FTC Delays Red Flag Rule For State Charters
WASHINGTON-State-chartered credit unions are getting a six-month reprieve from complying with the new anti-fraud Red Flag Rules. The Federal Trade Commission announced late last week that it is delaying the enforcement of the new rules until May 1, 2009 for state-chartered CUs, though federally chartered CUs will still have to comply on the original deadline date.
"Federal charters are still expected to have things in place and that is still effective on Nov. 1," said NCUA director of public affairs John McKechnie.
In a statement, the FTC said the decision to delay enforcement would give the financial institutions "additional time in which to develop and implement written identity theft prevention programs" and expressed concern that many state-charters were not aware they had to follow the Red Flag guidelines because "they generally are not required to comply with FTC rules in other contexts."
CUNA said that although the rule will still go into effect Nov. 1, enforcement of it will not begin until May 1.
NCUA Is Seeing Loan Demand Surge At CLF
ALEXANDRIA, Va.-Demand at NCUA's emergency loan fund, the Central Liquidity Facility, rose to a new high this week, as the turmoil in the credit markets continued to take its toll on liquidity among credit unions.
Last week NCUA was in the process of funding $1.64 billion in loans from the CLF, just weeks after the federal regulator convinced Congress to increase the CLF's funding from the previous $1.5 billion cap, all the way to 440.5 billion.
NCUA was reminding credit unions of the availability of CLF loans. "Credit unions should carefully monitor liquidity and if necessary, utilize the CLF on an as-needed basis," said NCUA Chairman Michael Fryzel.
Mortgage Portfolio Deteriorates
LENEXA, Kan.-U.S. Central FCU reported yesterday its securities portfolio took a beating over the past month, declining in value by another $700 million, increasing the corporate credit union's unrealized losses to $3.8 billion at Sept. 30.
That doesn't include additional losses of $2.3 billion when U.S. Central marks-to-market its entire portfolio-a total fair value loss of $6.1 billion-which U.S. Central is required to report under generally accepted accounting principles, or GAAP.
"Further credit spread widening in all fixed-income sectors pushed the fair value of U.S. Central's available-for-sale securities portfolio lower again in September," said Kathryn Brick, chief financial officer, in a letter to members last week.
About $400 million of the new losses were in U.S. Central's holdings of so-called private label mortgage backed securities, while $300 million was attributable to non-mortgage asset backed securities, she said.
The continuing decline in the mortgage market increased the unrealized loss on U.S. Central's $19.9 billion of private label MBSs to $5.1 billion at Sept. 30.
The corporates' corporate is also sitting on $880 million of unrealized losses on $12 billion worth of other asset backed securities, backed by credit card loans, student loans, auto loans, and commercial real estate, as well as $145 million of losses on corporate bonds and notes that it holds.
For the month of September, U.S. Central realized $1.9 million of losses on financial instruments, and has realized $27.6 million in losses through the first three quarters of the year.
Assets at Sept. 31 were down 27% from last year's high of $51.8 billion, to $38 billion. Net income for the first three quarters was $45.9 million, up from $27.1 million for the same period last year.
80K Homes Lost To Foreclosure
NEW YORK-Some 81,312 American homes were lost to foreclosure during September, according to data released last week by RealtyTrac.
Since August 2007, more than 851,000 homes have been foreclosed upon, the company reported. In addition, RealtyTrac said that during September another 265,968 homeowners received foreclosure filings, including default notices and action sale notices, a decline of 12% from August 2008 but up 21% from one year earlie, according to a report released last Thursday.
The company attributed the recent dip in foreclosure filings in part to a change in some states‚ laws, which require 30 days before delivering a default notice, but added the laws will likely only push the foreclosures back by a month. The highest foreclosure rate in the country remains Nevada (one in every 82 homes), followed by Florida (one in every 178) and California (one in every 189).
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