CURRENT Newsletter | 16 June 2020 - Virginia Credit Union League

Your League has scheduled a June 18 (10 a.m.) virtual meeting for credit unions with less than $100 million in assets. We'll cover pandemic, member service and lending issues.

Register here

TRGroup Hosting PPP Loan Forgiveness Webinar

After credit unions worked nights and weekends, originating millions of PPP loans to prop up the economy, Congress has passed the rewrite of the PPP forgiveness rules. With the new rules in place, financial institutions need to maximize forgiveness on these loans to get as much as possible off their balance sheets as soon as practical.

In this webinar, Alpharank thought leaders will cover:

The biggest challenges for credit unions to full forgiveness
Best practices in communicating and managing borrower expectations
Alpharank provides an Amazon-like solution for PPP forgiveness, giving borrowers a delightful experience to get loans off the balance sheet quickly with less risk and less work.

Time: June 17, 2020 | 2 p.m. Eastern

Virginia-Based Credit Unions Hit Record-High 13.9 Million Memberships; Almost Double the Number of a Decade Ago

Virginia’s 117 member-owned, not-for-profit credit unions hit major milestones in the first quarter of 2020, reaching 13.9 million memberships and $188 billion in assets.

Credit unions across the Commonwealth and nation have added record levels of new members since the financial crisis a decade ago. Total memberships for Virginia-based credit unions stood at 7 million at year-end 2010.

“We estimate Virginia’s credit unions saved their member-owners $1.8 billion for the year ended Dec. 31, 2019, thanks to their consumer-friendly loan and savings rates,” said Virginia Credit Union League President Rick Pillow. “Credit unions’ not-for-profit, member-owned structure means they put the needs of their member-owners first and that’s something more working families have come to appreciate.”

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Best Practices for a Compliant Collections Program Webinar

You've verified the member, properly determined their credit eligibility and confirmed the ability to repay. However, when the ability to repay turns into a collection effort, you may find out you're not as ready as you thought. Join CUNA Mutual Group June 17 to learn how to build collection strategies around your members while staying compliant.

CUNA Mutual Group Offering Free Online Education Forum June 25

CUNA Mutual Group is offering the Moving Forward Forum, a free webinar on June 25. The Forum will feature three, 45-minute online sessions:

How Leveraging Agility Will Help You Meet Uncertainty Head-On
Leading is more complex than ever. We will share some of the strategies that are helping us lean into this uncertainty with confidence!
Maximize Credit Unions’ Non-Interest Income
Today’s unprecedented economic conditions will greatly impact credit unions’ Key Performance Indicators (KPIs), and, in particular, credit union earnings. In order to be there for your members and to keep regulators satisfied, credit unions must explore every aspect of their income statement to leverage additional income. Learn strategies to sustain and improve your Non-Interest Income revenue stream and explore industry best practices to help with your strategy.
Multicultural Consumers—The Good, The Bad and The Opportunity
Recent events have amplified differences in income, healthcare access and discrimination toward people of color that had been less visible to the general population, and this is presenting new challenges that will require novel solutions. Is your credit union ready to connect with this market?

Register Now

FREE Webinar: Closing the Interchange Gap Post-COVID-19

As the new normal continues to evolve it is important to be flexible in how your payment strategies may change as well. Please join Fiserv and your League on June 23 for a FREE webinar looking at ATM, Debit and Financial strategies designed to close the interchange gap post-COVID-19.

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FHLBank Atlanta 2020 Election of Directors

Federal Home Loan Bank of Atlanta (Bank) has begun the election to fill certain directorships on the Bank’s board of directors, including the member directorships in North Carolina and Virginia, and two independent directorships.

The Bank’s vendor, Survey & Ballot Systems, has emailed eligible institutions information about nominating candidates from Virginia for the board of directors, including the nominating certificate and the nomination deadline, which is 5 p.m. on July 15, 2020.

The term of the directorships to be filled in this election begins on January 1, 2021, and ends on December 31, 2024. Pursuant to the Bank’s board-approved Equal Opportunity Policy Statement, which is available on the Bank’s website, the Bank encourages the consideration of diversity in nominating or soliciting nominees for positions on the Bank’s board of directors.

Your participation in this nomination process is important and the Bank encourages you to nominate eligible candidates. Individuals interested in being considered for an independent directorship must complete and return to the Bank, by 5 p.m. EDT on July 15, 2020, the application and related forms that are available on the Bank’s website. If you have questions, please contact Tina Carew, Associate General Counsel, at 404.888.8549 or tcarew@fhlbatl.com.

Advocacy / Governmental Affairs News

CUNA and Joint Trades Pen Letter to HUD Secretary Carson on Lender Forbearance Indemnification

CUNA signed on to a letter with several joint trades to HUD Secretary Ben Carson to express concern with the recently announced Federal Housing Administration (FHA) policy requiring lenders to provide 20 percent indemnification (of the original loan amount) for up to two years in relation to borrowers who enter into forbearance due to COVID19-related hardship after closing and prior to FHA insuring their loan.

Compliance / Regulatory Affairs News

FHFA to Re-Propose Financial Eligibility Requirements for GSE Seller/Servicers

The Federal Housing Finance Agency (FHFA) announced Monday it will be re-proposing the updated minimum financial eligibility requirements for Fannie Mae and Freddie Mac Seller/Servicers.

According to the agency, it has determined that it is prudent to work with the Enterprises to reassess and re-propose these requirements, including incorporating lessons learned from the evolving COVID-19 national emergency.

The original proposal was made on Jan. 31 and will not be finalized and implemented this month as planned. (CUNA News Now, June 15)

President Nominates Kyle Hauptman for NCUA Board

President Donald Trump announced Monday the nomination of Kyle Hauptman to the NCUA board. Hauptman would take the seat of current board member J. Mark McWatters, whose term expired in August 2019.

“The CUNA/League system congratulates Kyle Hauptman on his nomination to serve on the NCUA board,” said CUNA President/CEO Jim Nussle. “The NCUA board has its work cut out for it as the economic recovery gets underway, and we’re eager to continue our work with NCUA to ensure that credit unions remain in a position to serve their members during the crisis and into recovery.”

“We appreciate President Trump announcing his intention to make this nomination and look forward to working with Mr. Hauptman at the appropriate time.”

Hauptman, a native of Maine, is currently an advisor for Sen. Tom Cotton (R-Ark.) on economic policy and staff director of the Senate Banking Committee’s subcommittee on economic policy. Prior to joining Cotton’s office, Hauptman worked on the 2016 Presidential Transition Team.

From 2015 to 2016, Mr. Hauptman served on the United States Securities and Exchange Commission’s Advisory Committee for Small and Emerging Companies. Previously, he was Mitt Romney’s policy advisor for financial services during his 2012 campaign.

Should he be confirmed, Hauptman’s term on the NCUA board would run through August 2024.

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News From Credit Unions

$10,000 Grant Awarded to Credit Union for COVID-19 Relief

Hampton Roads Educators Credit Union, Inc. (HRECU) was awarded a $10,000 grant to fund the COVID19 Loan Payment Relief Program (CLPRP). The grant will assist the credit union in helping members financially by deferring their loan payments. Many members, particularly those outside of the teaching profession, are low-wage workers, often minorities, who feel the economic impact of COVID-19 the most.

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Chartway Federal Credit Union Welcomes Two New Leaders

Chartway Federal Credit Union is proud to welcome two new leaders to its leadership team: Ben Lemoine, chief financial officer, and Rebecca Riordan, chief talent officer.

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Pandemic Response News

AARP’s BankSafe Program Now Features COVID-19 Resources

Working with our founding distributors, the Credit Union National Association (CUNA), and Independent Community Bankers of America (ICBA), along with a host of state and local organizations, AARP significantly expanded the impact of BankSafe. In just one year, BankSafe-trained employees stopped nearly $17 million from being stolen from older adults and better protected 7 million consumers.

This work is more important than ever as the newest danger to older Americans, the coronavirus, is not only threatening their health, but also their financial well-being. The COVID-19 pandemic has triggered a wide array of financial schemes targeted to adults over 50.

AARP has moved quickly to develop a new section of BankSafe specifically designed to help financial institutions respond to COVID-19 related exploitation. The new section will help financial institutions act fast to protect the assets of consumers through interactive videos, scenarios and activities.

This new COVID-19 section is part of the updated BankSafe training platform, available at no-cost to all credit unions and banks in the United States. You can read more about the importance of the BankSafe community’s response to the COVID-19 crisis in this blog post.

SBA Releases New, Revised PPP Guidance Reflecting PPP Flexibility Act

The U.S. Treasury and Small Business Administration (SBA) last week released new and revised guidance regarding the Paycheck Protection Program (PPP). The guidance is designed to implement the changes signed into law by President Donald Trump earlier this month in the PPP Flexibility Act.

To implement the legislation, the SBA has revised its April 2 interim final rule, updating provisions within the rule relating to loan maturity, deferral of loan payments and forgiveness provisions.

CUNA’s CompBlog examines in detail the changes made by the SBA to implement requirements of the PPP Flexibility Act.

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SBA Reopens Disaster Loan Portal

The Small Business Administration said Monday that it has reopened the Economic Injury Disaster Loan (EIDL) and EIDL Advance program portal to all eligible applicants experiencing economic impacts due to COVID-19.

SBA Administrator Jovita Carranza said in a statement that the reopening will help small businesses and nonprofits.

“With the reopening of the EIDL assistance and EIDL Advance application portal to all new applicants, additional small businesses and non-profits will be able to receive these long-term, low-interest loans and emergency grants – reducing the economic impacts for their businesses, employees and communities they support,” Carranza said.

SBA’s EIDL loans can be used to cover payroll and inventory, pay debt or fund other expenses. Also, the EIDL Advance will provide up to $10,000 ($1,000 per employee) of emergency economic relief to businesses that are currently experiencing temporary difficulties, and these emergency grants do not have to be repaid, Carranza explained.

The interest rate is 3.75% for small businesses and 2.75% for non-profits.

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56% of Businesses Sought PPP Loans: AICPA Survey

Some 56% of business executives said their companies had sought relief funds through the Paycheck Protection Program, according to a just-released survey by the American Institute of CPAs.

During a Wednesday hearing held by the Senate Small Business and Entrepreneurship Committee, Treasury Secretary Steven Mnuchin said that the PPP has issued 4.5 million loans amounting to more than $510 billion, which he called an “incredible effort.”

Mnuchin said more guidance will be issued soon regarding the Paycheck Protection Program Flexibility Act, which was signed into law on June 5 and is designed to provide businesses with more time and flexibility to keep their employees on the payroll.

“In less than two months, the PPP is supporting the employment of approximately 50 million workers and more than 75% of the small-business payroll in all 50 states,” Mnuchin told the senators.

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Congressional Scrutiny of PPP Grows Amid National Focus on Racism

Lawmakers are sounding the alarm about the apparent inability of some minority-owned and other underserved businesses to gain access to small-business loans mandated by recent pandemic relief laws.

Independent data points to minority-owned businesses getting rejected or still waiting for coronavirus rescue funds. And, with the nation intensely focused on racial divisions after the killing of George Floyd, members of Congress from both parties continue to demand better demographic data from the government on recipients of Paycheck Protection Program loans.

Fears that minority-owned businesses lack access to loans and a focus on the lack of public data about PPP borrowers are emerging as additional trouble spots for the Small Business Administration program enacted in March in the Coronavirus Aid, Relief, and Economic Security Act. The PPP was met with earlier criticism that banks involved in distributing loans were prioritizing their wealthiest clients. (American Banker, June 14)

Financial Services / Economic News

'Dramatic Falls' & Some Bright Spots for Credit Unions: CUNA Economic Update

For credit unions, first mortgages are up, auto loans are down and commercial loans have plummeted since the coronavirus hit the U.S. economy.

CUNA released its updated economic forecast on Thursday with data collected through April and according to CUNA Senior Economist Jordan van Rijn, first mortgages continued to be at least the one bit of good news for the credit union industry with a growth of 7.2%.

In a video update, van Rijn said while that is down from the 9.4% growth seen at this time last year, “Credit unions are continuing to find ways to do mortgages particularly in this environment of extremely low interest rates – a lot of people are asking for mortgages.” He also made a point to say that CUNA has seen a lot of bank customers come over to credit unions to refinance.

HELOCs and second mortgages are down 2.1% and commercial loans are down 8.3%, according to the latest CUNA survey data. “Overall, the monthly credit union estimates show that credit union loan growth is up about 1% this year through the first four months,” van Rijn said.

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Fannie Mae Sees Record-Low Mortgage Rates Through 2021

The cheapest mortgage rates on record are heading lower, Fannie Mae said in a forecast on Monday.

According to Fannie Mae, the annual average rate for 2020 will be 3.2%, down from 2019’s 3.9%. This would beat the record of 3.65% set in 2016, according to Freddie Mac data. Fannie Mae expects rates to drop to 2.9% in 2021.

The mortgage-rate forecast bodes well for housing demand and for refinancing volume, said Doug Ducan, Fannie Mae’s chief economist.

“While housing took a big hit this quarter, we believe the further reduction of mortgage rates, persistently low levels of supply, and strong buyer sentiment compared to seller sentiment should continue to provide support to home prices and new construction,” Duncan said.

The low rates probably will boost refi volume to $1.78 trillion this year, according to the forecast, which would be the highest level since 2003, when it was $2.5 trillion.

“We also expect the extremely low mortgage rate environment to contribute to historically high levels of refinancing activity as household balance sheets and incomes improve,” Duncan said.

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Understanding How Consumer Borrowing Habits Will Change Post-COVID

Americans won't stop borrowing but there's a growing conservatism brewing as more confront the potential for job loss or a reduction in income as key federal programs near their original sunsets. On the upside, point of sale installment credit offerings for both store and e-commerce sales are catching on, especially among Millennials.

For decades, America’s economy has been built on consumer spending. Historically credit powered much of that spending. So much so that it’s fair to say that if none of that credit existed, Americans would live much different lives.

Now the economy labors in the midst of an extended reboot from the COVID crisis. As Americans reenter some version of normality their views about borrowing will vary, based on their employment status, where they live, the options available to them now, and in some cases their age. In some ways their thinking about credit is changing.

Lenders and financial marketers face a steep challenge trying to figure out where the immediate future is for the types of credit they sell. Given the highly unusual nature of the COVID-19 slowdown, past patterns only go so far. Even the economic developments right in front of them can be misleading.

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