Filed under: Current Issues in Credit Unions | Tags: ATM, Callahan's, IP, MBL, NCUA, P2P
Lydia Cole from Callahan’s joins Faith, Hal, Katherine & Rob for Episode 61. Here are the topics:
- –Callahan’s good news article
- –NCUA personnel changes.
- –MBL Cap: where are we now?
- –Big K Roundup.
- Will P2P be Mainstream for Credit Unions?
- Intellectual Property Infringement Case names Credit Unions and CUSOs
- What Has Your ATM Done for You Lately: ATMS Roll Out New Technology
- Remote Capture Coming Soon to a Consumer Like You
- NCUA GCO Opinion on IRA Insurance
Sound editing by Victor Khaze
The CIiCU hosts are:
Brian Witt
Hal Scoggins
Farleigh Wada Witt,
Attorneys at Law
121 SW Morrison Street, Suite 600
Portland, Oregon 97204
Telephone: 503-228-6044 Fax: 503-228-1741
http://www.fwwlaw.com
Guy Messick
Katherine Weber
Messick & Weber P.C.
211 North Olive Street
Media, PA 19063
Telephone 610-891-9000 Fax 610-891-9008
http://www.cusolaw.com
Faith Anderson
American Airlines Credit Union
P.O. Box 619001
MD 2100
DFW Airport, TX
75261-9001
(800) 533-0035
https://www.aacreditunion.org/default.asp
Robert Rutkowski
Shareholder
Weltman, Weinberg & Reis Co., L.P.A.
323 W. Lakeside Avenue, Suite 200
Cleveland, Ohio 44113
Telephone: 216-739-5004 Fax: 216-739-5642
http://www.thatcreditunionblog.com
http://www.weltman.com
Subcribe to the show via iTunes Music Store:
http://phobos.apple.com/WebObjects/MZStore.woa/wa/viewPodcast?id=151785964&s=143441
By Larry R. Rothenberg, Esq.
Until the last few years, when creditors accepted a deed-in-lieu of foreclosure, the transaction almost always provided for a cancellation of the note and a release of any further liability on the part of the borrower. However, times have changed. A release of further liability in connection with a deed-in-lieu transaction is no longer automatic. There is now a clear trend for mortgage holders to consider more rigorously whether the circumstances warrant agreeing to accept a deed-in-lieu only if the borrower agrees to remain liable for a deficiency.
Some mortgage holders calculate the deficiency based on the total debt less the proceeds of the future sale of the REO. However, using this method may cause some problems. A court might not enforce an action to collect until the amount of the deficiency is ascertainable. What if the REO is not sold for an extended period of time? In addition, once the REO is sold, the mortgage holder may be vulnerable to claims or defenses by the borrower that the deficiency is not enforceable because:
- The REO was not marketed and sold within a reasonable time
- The REO was not sold in a commercially reasonable manner, and should have been sold for a larger amount
- The mortgage holder failed to use reasonable diligence in maintaining or protecting the property, resulting in unnecessary loss in value
In order to avoid exposure to such problems, it would be preferable to have the amount of the deficiency established with certainty at the time of closing the deed-in-lieu transaction. For example, the agreement may provide for a credit based on a current appraisal of the market value or a quick sale value of the property. The deficiency may also be established based on an agreed amount determined by other methods.
In any event, if the borrower is to remain liable for a deficiency, it is important to have the borrower sign an agreement evidencing an understanding of the liability for the deficiency. In order to avoid misunderstandings and unwanted litigation, as well as to ensure compliance with the Fair Debt Collection Practices Act, the agreement should be written in terms that are understandable to the least sophisticated consumer.
It goes without saying that if the deed-in-lieu transaction calls for a release of further liability, the original note should be canceled and returned to the borrower promptly after the closing of the deed-in-lieu transaction.
A recent news item reported a lawsuit filed in Florida by a borrower against the investor, the loan servicer, and the servicer’s attorney, alleging that the borrower was lead to believe that the deed-in-lieu transaction was in consideration of a full release of further liability, but the canceled Note had not been delivered. The report refers to the note as a “Zombie Note”, speculating that the Note might come back to life and haunt the borrower if it is sold to a debt buyer.
Such lawsuits can be avoided by promptly delivering the canceled note to the borrower in cases where there is to be a release of further liability, or by having a clear, signed agreement providing for liability for a deficiency.
If you have any questions on this matter, please contact Mr. Larry R. Rothenberg, Esq. Larry is the partner-in-charge of the Cleveland real estate and foreclosure department of WWR. He is the author of the Ohio Jurisdictional Section within the treatise, “The Law of Distressed Real Estate”, and was a contributing author to “Ohio Foreclosures, What You Need To Know Now”, published by The West Group. He can be reached at 216.685.1135 or lrothenberg@weltman.com.
by: Rob
Many people have talked about the failure of imagination. Today I want to talk about the success of imagination. Arguably this can be reduced to desire plus imagination equals success. If you subscribe to the notion that life is as simple as knowing what you want, then imagination is the element that lets you visualize how to get it. After that, effort is almost trivial.
Don’t think so? One of my sisters talked about how her son Wilson “could not imagine anything else” one day while talking about his failure to occupy his time. While that’s not unusual for an 11 year old, it struck a chord with me because adults, so often like children, can have the same problem. If an adult, faced with an issue, does not think about the issue or visualize solutions or engage his or her imagination success will not follow.
Credit unions have no shortage of challenges that test imagination. While I see many issues concerning compliance or assessments, I also see lack of income. This leads me to put on my advocacy hat and climb up on my stump and beg for your consideration of the following.
Using imagination, credit unions need to increase income that’s not tied to lending. This is not to say that credit unions should start feeing their members to death. I’m very much into the abundance way of thinking. What I’m talking about here is offering products and services that generate income that your members want and will pay for. Some examples might include broker relationships, financial planner relationships, insurance agent relationships and CUSOs created for a variety of purposes.
Even if these new types of income result in unrelated business income tax, credit unions should embrace the revenue, pay the taxes and survive.
Filed under: Dodd-Frank Act | Tags: Durbin Amen, Economic Development Act, Senate Bill 782, Tester-Corker Amendment, Transaction Interchange Fees
By David S. Brown, Esq.
Please be advised that today, the U.S. Senate rejected an amendment to Senate Bill 782, the Economic Development Act, that would have called for a 6-month delay of the pending July 21st effective date of the Durbin Amendment. The amendment would also have required the Federal Reserve, OCC, FDIC and NCUA to conduct a joint 6-month study of the Federal Reserve’s debit interchange rule to protect against unintended consequences that the Durbin Amendment may produce. The Tester-Corker amendment failed by a vote of 54 to 45. It is important to note that a majority of the Senate voted in favor of this amendment; however, a 60-vote threshold was required for passage.
The Durbin Amendment is an amendment within the Dodd-Frank Act that was signed into law by President Obama on July 21, 2010. It establishes new restrictions for governing debit card transaction interchange fees. For those who don’t know, interchange fees are fees that an issuing bank deducts from the amount it pays the acquiring bank that handles a credit or debit card transaction for a merchant.[1] Typically, these fees are set by the credit card networks such as Visa and MasterCard and represent about 2% of the total sale.[2]
Unlike credit cards, where the user borrows money from a creditor and pays it back at the end of the month, debit cards are directly tied to money in the cardholder’s bank account.[3] The Durbin Amendment empowers the newly created Consumer Financial Protection Bureau (“CFPB”) to cap interchange fees charged by banks during a debit card transaction by requiring that any interchange transaction fee must be reasonable and proportional to the cost incurred by the issuer with respect to the transaction.[4] The Durbin Amendment only applies to lending institutions with assets worth more than $10 billion. In other words, the CFPB cannot cap interchange fees between lenders with less than $10 billion in assets, or 99% of U.S. Banks.[5] Government-administered payment programs and reloadable prepaid cards are also exempt from the Durbin Amendment.[6]
In theory, the Durbin Amendment is a way to reduce costs to the consumer by limiting the amount that banks can charge merchants for debit transactions. In reality, though, the Durbin Amendment may cause more harm than good. First, there is no evidence that indicates merchants are willing to pass along any savings realized to consumers. Second, the credit card networks are responding by creating rate schedules that may significantly hamper competition. Specifically, Visa recently indicated that it will introduce a dual interchange rate schedule for issuing banks and credit unions based on the Dodd-Frank Act.[7] In other words, Visa will implement one rate for large institutions governed by the Dodd-Frank and a different rate schedule for those institutions that are exempt from the Act, because they fall below the threshold of $10 billion in assets. Many think that this will lead merchants to only accept cards from the largest banks. After all, those cards will have lower interchange rates which will translate to larger profits for the merchant.[8] As a result, community banks and other smaller lending institutions will be injured as their cards will not be accepted by merchants looking to increase profit margins. Consumers will also be hurt as they will be unable to shop at stores that refuse to accept the card that they have in their wallet.
Although still unknown, the impact that the Dodd-Frank Act and the Durbin Amendment will have on the financial sector promises to be substantial. Certainly, increased regulation appears to be imminent. As always, the attorneys at Weltman, Weinberg & Reis are here to assist you in understanding and operating within these changes as they come about.
David S. Brown is an Associate in Commercial Collections; focused on Commercial Banking, Commercial Business, Special Collections and Commercial/Agency Services. He is based in the Cleveland office of Weltman, Weinberg & Reis Co., LPA. He can be reached at (216) 685-1062 or dbrown@weltman.com.
—-
FOOTNOTES:
[1] Interchange fee, Wikipedia,
http://en.wikipedia.org/wiki/Interchange_fee
[2] Mitchell, Stacy, Soaring Credit Card Transaction Fees Squeeze Independent Businesses, The New Rules Project, May 5, 2009, www.newrules.org
[3] 2010 Financial Reform and Debit Interchange Rates,
http://interchangerate.com/?p=45
[4] The Consumer Financial Protection Act, supra.
[5] Admin, Wall Street Reform: The Consumer Financial Protection Bureau, Americans for Financial Reform, June 30, 2010,
http://ourfinancialsecurity.org/2010/06/
[6] The Consumer Financial Protection Act, supra.
[7-8] VISA to Offer Two-Tier Interchange Pricing, GBA e-Bulletin,
http://www.gabankers.com/e-Bulletin/gba_bulletinJan142011.htm
Filed under: Dodd-Frank Act | Tags: CFPB, consumer financial protection bureau
By Theodore Bush
The Dodd-Frank Wall Street Reform and Consumer Protection Act established a Bureau of Consumer Financial Protection (the CFPB). One of the provisions of the Act called on the Director of the CFPB to “establish a unit whose functions include researching, analyzing and reporting on – (C) consumer awareness, understanding, and use of disclosures and communications regarding consumer financial products and services;”
On May 18, 2011, the CFPB launched its “Know Before You Owe” project. This project is an effort by the CFPB to combine the Good Faith Estimate (GFE) (currently 3 pages) and the Truth in Lending Act disclosure (TIL) (currently 2 pages) into a single two page form. According to Elizabeth Warren, “[t]he current forms can be complicated and difficult for consumers to use. They are also redundant and can be costly for lenders to fill out. With a clear simple form, consumers will be in a better position to answer two basic questions: Can I afford this mortgage and can I get a better deal somewhere else?”
On May 19, 2011, the CFPB began testing two alternative prototypes. The new forms emphasize monthly payment information, projected payments, interest rates and certain “cautions” regarding loan features that might trigger higher or additional payments such as increasing loan amounts, balloon payments or any prepayment penalties. The forms also provide information regarding estimated closing costs.
Testing will take place over several months and includes one-on-one interviews with consumers, lenders and brokers in six cities: Albuquerque, NM; Baltimore, MD; Birmingham, AL; Chicago, IL; Los Angeles, CA, and Springfield, MA. Initial testing will include both English and Spanish language versions of the forms. The prototypes are also posted on the CFPB’s website (www.consumerfinance.gov) with an interactive tool to gather additional feedback. The CFPB’s goal is to issue proposed forms and implementing regulations by July 2012 for formal notice and comment.
The CFPB “will also consider underlying regulatory issues and ways to refine closing-stage forms, a process that will likely extend into the fall and early next year.” This will seem to require a change to the HUD-1 since the 2010 changes to the GFE and HUD-1 included cross-references to each other.
Affected industries have been cautious in their comments thus far. Some have noted that it was less than a year and a half ago that revisions were made to the GFE and HUD-1, which led to substantial implementation costs. Other comments have been more particular such as suggestions that the term “non-required services,” which currently includes Owner’s title insurance and Home Warranty, should be changed to something like “recommended” services.
Given the political controversy surrounding Elizabeth Warren and her future with the CFPB, and the amount of time between now and July 2012, it is uncertain what course these proposals will take. During the last revision to the GFE, HUD received over 12,000 comments. Stay tuned for updates.
Ted Bush is the Operations Director of Thoroughbred Title Agency, Inc. (TTA), working hand-in-hand with the Real Estate Default Group of affiliate of Weltman, Weinberg & Reis Co., LPA. His responsibilities include overseeing the daily operations of TTA. Ted can be reached directly at 216.685.1054 and tbush@weltman.com.
By David A. Wolfe, Esq.
In the wake of the 2008 financial crisis, mortgage lending is currently undergoing a major legislative overhaul. The purpose of the increased regulation is to create strong incentives for responsible lending and borrowing and to help borrowers get home loans that are less likely to result in hardship or default, which will most certainly have the added effect of increasing costs to borrowers.
The Dodd-Frank Financial Reform Bill requires mortgage lenders to retain a 5 percent share of each loan they originate, but Qualified Residential Mortgages (QRMs) will be exempt from the new risk-retention rules. The legislation specifically identified loans guaranteed or originated by FHA, VA, and USDA as qualified for exemption but left other products, including loans written by Fannie Mae and Freddie Mac, up to federal regulators to determine. A joint effort between six federal agencies, including the Department of Housing and Urban Development, Federal Deposit Insurance Corp., Federal Housing Finance Agency, Federal Reserve, Office of the Comptroller of the Currency, and the U.S. Securities and Exchange Commission, the QRM definition is of great importance because it will determine the types of mortgages that will be generally available for borrowers in the foreseeable future.
The current QRM definition proposed at the end of March would require an 80% or less loan-to-value, (at least a 20% down payment); limiting the mortgage payment to 28% of gross income and all debts to 36%. Further, while no credit score requirement is included, a mortgage loan would qualify as a QRM only if the borrower is not currently 30 or more days past due on any debt obligation; borrowers could not have been 60 or more days past due on any debt obligation within the preceding 24 months; and during the preceding 36 months borrowers could not have been through bankruptcy, foreclosure, engaged in a short sale or deed-in-lieu of foreclosure, or subject to a Federal or State judgment for collection of any unpaid debt. The proposed definition is subject to public comment through June 10, 2011, and will then be reviewed by Congress.
In a recent speech, Federal Reserve Chairman Benjamin Bernanke urged lawmakers to avoid “imposition of ineffective or burdensome rules that lead to excessive increases in costs or unnecessary restrictions in the supply of credit.” However, a restrictive QRM definition will work against homeowners. The longest recession since the Great Depression has been the cause of high unemployment and under-employment, leading a high debt-to-income ratio for many borrowers and devastated credit scores. These factors combined with falling property values will prevent many U.S. homeowners from refinancing into a QRM. Without the ability to secure a 20% down payment, the capital reserve retention rules will subject borrowers to higher costs for the additional risk and will combine with higher mortgage rates for many to add additional roadblocks to sustainable home ownership, especially those in the hardest hit areas of the country.
David A. Wolfe is an associate in Consumer Collections who practices within the Consumer Collections, Corporate & Financial Services, Credit Union, Collateral Recovery/Replevin and Litigation & Defense Groups of Weltman, Weinberg & Reis Co., LPA. He is based in the Detroit office and can be reached at 248.362.6142 or dwolfe@weltman.com.
By David S. Brown, Esq.
Over the next decade, 64 million skilled workers will be able to retire. Additionally, many Generation X workers are opting out of long hours in exchange for more family friendly positions. This means that marketing to Generation Y, also known as the Millennials, Generation Next, the Net Generation, Echo Boomers, the iGeneration, and the Google Generation will become a high priority for many businesses. Generation Y is made up of individuals born between 1977 and 2002. With 79.8 million members born between 1977 and 1995, they outnumber the baby boomers and are more than three times the size of Generation X. This article will help you understand who they are; how they think; how to attract them to your company; and how to keep them happy and productive as long term employees.
Who Are They?
“Generation Y combines the can-do attitude of Veterans, the teamwork ethic of Boomers and the technological savvy of Generation X.” They are the most diverse generation in history as they were born to the most diverse mix of parents in history. For example, one third of the generation was born to single, unwed mothers. Additionally, Generation Y is less white and more brown than any generation to come before it.
The great majority of Generation Y are the children of Baby Boomers. As a result, they grew up in a very structured, busy and over planned world involving all sorts of lessons, camps and group activities. This slew of activities contributed to Generation Y being more tolerant of racial and cultural differences than their parents’ and grandparents’ generations. For example, gay rights and non-traditional gender roles are more widely accepted by this generation than any other generation. They also tend to work best in groups and enjoy collaborating on projects, rather than handling tasks on their own. Generation Y places high value on developing good interpersonal skills and in “getting along”, and the activities of their youth taught them to be polite and to believe in manners.
These same activities have caused Generation Y to exhibit a great deal of anxiety as well. Specifically, individuals of this generation tend to crave structure, attention and feedback from their superiors. As one observer put it, “Gen Yers have grown up getting constant feedback and recognition from teachers, parents and coaches and can resent it or feel lost if communication from bosses isn’t more regular.” Another expert opines that “The millennium generation has been brought up in the most child-centered generation ever. They’ve been programmed and nurtured. Their expectations are different. The millennial expects to be told how they’re doing.” Certainty and security are key for this Generation. To this end, “Gen Yers want to know everything up front as far as what is expected and what criteria will be used to evaluate their performance.”
Generation Y has been described as ambitious and highly motivated. They aim to work faster and better than other workers and they want to make an important impact on day one. Bruce Tulgan, the founder of leading generational-research firm Rainmaker Thinking described Generation Y by stating “This is the most high-maintenance workforce in the history of the world. The good news is[,] they’re also going to be the most high-performing workforce in the history of the world. They walk in with more information in their heads, more information at their fingertips – and, sure, they have high expectations, but they have the highest expectations first and foremost for themselves.”
Perhaps Generation Y’s most distinct feature is their knack for technology. It’s no secret that Generation Y is the world’s first native online population. They grew up with technology and they are plugged-in twenty-four hours a day, seven days a week. They’ve mastered televisions, gaming systems, dvd’s, cd’s, mp3’s, iPod’s, laptop computers, cell phones, e-mail, the internet, instant messaging, text messaging, Facebook and much more. They’ve even proven successful in launching viable online businesses – Facebook and Napster are two great examples. A recent survey indicates that ninety percent of Gen Yers in the U.S. own a PC, while 82 percent own a cell phone. Their familiarity with technology and media has lead to a generation of multitaskers who are able to conduct assignments quickly while listening to music, surfing the internet, or watching movies.
How Generation Y Thinks
The first thing that has to be understood when marketing to Generation Y is that they want to work, but they don’t want work to be their life. Unlike their parents generation, which tends to put a high priority on career, today’s youngest workers are more interested in making their jobs accommodate their family and personal lives. They want jobs with flexibility, telecommuting options and the ability to go part time or leave the workforce temporarily when children are in the picture.
When it comes to loyalty, the companies that they work for don’t receive high priority. In fact, some experts have opined that Generation Y puts their employer at the very bottom of their list – behind their families, their friends, their communities, their co-workers and, of course, themselves. Early research indicates that the average Gen Yer has been changing jobs every 1.1 years.
Generation Y’s quick to jump ship attitude can be explained at least partially by their world view. From day one, Gen Yers have been told that they can be anything they can imagine. It’s an idea they’ve clung to as they’ve grown up and as their outlook was shaken by the Columbine shootings and 9/11. More than the nuclear threat of their parents’ day, those attacks were immediate, potentially personal, and completely unpredictable. Add in a never ending news reel of stories about global warming, the impending budget crisis and the certain failure of Social Security and its easy to understand Generation Y’s outlook. They know that they are not promised a healthy, happy tomorrow – so, they’re determined to live their best lives now.
To further complicate matters, Generation Y is working with the largest safety net this world has ever seen. More than half of new college graduates move back to their parents’ homes after collecting their degrees. This parental support gives Gen Yers the financial support and time that they need to pick the job that they really want. Thus, companies are being forced to think more creatively about how to offer positions with better work-life balance, while maintaining profits and still cutting costs.
How to Attract Gen Yers and How to Keep Them Happy Once You Do
Benefits, technology, family friendly hours, and an inclusive and comfortable work environment seem to be the keys to attracting the most promising members of Generation Y. A survey by the Diversified Investment Advisors of Purchase, NY reported that 37 percent of Generation Yers expect to start saving for retirement before they reach 25, with 49 percent who say retirement benefits are very important when accepting a position. Among those eligible, 70% of Generation Y respondents contribute to their 401(k) plan. It’s important to remember that Generation Y has grown up through massive layoffs in the 1980’s, the dot-com bust, the Enron Scandal and most recently, the real estate bubble which resulted in the worst economic downturn since the Great Depression. Thus, security and benefits are often more important to Generation Y than their hourly rate – although I’m not suggesting that they’ll work for free.
While Boomers may expect a phone call, or an in person meeting, Generation Y would much rather communicate via e-mail, or instant messaging. Thus, it’s imperative that employers offer up-to-date computer systems, work from home capability, and cell phone plans that include data and texting. After all, it feels natural for Generation Y to check in by BlackBerry all weekend as long as they have flexibility during the week.
Flexible hours can come in many forms. Some companies have instituted a four day work week consisting of four ten hour days. Others permit flextime, which allows their employees to arrive and depart during hours that are more convenient for them than the traditional work hours. Some companies go as far as allowing each employee to work from home at least one day a week – or for a period of time after an injury or the birth of a child. Whatever form it takes, flexible hours are a real hit with Generation Y.
With respect to dress, Generation Y is used to going casual. They’ve spent four to ten years attending college and graduate school classes in their sweat clothes and pajamas, so jumping right to a suit and tie can be quite a drag. Many of them feel they can be just as, or more productive than their predecessors while sporting flip-flops and capri pants. Oh yeah, they have lots of tattoos and piercings too. In fact, Generation Y is all about quietly expressing themselves with small statements that won’t cause trouble – a funky T-shirt under a blazer, artsy jewelry, silly socks.
The most important thing to remember after you’ve successfully recruited a few Gen Yers, is that you have to make them feel like they are a contributing member of your team from day one. Feeling like they are making a difference is the single most motivating factor for Generation Y employees. This can be done by assigning them significant tasks and following up with as much feedback and guidance as possible. If your company is unable to make them feel like they are making a difference, or show them the attention that they desire in the form of guidance and feedback, they’ll quickly seek out another employer that they feel will be more appreciative of the skills and talents that they have to offer. However; if you keep the foregoing tips in mind and make an effort to adapt your workplace, you will attract and keep as many Generation Y employees as you can handle.
David S. Brown is an Associate in Commercial Collections who practices in the Commercial Banking, Commercial Business, Special Collections and Commercial/Agency Services Groups. He is based in the Cleveland office and can be reached at (216) 685-1062 or dbrown@weltman.com.
WORKS CITED:
Hira, Nadira A, Attracting the twentysomething worker, Fortune, May 15, 2007,
http://money.cnn.com/magazines/fortune/fortune_archive/2007/05/28/100033934
Trunk, Penelope, What Generation Y Really Wants, TIME, July 5, 2007,
http://www.time.com/time/printout/0,8816,1640395,00.html
Armour, Stephanie, Generation Y: They’ve arrived at work with a new attitude, USA TODAY, November 6, 2005, www.usatoday.com/money/workplace/2005-11-06-gen-y_x.htm
Coates, Julie, Generation Y – The Millennial Generation, from Generational Learning Styles, Published by LEARN Books, 2007,
http://honolulu.hawaii.edu/intranet/committees/FacDevCom/guidebk/teachtip/GenY.htm
Generation Y, Wikipedia, April 21, 2011,
http://en.wikipedia.org/wiki/Generation_Y
