CURRENT Newsletter | 14 May 2020 - Virginia Credit Union League

Virginia’s credit unions have donated $91,000 to seven food banks serving the Commonwealth. The donation was made possible by credit unions’ support of the Credit Unions Care Foundation of Virginia, a charitable organization formed by credit unions and the Virginia Credit Union League, their trade association, to coordinate charitable giving, financial education initiatives and disaster recovery donations.

“The current health crisis is amplifying food insecurity and hunger issues across the Commonwealth,” noted David Miles, Senior Vice President of the Virginia Credit Union League and Chief Operating Officer for the Credit Unions Care Foundation of Virginia. “Food banks across the state are working hard to ensure vulnerable families have access to the food they need and we’re proud to support their efforts.”

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FREE May 19 Webinar: Managing Risk with Changing Business Practices

Join us May 19 as CUNA Mutual Group Senior Risk Consultant Carlos Molina walks us through today’s evolving threat profiles, brought on by the pandemic.

He’ll discuss branch re-openings, branch reconfigurations, digital technology, crisis communication, frauds/scams, remote work arrangements and work flexibility.

Bottom line: Our business practices will change as we adjust to a new normal.

The way we operate our locations – whether member-facing branches or administrative offices – will change dramatically.
We’ll need to prepare for new challenges related to employee safety and security issues.
A whole host of new Human Resource Management issues will need to be addressed, including hiring, work-at-home policies and supervision. Carlos will also discuss development of consistent policies and consistent implementation of those policies.
Fraud and security issues will be an evolving issue, and we may be especially vulnerable with many employees continuing to work from home.
The lending environment will be a challenge during the next six months (at least). Are you also prepared to address possible liquidity issues, a continued uptick in forebearance requests and collections issues?
On the positive side, there may be new lending and payments opportunities, as well!

FREE Webinar May 27: Compliance Hot Topics

Your League is hosting a Compliance Hot Topics webinar with attorney Jay Spruill, who leads our compliance hotline. Join us on May 27, at 11 a.m.

Topics will include:

Holding annual member meetings, board meetings, and other meetings through remote participation: legal and compliance issues
Emerging Issues under the Paycheck Protection Program for lenders, including loan forgiveness
Legal and regulatory considerations for dealing with troubled borrowers and loans in default as a result of COVID-19
Protecting the credit union and its members from new fraud scams as a result of COVID-19
New regulatory guidance on compliance obligations in response to COVID-19

Woods Rogers Info From May 13 Webinar

Thank you to everyone who attended our free webinar yesterday with League HR Hotline attorneys Dan Summerlin and Tom Winn. They've shared their slide deck here. (League password required; register here if you need one.)

Pandemic Resources

FREE League Virtual Call May 20: Managing Pandemic-Related Collections, Bankruptcy Matters

Join our virtual call May 20 with attorney Eddie Whitlock on collections, bankruptcy and court system issues related to the pandemic. The presentation will cover key issues such as foreclosures, repossessions, late payments, modifications and more. We’ll also cover the anticipated uptick in bankruptcies.

Paycheck Protection Program Loans Under $2M Not Subject to Audit, SBA Says

The U.S. Small Business Administration will not audit borrowers who receive loans of less than $2 million under the Paycheck Protection Program in a bid to "conserve its finite audit resources."

When submitting a PPP application, all borrowers must certify in good faith that the economic uncertainty makes this loan request necessary to support their ongoing operations. The SBA said loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment, and that this would allow it to focus its reviews on larger loans.

The SBA also said an employer that repays a loan by the safe harbor deadline of May 14 will be treated as though the employer had not received a covered loan under the PPP for purposes of the employee retention credit. (Market Intelligence, May 13)

The IRS Answers COVID-19 Related IRA Questions

The IRS recently posted “Coronavirus-related relief for retirement plans and IRAs” to provide additional guidance on this topic.

Source: IRS

Compliance / Regulatory News

CFPB Gives Credit Card Issuers Flexibility on Billing Disputes

The Consumer Financial Protection Bureau issued guidance meant to enable credit card companies to resolve billing disputes tied to businesses affected by the coronavirus pandemic.

Credit card issuers that make a good-faith effort to resolve billing disputes will not receive an enforcement action or be cited in a supervisory exam, the CFPB said Wednesday.

The agency said it wanted to inform creditors of its “flexible supervisory and enforcement approach" as many small businesses hit by the economic fallout of the virus have struggled to keep up with the volume of billing disputes brought by consumers.

Credit card issuers are typically required to acknowledge a merchant billing error notice from a consumer within 30 days. But the guidance means issuers failing to meet that deadline will not be cited by the CFPB.

Lenders generally must investigate and resolve billing errors within two billing cycles but no later than 90 days, according to Regulation Z, which implements the Truth in Lending Act.

The CFPB noted that consumers have been facing long hold times trying to reach both merchants and credit card time, some of which may be closed or operating with reduced staff. (Credit Union Journal, May 13)

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FHFA Extends Eviction and Foreclosure Moratorium to June 30

The Federal Housing Finance Agency is extending by over a month its moratorium for foreclosures and evictions on single-family loans backed by Fannie Mae or Freddie Mac until at least June 30.

The moratorium — intended to help borrowers affected by the coronavirus and — was previously set to expire May 17.

“During this national health emergency, no one should be forced from their home," FHFA Director Mark Calabria said in a statement. “Extending the foreclosure and eviction moratoriums protects homeowners and renters with an Enterprise-backed mortgage and provides certainty for families.” (American Banker, May 14)

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CFPB, Other Agencies Post Website for Consumers Seeking Housing Relief

The Consumer Financial Protection Bureau has launched a joint website with the Department of Housing and Urban Development and the Federal Housing Finance Agency to be a central repository of information on housing relief options for consumers and scams to watch out for during the coronavirus pandemic.

The website, announced Tuesday, describes potential strategies for both homeowners and renters economically affected by COVID-19. It also features a tool for homeowners to determine if their mortgage is backed by Fannie Mae, Freddie Mac or the Federal Housing Administration.

The agencies unveiled the site on the same day of a virtual video meeting of the National Association of Realtors. CFPB Director Kathy Kraninger told the group that the bureau is monitoring a range of housing-related issues tied to the pandemic, including a spike in consumer complaints against certain companies, a drop in new mortgage inquiries and a big increase in forbearance requests. (American Banker, May 12)

Economic / Financial Services News

'Improving Trends' Seen in Consumer Credit, Debit Transactions: PSCU Report

Credit card spend across the country was down about 20% the first week of May compared to the same period last year, but there are signs that spending is coming back, the CUSO PSCU said in its latest weekly transaction trends report.

The PSCU report, comparing the week ending May 3 to the week ending May 5, 2019, said overall debit card spend was up 6.6%. Consumer spending took a hit amid the coronavirus pandemic and state stay-at-home orders, but the report described “strengthening results” for consumer credit spend.

“This week’s data suggests that the consumer is gradually resuming their spend patterns, albeit slowly,” Glynn Frechette, SVP, Advisors Plus at PSCU, said in a statement. “We have seen four consecutive weeks of improving trends for both credit and debit as cards continue to play a critical role for consumers — whether used virtually through card-not-present alternatives or face to face as merchants begin to reopen.”

Frechette added: “While we still have a way to go, underscored by this week’s U.S. jobs report, it is encouraging to see consumers resuming certain aspects of normalcy.”

The new transaction report said the average debit card purchase amount was up more than 18% year-over-year, an increase attributed to the U.S. government’s stimulus package. The U.S. Treasury Department and IRS said last week that more than 130 million individuals had received more than $200 billion in the first four weeks of the program.

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Powell Nudges Congress to Take More Action to Avoid 'Long-Term Economic Damage'

Federal Reserve Chairman Jerome Powell nudged U.S. lawmakers to take additional action in a May 13 speech, saying it would help limit the potential of "long-term economic damage" caused by the coronavirus pandemic.

Already, the current downturn is "significantly worse" than any recession since World War II. It has erased the job gains over the last decade and "caused a level of pain that is hard to capture in words," the Fed chief said in written remarks.

Policymakers may need to do more to avoid a "prolonged recession and weak recovery" in which business bankruptcies weigh on growth, long stretches of unemployment eat away at workers' skills, and household debt burdens grow.

"Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery," Powell said during a Peterson Institute for International Economics webcast event. "This tradeoff is one for our elected representatives, who wield powers of taxation and spending."

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Fannie Mae Predicts Highest RefinancingVolume in Nearly a Decade

Continued low interest rates due to the coronavirus-economic contraction likely means that 2020 will have the largest refinance volume in eight years, Fannie Mae's latest forecast said.

"We expect the contraction in the second quarter of 2020 to represent the floor of the sudden and historic drop in economic activity associated with the coronavirus," Fannie Mae Chief Economist Doug Duncan said in a press release.

Mortgage Delinquencies Rise in First Quarter of 2020

The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 4.36 percent of all loans outstanding at the end of the first quarter of 2020, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey.

The delinquency rate was up 59 basis points from the fourth quarter of 2019 and down 6 basis points from one year ago. The percentage of loans on which foreclosure actions were started in the first quarter fell by 2 basis points to 0.19 percent.

"The mortgage delinquency rate in the fourth quarter of 2019 was at its lowest rate since MBA's survey began in 1979. Fast-forward to the end of March, and it is clear the COVID-19 pandemic is impacting homeowners. Mortgage delinquencies jumped by 59 basis points - which is reminiscent of the hurricane-related, 64-basis-point increase seen in the third quarter of 2017," said Marina Walsh, MBA's Vice President of Industry Analysis. "The major variances from the fourth quarter of 2019 to this year's first quarter are tied to the increase in early-stage delinquencies for all loan types. For example, the 30-day FHA delinquency rate rose by 113 basis points, the second-highest quarterly ramp-up in the survey series. The 30-day VA delinquency rate rose by 78 basis points - the highest quarterly increase."

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Community Involvement News

Report Your Charitable Donations for 2019

Our friends at Virginia Business are conducting their annual Generous Virginians survey, which will be featured in the publications’s July issue. We’re asking CUs to report the top five philanthropic donations made to Virginia nonprofits and organizations during calendar year 2019.

Please click this link to respond to the survey.

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