Tuesday, May 23, 2017

25 CUs Fined for Late Filing Q4 2016 Call Report

Twenty-five federally insured credit unions have consented to pay civil monetary penalties for filing late Call Reports in the fourth quarter of 2016.

Total penalties assessed by the National Credit Union Administration totaled $10,365.

Individual penalties ranged from $151 to $2,509. The median penalty was $253.

Of the 25 credit unions agreeing to pay penalties for the fourth quarter of 2016:
  • Eleven had assets of less than $10 million;
  • Nine had assets between $10 million and $50 million;
  • Four had assets between $50 million and $250 million; and
  • One had assets greater than $250 million.

Four of the late-filing credit unions had been late in a previous quarter.

Read the press release.

Credit Union Tax Expenditure Is $35.31 Billion over the Next 10 Fiscal Years

The tax expenditure arising from the credit union industry's exemption from the corporate income tax will equal $35.31 billion over fiscal years 2017 thru 2026, according to President Trump's 2018 Budget released today.

Read the Analytical Perspectives.

Bad Taxi Medallion Loans and New York Credit Union Merger

Credit Union Times is reporting that potential losses from taxi medallion loans played a role in the merger of Northwell Health Federal Credit Union (Jericho, NY) with Bethpage Federal Credit Union (Bethpage, NY).

The Northwell Health Federal Credit Union reported a loss of $2.1 million for 2016, as the credit union increased loan loss provisions for anticipated losses associated with taxi medallion participation loans.

At the end of the first quarter of 2017, Northwell Health had approximately $10.6 million in business participation loans, presumably most of the loans, if not all, were taxi medallion loans. Almost one-third (32.5 percent) of participation loans were 60 days or more past due.

Last year, Bethpage acquired troubled taxi medallion lender Montauk Credit Union.

I suspect that this latest merger will not be the last credit union merger due to taxi medallion loan losses.

Read the Credit Union Times article.

Monday, May 22, 2017

Banks and CUs Are Seeking Part of The Payday Lending Market

The Wall Street Journal is reporting that banks and credit unions are hoping that the Trump Administration will block the Consumer Financial Protection Bureau (CFPB) proposed payday lending rule and will scrap 2013 guidelines that forced banks to abandon the short-term loan market.

The article notes that "[s]ome credit unions continue to offer payday alternative loans"; however, the proposed requirement that lenders assess borrowers’ ability to repay could make this product too expensive to offer.

Proponents argue that letting banks and credit unions offer payday loans would benefit U.S. households that have paid billions in fees annually to payday and auto title lenders.

Read the article (subscription required).

Saturday, May 20, 2017

Colorado and Kansas CUs Buy Corporate Office Buildings

Elevations Credit Union (Boulder, CO) and Meritrust Credit Union (Wichita, KS) have purchased corporate office buildings.

Office-supply chain Staples has sold its four-story corporate office building in Broomfield for $16.5 million to Elevations Credit Union.

According to public records, Staples Contract and Commercial Inc., sold its 149,038-square-foot building and 17.6 acres at 1 Environmental Way in the Interlocken business park to One Environmental Way LLC, an entity created by Elevations.

In Wichita, Meritrust Credit Union announced that it has reached an agreement to buy the current headquarters building of Cargill Meat Solutions.

The building will house the credit union’s administrative departments and offices for mortgage services, wealth management advisors and small business services.

Terms of the deal were not disclosed.

Read the story.

Meritrust press release.

Friday, May 19, 2017

HUD Secretary Signals Possible Policy Shift on PACE Loans

Housing and Urban Development (HUD) Secretary Ben Carson signaled this week that the administration may revisit an Obama-era policy on Property Assessed Clean Energy, or PACE, loans, a controversial financial product that allows homeowners to pay for energy-efficient retrofitting -- such as solar panels and high-efficiency air conditioners -- through their property tax assessments.

Guidance issued last year allowed the Federal Housing Administration to approve mortgage and refinance applications for properties with PACE loans outstanding. “We are very, very amenable to adjusting that policy,” Carson said at an industry conference. “I’m concerned about it. It really does create a burden and an extra complication.”

Financial and housing trade groups, the Federal Housing Finance Agency (FHFA), and the housing GSEs have long expressed concern about PACE loans -- currently available in about 30 states -- taking lien priority over the first mortgage lien.

FHFA has prohibited Fannie Mae and Freddie Mac from purchasing loans with PACE liens which take precedence over the first mortgage, citing concerns about taxpayer risk.

As PACE loans have come under fire in the media for their lack of consumer protections, legislation has been introduced in Congress that would ensure PACE lenders provide full consumer disclosures. (See earlier post)

Thursday, May 18, 2017

Group Asks NCUA to Stop Bullying Medallion Owners

The Committee for Taxi Safety has requested that the National Credit Union Administration (NCUA) stop its assault on the taxi industry and show some human decency.

In a May 12 letter, David Beier, president of the Committee for Taxi Safety, wrote that "NCUA's unwillingness to work with medallion owners has put the very survival of our industry at risk."

The letter stated that the only lender not working with medallion owners is Melrose Credit Union, which is currently under conservatorship with NCUA.

The NCUA conserved lender is accused of taking a hardline stance with medallion owners by demanding large down payments or liens on primary residences to renew loans.

Even when borrowers comply with these demands, borrowers face substantial increases in the interest rates on their medallion loans.

The letter contends that NCUA's actions are that of a bully and will result in the financial ruin for thousands of medallion borrowers.

Beier asks "NCUA to act responsibly" and to work with struggling medallion owners.

Moreover, the letter suggests that NCUA is making things worse, which could adversely impact other medallion lenders.

Read the letter below.


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