NCUA Renews PCA Relief; DFPI’s Pandemic Initiatives & More

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The National Credit Union Administration board (NCUA) approved, by notation vote, an interim final rule that temporarily modifies certain regulatory requirements to help ensure federally insured credit unions remain operational and able to provide needed financial services during the COVID-19 pandemic.

This interim rule is substantially similar to an interim final rule the NCUA Board previously approved in May 2020, which expired at the end of that year. Due to the pandemic’s continued financial and economic disruptions, the board determined it was necessary to reintroduce these two temporary relief measures related to earnings transfer waivers for adequately capitalized credit unions and net worth restoration plans for certain undercapitalized credit unions.

Specifically, the interim final rule makes two temporary changes to the NCUA’s prompt corrective action regulations. The first temporarily reduces the earnings retention requirement for federally insured credit unions classified as adequately capitalized.

Those credit unions unable to meet the earnings retention requirement will not have to submit a written application requesting approval to decrease their earnings retention amount. However, if a credit union either poses an undue risk to the National Credit Union Share Insurance Fund or exhibits material safety and soundness concerns, the appropriate NCUA Regional Director may require the credit union to submit an earnings transfer waiver request.

The second change temporarily permits an undercapitalized credit union to submit a streamlined net worth restoration plan if it becomes undercapitalized predominantly because of share growth. If a credit union becomes less than adequately capitalized for reasons other than share growth, it must still submit a net worth restoration plan under the current requirements in NCUA’s regulations.

These temporary measures will remain in place until March 31, 2022. The interim final rule is effective upon publication in the Federal Register, and there is a 60-day public comment period. Read more here.

The Leagues would like to thank the board for its attention to this matter. The Leagues and the Credit Union National Association (CUNA) have lobbied both the NCUA board and Congress to take immediate action on this effort. Many of these conversations were discussed with high-profile members of Congress during our Governmental Affairs Conference (GAC) meetings earlier this year. Several members of Congress made statements, inquiry calls, and other actions to ensure attention to this matter was given. The Leagues also recognize that this is not the end resolution on this issue and will continue to work with both the agency and Congress to pursue workable options to address PCA.

NCUA Board to Be Briefed: PCA Interim Final Rule & Cybersecurity
The NCUA’s board meeting will take place next Thursday, April 22, at 7 a.m. (Pacific). The board is set to be briefed on the recently issued interim final rule relating to capital adequacy/prompt corrective action (PCA), as well as on a cybersecurity update. You can view the meeting via live audio webcast at www.ncua.gov.

LICU Application Period for CDRLF
Low-income-designated credit unions seeking Community Development Revolving Loan Fund (CDRLF) grants in 2021 will be able to apply between May 3 and June 26. The NCUA will administer approximately $1.5 million in CDRLF grants to the most-qualified applicants, subject to availability of funds. Grants will be awarded in three categories: Underserved Outreach (maximum award of $50,000); Minority Depository Institution Mentoring (maximum award of $25,000); and Digital Services and Cybersecurity (maximum award of $7,000). Read more here.

DFPI's Pandemic Initiatives
More than a year into the COVID-19 pandemic, the California Department of Financial Protection and Innovation (DFPI) continues to expand efforts to protect consumers from financial impacts of the COVID-19 pandemic that has ravaged the state’s economy.

The DFPI is aggressively exercising its new authority under the California Consumer Financial Protection Law to regulate a large group of newly covered financial services, including debt collectors, credit reporting and credit repair agencies, debt relief agencies and others. It has taken actions to collect data on a number of new industries, including debt relief and earned wage access providers The Department also issued an order against an unlawful Property Assessed Clean Energy (PACE) solicitor, and a cease-and-desist order against a student loan debt relief company charging borrowers exorbitant fees for the false promise of getting their student debt forgiven.

In addition, the Department has stepped up measures to expose and track emerging scams, field and respond to a large increase in consumer complaints and inquiries, connect struggling consumers with available resources, and to work with licensees to ensure compliance with state and federal laws enacted to protect homeowners from foreclosures.

The DFPI’s expanded initiatives include:

  • For licensees engaged in mortgage loan servicing, DFPI exams now include verification of compliance with recently enacted state and federal laws protecting homeowners from coronavirus-related foreclosures. All mortgage loan servicers licensed by the DFPI undergo routine regulatory examinations to ascertain compliance with applicable state and federal laws: 1) The applicable laws include provisions allowing for forbearance of mortgage payments, post-forbearance options forbidding a requirement of lump sum payments, and the extension of the California Homeowner Bill of Rights to tenant occupied principal residences. California’s legislation, AB 3088, offers protection to both federally backed and non-federally backed mortgage loans; 2) The California Homeowner Bill of Rights was enacted in 2013 to provide protections for residential borrowers faced with the challenge of increasing residential foreclosures in California and to ensure borrowers are provided with available loss mitigation options. The DFPI is taking the necessary actions to ensure mortgage loan servicers comply with the required homeowner protections and reminded licensees in a bulletin last month of those laws.
  • The DFPI continues to experience and respond to a more than 40 percent increase in consumer complaints, calls and inquiries since the onset of COVID-19 in the state. Pandemic-related concerns about mortgages, student loans, personal loans, questionable investments, and apparent fraudulent schemes prompted many of the additional inquiries and complaints. The DFPI is tracking all COVID-19 related complaints and reporting harmful emerging consumer trends to the Enforcement Division for investigation. The DFPI Consumer Services Office also works with homeowners and licensees to resolve any issues holding up forbearance. In the process, the consumer office advises consumers of their rights and options during these difficult times.
  • The DFPI has posted and circulated consumer alerts warning of scams involving federal stimulus payments, fake default notices and private placement offerings. To aid consumers, the DFPI maintains a COVID-19 page that serves as a bulletin board for relief programs, consumer advisories, and financial relief efforts.
  • The DFPI has launched an investigation of lender efforts to evade the state’s new, stricter interest rate caps at a time when consumers need credit more than ever.

'CalMoneySmart Grants': DFPI Accepting Applications for 2nd Round
The DFPI is now accepting applications for its CalMoneySmart Grant Program, which will award up to $1 million this year to support free financial education for unbanked and underbanked consumers in California.

This is the second round of grant funding. The initial round last year awarded nearly $1 million to 12 nonprofits that serve communities in 17 counties across the state. Grant funds helped organizations create important resources, including:

  • The Mission Asset Fund’s mobile financial education app MyMAF.
  • The financial education curriculum with El Sol Neighborhood Education Center and the Mexican Consulate at the Ventana Financiero.
  • The Juma Ventures YouthConnect program to help youth gain work experience while becoming financially literate.

CalMoneySmart was created when Gov. Gavin Newsom signed Senate Bill 455 by Sen. Steven Bradford (D-Gardena). The bill established a $4 million Financial Empowerment Fund from which CalMoneySmart awards grants. To be eligible, applicants must be a nonprofit organization. Grant funds can be used only for:

  • Free classroom or web-based financial education and empowerment content to help consumers access lower-cost financial products and services, establish or improve their credit, increase savings, or reduce debt.
  • Individualized financial coaching.
  • A financial product or service intended to help consumers identify and access responsible financial products and services, establish or improve credit, increase savings, or lower their debt.

To be eligible, an organization must: 1) Be a nonprofit organization, exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and organized and operated exclusively for one or more of the purposes described in Section 501(c)(3) of the Internal Revenue Code (IRS); and 2) Have no part of its net earnings inure to the benefit of a private shareholder or individual.

For the latest round of grants, all CalMoneySmart applications must be submitted by May 28. The DFPI expects to announce the new awardees in August. The CalMoneySmart application can be found at https://dfpi.ca.gov/calmoneysmart-application-2021-22/. Additional information can be found at https://dfpi.ca.gov/calmoneysmart/. For questions, comments, or help, please contact CalMoneySmart@dfpi.ca.gov.

DFPI Hosts Inaugural Economic Equity Conference
The DFPI will present its inaugural Economic Equity Conference on April 21. Curated for top-level banking executives and diversity officers, conference highlights include:

  • Expert guidance for bankers from a nationally renowned diversity consultant.
  • Commentary from DFPI Commissioner Manual P. Alvarez on the department's first ever State Bank Diversity Survey.
  • Panel discussion with industry leaders on strategies for closing the racial wealth gap.
  • Honorary messages from special guests.

Invitations to this private event were sent via GovDelivery to all state banks and credit unions in February. If you did not receive your invitation or have questions, please email DEI@dfpi.ca.gov.

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