NCUA Chairman Michael E. Fryzel and other regulators to enforce forthcoming rules on reviewing rate increases and warn card issuers that they'll be held accountable for recent rate hikes.
Dodd (D-Conn.) noted that the recently passed law overhauling credit card rules requires card issuers to review, at least once every six months, accounts on which the rate has been raised. This includes any rate increase imposed after Jan. 1 of this year.
"I ask you to immediately notify all credit card companies under your respective jurisdictions that they will be held accountable for all interest rate increases during this time period and will be subject to the review requirement once it takes effect," Dodd wrote on July 9.
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The Federal Reserve will write the regulations and the Fed, the NCUA and other financial regulators will be responsible for enforcing them.
Lawmakers Urge Close
2nd-Mortgage Monitoring
The chairmen of the two committees that oversee financial services are urging NCUA Chairman Michael E. Fryzel and other regulators to ensure that financial institutions don't inflate the value of second mortgages.
Senate Banking Committee Chairman Christopher Dodd and House Financial Services Committee Chairman Barney Frank wrote that the true value of these homes must be reflected in balance sheets so that the government program to promote loan modifications, Hope for Homeowners, will work as intended.
"In recent discussions with servicers, investors in mortgage-backed securities and administration officials, it has become clear that one of the most significant impediments to the success of H4H is the unwillingness of subordinate lienholders to extinguish their liens as required for participation in this program, even in return for offers of reasonable compensation," Dodd and Frank wrote the regulators.
They also noted that misstating capital positions of these institutions would be especially harmful at a time when "an accurate picture of the capital adequacy of the banking system is crucial."
Dodd and Frank asked the regulators to review their findings with congressional staffers as soon as possible.
CU Trades Weigh In
On Mortgage Originators
The two national credit union trade groups expressed concern about the scope of proposed rules on registering mortgage originators.
NAFCU contends the proposed rules apply to too many people, require too much information and are slated to take effect too soon.
The association is urging the NCUA, which issued the proposed rules in conjunction with other financial services regulators, to only require mortgage originators paid by commission to register. That would exempt credit union employees because they are providing service to members rather than "engaging in an activity for profit," wrote NAFCU Associate Director of Regulatory Affairs Tessema Tefferi.
He also urged the agency not to require the registration of loan modifiers and not to require those who have to register to include their address and Social Security number in a place that the public can access.
In addition, employees should be exempt if they have originated five or fewer residential mortgages in the past year.
Tefferi also said the 180-day implementation grace period is not adequate due to the complexity of the rules, which would implement the Secure and Fair Enforcement for Mortgage Lending Act and suggested it be extended to at least one year.
CUNA echoed NAFCU's concerns about not including mortgage modifiers, but CUNA's letter mostly addressed other topics.
CUNA urged the agency to ensure that CUSOs are included in the rules, that privately insured credit unions have access to the registry, and that credit unions can override information provided by an employee if it is inconsistent with the credit union's records.
The association also suggested that high-level officials who review loan applications only occasionally shouldn't be defined as mortgage loan originators.
CUNA added that the exemption of certain employees should be based on the institution's asset size, not the number of mortgages he or she originates.
CUNA Senior Assistant General Counsel Jeffrey P. Bloch wrote in the group's comment letter that the NCUA should modify the proposed requirement on fingerprints for loan originators to allow credit unions to accept fingerprints that are more than three years old.
He said, "Since fingerprints do not change, the issue is how long fingerprints can be preserved, which we believe is much longer than three years, especially if they are in digital form."
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