In This Issue

• FHFA Warns About Risks from 'Super-Priority' Liens
• SEC Proposal Would Address S&L Holding Company Disparity
• ABA, State Groups Urge Withdrawal of FHLB Membership Proposal
• ABA Continues Push for FCC Action on Phone Alerts
• ABA, Groups: Pentagon Proposal Would Constrict Credit
  
• New Opportunities Available Through SDBA Education Partner

FHFA Warns About Risks from 'Super-Priority' Liens

The Federal Housing Finance Agency last week issued a statement warning homeowners, lenders and local authorities about the risks posed by actions that affect the first-lien mortgages guaranteed by Fannie Mae and Freddie Mac. These actions include financing energy-efficient retrofitting and foreclosures for unpaid homeowner association fees.

Some local authorities -- particularly in California through a program called PACE -- have structured energy-efficiency retrofitting to be financed through property tax assessment, thus giving the liens so-called super-priority to GSE loans. FHFA warned that Fannie and Freddie cannot buy mortgages on homes with a first-lien PACE loan attached to it, which “may reduce the marketability of the house.”

FHFA also expressed concern about the practice of making unpaid HOA dues senior to first-lien mortgages, which in Nevada has allowed HOAs to foreclose on homes and extinguish the first-lien mortgage, selling them for a fraction of their value. FHFA has filed suit to invalidate HOA foreclosures on GSE mortgages.

“[T]he mortgages supported by Fannie Mae and Freddie Mac must remain in first-lien position, meaning that they have first priority in receiving the proceeds from selling a house in foreclosure,” FHFA said. “As a result, any lien from a loan added after origination should not be able to jump in line ahead of a Fannie Mae or Freddie Mac mortgage to collect the proceeds of the sale of a foreclosed property.” Read the statement.

SEC Proposal Would Address S&L Holding Company Disparity

The Securities and Exchange Commission has proposed a rule that would treat savings and loan holding companies the same as bank holding companies for purposes of registration and deregistration under the Exchange Act. The proposal addresses a technical error in the JOBS Act raising the threshold for registration from 500 to 2,000 shareholders and the deregistration threshold from 300 to 1,200 for BHCs -- but not for S&LHCs.

“This creates inconsistent treatment among depository institutions, resulting in different registration requirements for savings and loan holding companies that otherwise provide services similar to those provided by banks and bank holding companies and are generally subject to similar bank regulatory and supervision requirements,” the SEC noted in its proposal. “We believe these companies should be treated consistently with other depository institutions under our rules.”

ABA has long sought to correct the oversight. The proposal -- on which comments are due 60 days after publication in the Federal Register -- comes on the heels of other good news for S&LHCs, which were included in legislation raising the Federal Reserve’s threshold for small bank regulatory relief to $1 billion in assets, the first time S&LHCs will be covered by the Fed’s small BHC relief framework. Read the proposed rule.  Read ABA’s letter seeking relief.

ABA, State Groups Urge Withdrawal of FHLB Membership Proposal

The Federal Housing Finance Agency should withdraw its proposal to limit membership in the Federal Home Loan Bank System, according to a comment letter from ABA and the state bankers associations. The proposal contradicts Congress’ intent for the FHLBs and would harm the FHLBs, their member banks and the communities they serve, the groups said.

The proposal goes against recent legislative developments acknowledging the FHLBs’ role in providing liquidity to members beyond housing finance, the associations said. By requiring new FHLB members to hold 1 percent of assets in home mortgage loans, and to hold at least 10 percent of assets in residential mortgage loans on an ongoing basis, FHFA would hinder the FHLBs’ mission of providing reliable liquidity.

Furthermore, the associations noted, “there is no demonstrable need for the changes proposed.” Current FHLB rules require sufficient collateral for borrowing, an “efficient and elegant” structure allowing member banks “maximum flexibility.” Read the letter.

ABA Continues Push for FCC Action on Phone Alerts

ABA’s October petition to the Federal Communications Commission has received an “overwhelmingly positive” response, ABA told the FCC in a filing on Dec. 19. ABA asked the agency to remove barriers to the time-sensitive and customer-preferred mobile calls and texts banks use to reach their customers, including when their accounts may be compromised.

Supportive comments poured in from banks, technology companies, service providers, payment networks and consumer privacy organizations. “Significantly,” ABA added, “not a single privacy advocacy group or consumer protection organization filed in opposition.”

The commenters all agreed that ABA’s proposed solution -- an exemption from the Telephone Consumer Protection Act that would allow automated alerts to potentially fraudulent transactions, actions needed to complete pending money transfers and actions necessary to respond to data breaches -- would reduce risks to privacy and security. Read ABA’s latest FCC filing.

ABA, Groups: Pentagon Proposal Would Constrict Credit

The Defense Department’s proposed restrictions on credit for service members goes too far, ABA said Dec. 18. Not only would the proposed rule constrict mainstream credit options for members of the military and their families, it would create technological and compliance hurdles that would impede lending across the country, regardless of the borrower’s military status.

In a comment letter signed by a coalition of groups representing banks and credit unions, ABA noted that DoD offered no evidence for covering mainstream products such as credit cards, student loans and installment loans under the Military Lending Act, which was intended to target tax refund anticipation loans, payday loans, car title loans and other predatory products not generally offered by depository institutions.

The groups urged DoD to exempt depository institutions from the rule, warning that its idiosyncratic Military APR cap (encompassing even low-rate credit cards) and “vague and uncertain prohibitions” could force banks and credit unions out of the military market -- thus reducing access to mainstream credit for service members.

The proposal would also impose massive compliance burdens on all banks, whether they serve military customers or not. While today service members and their families must proactively identify themselves as such, DoD would require lenders to screen all applicants for military status. This requires checking each applicant at least twice in a Pentagon-run database -- but the database is frequently unavailable, which would mean “virtually all new consumer lending comes to a standstill.” Read the letter. For more information, contact ABA’s Nessa Feddis.

New Opportunities Available Through SDBA Education Partner

Beginning in 2015, all registrations of a Total
Training Solutions live webinar will be given access to the OnDemand recording at no additional cost for seven days following the event.

This will allow a flexible alternative when last minute conflicts intrude on scheduled events. It will also allow bankers to listen to the event a second time. 

Total Training Solutions still offers a six month on-demand option. This is a great value for those who want others in their organization to listen to the webinar and need more than seven days. While there is a slight increase in pricing starting Jan. 1, Total Training Solutions is cutting the cost of additional locations in half. 

Orders placed before Jan. 1 will be priced according to the previous rate schedule. View Training Training Solutions webinars.