CURRENT Newsletter | 27 August 2020
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Headline News
- Credit Unions Vote: Help Members Prepare for November Elections
- U.S. Economy Plunges an Annualized 31.7% in Second Quarter
- League Providing Virtual Workshops on IRAs
- League’s Free ‘Shift Happens’ Webinar Series Continues Sept. 1
- FHFA Delays GSE Refinance Fee Implementation to Dec. 1
- Fed Lays Out Historic Change to Boost Inflation Past 2%
Compliance / Regulatory Affairs
- Increase in Fair Credit Reporting Complaints May Lead to Increased Litigation
- Trump’s Payroll Tax Deferral In Limbo as Employers Await IRS Guidance
Pandemic Response
- FHFA Further Extends Buying Loans in Forbearance & COVID-Related Loan Processing Flexibilities
- FHFA Extends Foreclosure, REO Eviction Moratoriums
- Reevaluate 4 Key ALM Assumptions During the Pandemic
Economy / Marketplace News
News From Credit Unions
Headline News
Credit Unions Vote: Help Members Prepare for November Elections
The 2020 General Election is 67 days away and in light of the coronavirus pandemic (COVID-19), it is more important than ever to remind your members to vote and provide them with the resources so they can cast their ballots safely.
By sending your members to creditunionsvote.com, they can make sure they're registered, locate their polling place, and find information on voting early, absentee, or by mail. All details are specific to their state and local jurisdiction and updated with any changes.
Be sure to send this to your members early so they know all the voting options in your state.
Learn more about Virginia’s voting options here, including absentee and early voting.
U.S. Economy Plunges an Annualized 31.7% in Second Quarter
The U.S. economy shrank at an alarming annual rate of 31.7% during the April-June quarter as it struggled under the weight of the viral pandemic, the government estimated Thursday. It was the sharpest quarterly drop on record.
The Commerce Department downgraded its earlier estimate of the U.S. gross domestic product last quarter, finding that the devastation was slightly less than the 32.9% annualized contraction it had estimated at the end of July. The previous worst quarterly drop since record-keeping began in 1947 was a 10% annualized loss in 1958.
League Providing Virtual Workshops on IRAs
This year will see the most significant changes to individual retirement accounts (IRAs) in more than a decade.
Your League is providing a two-day Essentials and Advanced Virtual IRA Workshop on Sept. 22 and 23 from 9 a.m. – 3:45 p.m. each day. This interactive workshop will be led by instructors presenting live with opportunities to pose questions and engage in the discussion.
League’s Free ‘Shift Happens’ Webinar Series Continues Sept. 1
Your League is offering an ongoing series of free webinars, which we’ve titled “Shift Happens.” Registration is now open for the following sessions:
- Compassionate Member Service (Sept. 1)
- Whether You Realize It Or Not...Your Brand Has Evolved (Sept. 8)
- Contactless Cards Are Gaining Momentum (Sept. 15)
FHFA Delays GSE Refinance Fee Implementation to Dec. 1
The Federal Housing Finance Agency (FHFA) says it will delay implementation of its GSE refinance fee until Dec. 1, past the original effective date of Sept. 1. This delay comes after heavy engagement from CUNA, Leagues and other system partners, most recently in a letter from CUNA, the American Association of Credit Union Leagues and all 34 League presidents detailing the impact the fee and September 1st effective date was already having on credit union loans.
According to FHFA, the fee is necessary to cover projected COVID-19 losses of at least $6 billion at Fannie and Freddie, due to actions taken during the pandemic to protect renters and borrowers.
Learn more
Related: GSE refinance fee disrupting CU lending pipeline
Fed Lays Out Historic Change to Boost Inflation Past 2%
The Federal Reserve has made a historic change to its goal of targeting 2% inflation, allowing for prices to temporarily rise above the threshold to make up for any time they spent below it.
The action marks a major shift to the Fed's decades-long method of containing inflation, which has consisted of acting quickly to raise rates as soon as inflationary signs appear.
The change will instead mean Fed officials will likely keep interest rates lower for a longer period of time, as part of an effort to temporarily boost inflation past 2% to make up for periods when inflation was "running persistently below" their goal. (S&P Global Market Intelligence, Aug. 27)
Compliance / Regulatory Affairs
Increase in Fair Credit Reporting Complaints May Lead to Increased Litigation
In April and May, the CFPB received approximately 42,400 and 44,100 complaints, respectively—the highest monthly complaint volumes in the Bureau’s history. The most common creditor violations of Fair Credit Reporting Act (FCRA) include:
- Creditors provide inaccurate financial information to reporting agencies
- Creditors fail to send notifications about credit report or score
- Creditors pull credit reports for an impermissible purpose
- Creditors utilize credit reports pulled for a permissible purpose to market or cross-sell additional products and services
The most recent issue impacting credit unions is based in the requirement to establish a permissible purpose before pulling a member’s individual credit report.
Read CUNA Mutual Group’s latest Risk Alert for more details.
Trump’s Payroll Tax Deferral In Limbo as Employers Await IRS Guidance
The U.S. Treasury Department has yet to tell companies how to handle President Trump’s order delaying the due date for employee payroll taxes.
It’s been two weeks since Trump issued his directive deferring the deadline to pay worker’s portions of Social Security taxes from Sept. 1 to the end of the year. But employers, which are responsible for submitting those payments to the Internal Revenue Service, are waiting to hear from the agency on how any tax bill would be handled when it comes due later.
Pandemic Response
FHFA Further Extends Buying Loans in Forbearance & COVID-Related Loan Processing Flexibilities
The Federal Housing Finance Agency (FHFA) announced today that Fannie Mae and Freddie Mac (the Enterprises) will extend buying qualified loans in forbearance and several loan origination flexibilities until Sept. 30, 2020. The changes are to ensure continued support for borrowers during the COVID-19 national emergency. The flexibilities were set to expire on Aug. 31, 2020.
FHFA Extends Foreclosure, REO Eviction Moratoriums
To help borrowers at risk of losing their home due to the coronavirus national emergency, the Federal Housing Finance Agency (FHFA) today announced that Fannie Mae and Freddie Mac (the Enterprises) will extend the moratoriums on single-family foreclosures and real estate owned (REO) evictions until at least Dec. 31, 2020.
The foreclosure moratorium applies to Enterprise-backed, single-family mortgages only. The REO eviction moratorium applies to properties that have been acquired by an Enterprise through foreclosure or deed-in-lieu of foreclosure transactions. The current moratoriums were set to expire on Aug. 31, 2020.
Reevaluate 4 Key ALM Assumptions During the Pandemic
The coronavirus (COVID-19) pandemic is a historical moment that will be discussed for years. High unemployment has caused credit unions to revamp their loan programs, allow deferrals and skip-a-pays, and waive fees, while low interest rates affect credit union earnings.
As the pandemic takes its toll on credit union financials, how can leaders assess the current environment and make decisions that keep the credit union and its asset/liability management (ALM) efforts in line?
“Taking risks is the only way to get earnings,” says Dave Koch, managing director at Abrigo. “What matters is managing the downside risk. You need to give up some of the possible upside gains to manage the downside risks because we’re going to be here for a while.”
Economy / Marketplace News
US Housing Market: Existing, New Home Sales Post Robust Growth in July
Existing home sales in the U.S. logged 24.7% month-over-month growth in July, building on the double-digit increase from the previous month, according to the National Association of Realtors. Sales also increased 8.7% on an annual basis.
NAR Chief Economist Lawrence Yun noted that the housing market is "well past the recovery phase" and is booming with higher sales now than in the pre-pandemic days. "With the sizable shift in remote work, current homeowners are looking for larger homes, and this will lead to a secondary level of demand even into 2021," he added. (S&P Global Market Intelligence, Aug. 27)
Related: Why Are Home Prices Appreciating? Zillow CEO Offers a Theory
News From Credit Unions
Chartway FCU Welcomes Jim Bibbs as Associate Director
Chartway Federal Credit Union is proud to welcome Jim Bibbs to its newly established associate director development program, designed to provide a prepared slate of board succession candidates to ensure board leadership continuity.
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