Compliance Outlook

1. Compliance Outlook 2012 Fourth Quarter 2013 First Quarter

2. Program Overview • Fourth Quarter 2012 • Troubled Debt Restructuring • S.A.F.E. ACT • Unlimited Share Insurance Coverage • First Quarter 2013 • CFPB • NCUA

3. Troubled Debt Restructures • Eliminates dual tracking • Calculate delinquency based • on modified loan terms • Nonaccrual on loans > 90 • days past due • Policies & Procedures http://www.ncua.gov/about/Documents/Agenda%20Items/AG20120524Item3b.pdf

4. S.A.F.E. ACT • Registration Renewal • Annual Audit • Federally Insured CUs – no CE Training • CU not Federally Insures – required CE Training http://www.ncua.gov/Resources/CUs/Pages/SAFE.aspx

5. NCUA Share Insurance • Unlimited Share Insurance ENDS December 31, 2012 Recommendations: • Determine affected accounts • Communicate change • Update disclosures http://www.ncua.gov/Resources/CUs/Pages/SAFE.aspx

6. Looking Ahead to 2013 • NCUA • Small Credit Union Rule • Low Income Designation • CU Troubled Condition • High Cost Mortgages • Escrow Requirements • Ability to Repay • Servicing CFPB

7. CFPB – High Cost Mortgages • Rule effect: • Ban balloons and prepayment penalties; • No loan modification and payoff fees; • Late fee capped at 4%; and • Prohibits lenders from rolling closing costs into the loan amount. • Covered Loans: • Secured by principal dwelling • Purchase money mortgages • Refinances • Close-end home equity loans • Open-end credit plans http://www.consumerfinance.gov/regulations/high-cost-mortgage-and-homeownership-counseling-amendments-to-regulation-z-and-homeownership-counseling-amendments-to-regulation-x/

8. CFPB – Escrow Accounts Escrow accounts must be established on Higher-priced mortgage loans and maintained for at least 5 years. • Exemption: • Serve rural & underserved areas • Assets < $2 billion • Originate < 500 first lien mortgages • AND • Not escrow currently http://www.consumerfinance.gov/regulations/escrow-requirements-under-the-truth-in-lending-act-regulation-z/

9. CFPB – Ability-to-Repay • Credit Unions must consider 8 underwriting factors: • Current income or assets • Current employment status • Monthly payment on loan • Monthly payment on other loans • Payments on related obligations • Current debt obligations • Monthly debt-to-income ratio / Residual income • Credit History http://www.consumerfinance.gov/regulations/ability-to-repay-and-qualified-mortgage-standards-under-the-truth-in-lending-act-regulation-z/

10. CFPB – Servicing Rules • Final Rules Cover Nine Topics: • Periodic billing statements • Interest-rate adjustment notices for ARMs • Prompt payment crediting and payoff statements • Force-placed insurance • Error resolution and information requests • Servicing policies, procedures, and requirements • Early delinquency intervention • Continued contact with delinquent members • Loss mitigation procedures http://www.consumerfinance.gov/regulations/2013-real-estate-settlement-procedures-act-regulation-x-and-truth-in-lending-act-regulation-z-mortgage-servicing-final-rules/

11. NCUA – New Rules • Final Rules Cover Nine Topics: • Small Credit Unions • $50 million in assets • Streamlined exams – NO change + $10 million • Low income designation acceptance now 90 days • Troubled Condition Credit Unions

12. Thank you for joining me for this overview of the Compliance Outlook. Stay Tuned……..