NCUA Chairman: Credit Unions Can Lead During “a Time of Seismic Change”

Hood Speaks to AACUC on Inclusion, Innovation, and Modern Regulation

CHARLOTTE, NC (Aug. 9, 2019) – America is going through an unprecedented demographic transition, NCUA Board Chairman Rodney E. Hood said today, and credit unions have a chance to show leadership as the financial industry responds to that transition.

“This is a time of seismic change,” Hood said, “and that dynamic creates both challenges and opportunities. I consider financial inclusion to be the civil rights issue of our time. For too long, too many people have been overlooked or locked out of the financial system. Lack of access holds working families back from climbing the financial ladder.

“I believe credit unions are better-positioned than any other player in the financial sector to make a big difference when it comes to diversity and inclusion; because those are a fundamental part of our industry’s history,” he said.

Chairman Hood spoke to the 21st annual conference of the African-American Credit Union Coalition. Today’s speech was the Chairman’s first major address since taking office. The full text of Chairman Hood’s remarks is available online.

AACUC Executive Director Renee Sattiewhite welcomed Chairman Hood and said she and her organization look forward to working with him and NCUA.

“We are so happy to welcome Chairman Hood back to the credit union community, and we are thrilled to welcome him as the first African-American to lead a federal banking regulator,” Sattiewhite said. “There are many important issues ahead, and we are grateful to have him as a partner.”

Chairman Hood described the commitment to service that set the course of his life and career, and he discussed ways the NCUA can both support and protect credit unions and their members.

“When I embarked on my banking career, I always saw our primary mission in simple terms,” Hood said. “It was about people helping people and people serving people.”

Innovation: Changes and Opportunities

Rapid changes in information technology create growing concerns about data breaches, but they also provide credit unions with new tools to improve service and expand access to affordable financial products, Hood said.

“Cybersecurity is a significant concern,” Hood said. “Even the largest and strongest financial institutions have points of vulnerability. It will remain a top priority for NCUA during my chairmanship, and I recently appointed a cybersecurity advisor who reports directly to me.

“On the other side of the ledger, financial technology is creating a different kind of challenge, in the form of new ways of doing business and new customer expectations,” he said. “Mobile banking, digital payments, artificial intelligence, data aggregation, or whatever may come next. These trends are going to change the way you engage members, analyze lending risk and market your products and services.”

Regulatory Reform: Effective, but not Excessive

Chairman Hood made a commitment to regulations “that will encourage innovation, provide flexibility, and fulfill our primary mission of protecting safety and soundness.”

Two examples of this effort, he said, were increasing the threshold for requiring commercial property appraisals from $250,000 to $1 million and a two-year delay in the agency’s risk-based capital rule.

Calling the appraisal rule changes “long overdue,” Hood said they would reduce transaction costs and spur more lending, particularly in hard-press rural areas.

The two-year delay in the risk-based capital rule will ensure it will be properly implemented and will give NCUA an opportunity to take “a holistic approach to the issue of capital in the credit union system,” Hood said.

“The goal is to create a regulatory system that is effective, but not excessive,” Hood said, “so you can go about your vital work of lending and providing your members with the highest level of service and quality, affordable financial products.”

As it moves forward, Hood said, the credit union industry should keep its traditional mission in mind.

“The key to this industry’s future success lies with staying true to the values the credit union system was founded upon,” he said, “the commitment to people helping people by fostering greater financial inclusion, accessibility, and opportunity for all Americans.”

NCUA’s Hood: Federal-State Chartering and Supervision System Working Well

NCUA and NASCUS Chairmen Sign New Document of Cooperation

SAN FRANCISCO (Aug. 14, 2019) – The National Credit Union Administration and state regulators are working well together to modernize the dual chartering and supervision system and reduce regulatory burdens for credit unions, NCUA Chairman Rodney E. Hood said today.

“The system of regulation and supervision where federal and state authorities work cooperatively, always with the common goal of a safe, sounder, more efficient and innovative credit union industry, has clearly demonstrated its merits,” Hood said. “Essential to making that system work is a solid relationship between the NCUA and state regulators, based on mutual respect.”

Speaking to the National Association of State Credit Union Supervisors’ State System Summit meeting, Hood thanked NASCUS President and Chief Executive Officer Lucy Ito for her years of leadership in building the collaborative relationship between NCUA and state regulators. The full text of the Chairman’s remarks is available on NCUA’s website.

Hood and NASCUS Chairman John Kolhoff signed a Document of Cooperation pledging continued coordination between state and federal regulators within the credit union dual chartering system. The document lays out general principles for ensuring credit unions’ safety and soundness, enhancing supervision, and fostering “an environment of innovation, prosperity, and success.” The new document is a significant update to the agreement signed by the agency and NASCUS in 2007.

Hood also reported on the progress of the NCUA-State Supervisor Working Group, created in 2017.

“The group is committed to evaluating the examination program for federally insured, state-chartered credit unions and making recommendations for changes,” he said. “I am excited about the possibilities it represents.”

The Working Group, comprised of NCUA senior staff and representatives from six state credit union regulators, used ideas gathered from focus groups and other credit union stakeholder outreach to create a work plan in three phases, Hood said.

  • Phase I, recently completed, developed a pilot program for a system of alternating examinations. Six states are now participating in that program.
  • Phase II, now under way, will identify improvements in coordination and cooperation between the NCUA and state regulators when conducting joint exams or supervision.
  • Phase III will look for other potential benefits to credit unions from improved collaboration between state and federal regulators.

Hood praised the Working Group for its accomplishments and said the group’s efforts reflected the basic values of the credit union system.

“What we’re doing is really no more than staying faithful to the fundamental credit union principle of people helping people,” he said, “working together to support one another, to share best ideas, to fulfill needs, to find solutions, to create opportunities, to help credit unions and their members grow, thrive, and prosper.”

NCUA Releases Interim Guidance on Serving Hemp Businesses

ALEXANDRIA, Va. (Aug. 19, 2019) – Federally insured credit unions may provide certain financial services to legally operating hemp businesses under new guidance published today by the National Credit Union Administration.

The guidance will be revised and updated once the United States Department of Agriculture finalizes forthcoming regulations and guidelines. Credit unions will be able to provide the customary range of financial services for business accounts, including loans, to hemp businesses within their fields of membership.

“Lawful hemp businesses provide exciting new opportunities for rural communities,” NCUA Chairman Rodney E. Hood said. “I believe today’s interim guidance keeps with the mission of the nation’s cooperative credit system to serve people who have been overlooked and underserved. Many credit unions have a long and successful history of providing services to the agriculture sector. My expectation is that credit unions will thoughtfully consider whether they are able to safely and properly serve lawfully operating hemp-related businesses within their fields of membership.”

NCUA Chairman Hood Statement on the Appeals Court Decision Regarding Field-of-Membership Rule

ALEXANDRIA, Va. (Aug. 20, 2019) – National Credit Union Administration Chairman Rodney E. Hood issued the following statement in response to today’s D.C. Circuit Court of Appeals decision in American Bankers Association v. National Credit Union Administration:

“The NCUA is pleased with today’s Court of Appeals decision. The agency is still reviewing that decision. In the near future, we will provide guidance for affected credit unions.”

NCUA Chairman: Defense Credit Unions “Positioned to Lead the Way” on Financial Inclusion

CHICAGO (Aug. 20, 2019) – Defense credit unions are well-positioned to lead the way on improving access to affordable financial services in underserved communities, National Credit Union Administration Board Chairman Rodney E. Hood said today.

“There are a lot of innovations that defense credit unions have pioneered to better serve members in far-flung postings around the world,” Chairman Hood said. “Those innovations might help us to get a better sense of how to target services to rural communities or other hard-to-reach places. I think the industry as a whole can learn a great deal from defense credit unions that have effectively met the challenges of diverse and highly mobile populations and those that have had limited interaction with traditional financial service providers.”

Chairman Hood spoke before the Defense Credit Union Council’s Annual Meeting in Chicago. During his remarks, he also discussed the importance of financial inclusion calling it the “defining civil rights issue of our time.”

Hood noted there are dividing lines that separate too many Americans from access to safe and affordable financial services, including age, disability, and where a person lives. This is especially true in rural communities, where the withdrawal of financial institutions from rural communities over the last decade poses a serious threat to financial access for the people who still live there.

“When communities lose financial access, it is almost like cutting off the oxygen supply that is needed to fuel the local economy,” Hood said. “We also know that the lack of access to affordable banking and lending services holds working families back from climbing the financial ladder. I’m committed to doing everything we can to recognize and incentivize what’s best in the credit union mission, so that we can remove the obstacles to financial access that all rural and underserved communities are facing.”

NCUA Charters Maine Harvest Federal Credit Union

Credit Union Will Offer Affordable Financial Services to Farm and Food Production Community

ALEXANDRIA, Va. (Aug. 23, 2019) – The state of Maine has a new credit union, Maine Harvest Federal Credit Union, headquartered in Unity.

The National Credit Union Administration on August 14 granted a federal charter and Share Insurance Fund coverage to Maine Harvest, which will serve the employees and approximately 13,000 members of the Maine Organic Farmers and Gardeners Association and the Maine Farmland Trust.

“How appropriate that this credit union is located in a town named Unity,” NCUA Chairman Rodney E. Hood said. “Credit unions are organized through, and operate on, the principle of people working together to support one another. I want to thank the organizers of Maine Harvest for their hard work to bring their dream to reality and congratulate them on their charter.”

Maine Harvest was chartered to make affordable member business loans to small farms, farmers, and other food producers within its field of membership. Loan funds will be available through mission-based deposits. During its first year of operations, Maine Harvest will offer its membership:

  • Agricultural real estate loans
  • Agricultural-related equipment loans
  • Regular shares
  • Share certificates
  • Home and mobile banking
  • Wire transfers
  • Cashier checks
  • Shared branching
  • Debit ATM cards
  • E-statements and online applications

Maine Harvest Federal Credit Union expects to begin operations this fall.

NCUA Urges Credit Unions to Prepare for Tropical Storm Dorian

ALEXANDRIA, Va. (Aug. 27, 2019) – The National Credit Union Administration is advising credit unions in the path of Tropical Storm Dorian to take precautions as the storm enters the eastern Caribbean.

“Credit unions in Dorian’s path should to take measures to protect their staff and secure their operations,” NCUA Board Chairman Rodney E. Hood said. “The NCUA will be closely monitoring the storm’s progress, and we will be ready to assist credit unions with maintaining or restoring operations, if necessary. Credit unions and members can find information on staying safe from several online resources, and we encourage everyone to be alert for official announcements and media reports as the storm draws near.”

Dorian’s current projected path could take it across Puerto Rico by Wednesday, and the storm could reach Florida by this coming weekend.

The NCUA maintains a hurricane and disaster information page on its website as well as on the MyCreditUnion.gov consumer information page. The National Hurricane Center has regular updates on the storm as it approaches landfall, and the Department of Homeland Security has an information page on being prepared for hurricanes.

Credit union members with questions may contact the NCUA’s Consumer Assistance Center at 800.755.1030 Monday through Friday between 8 a.m. and 5 p.m. Eastern. The NCUA’s Office of Credit Union Resources and Expansion can provide urgent needs grants of up to $7,500 to low-income credit unions that experience sudden costs to restore operations interrupted by the storm.

FFIEC Encourages Standardized Approach to Assessing Cybersecurity Preparedness

The Federal Financial Institutions Examination Council (FFIEC) members today emphasized the benefits of using a standardized approach to assess and improve cybersecurity preparedness. 

The members note that firms adopting a standardized approach are better able to track their progress over time, and share information and best practices with other financial institutions and with regulators.   

Institutions may choose from a variety of standardized tools aligned with industry standards and best practices to assess their cybersecurity preparedness.  These tools include the FFIEC Cybersecurity Assessment Tool, the National Institute of Standards and Technology Cybersecurity Framework, the Financial Services Sector Coordinating Council Cybersecurity Profile, and the Center for Internet Security Critical Security Controls. 

FFIEC members welcome collaborative approaches to advance and support cyber preparedness and enhance the efficiency and effectiveness of the supervisory process.  While the FFIEC does not endorse any particular tool, these standardized tools support institutions in their self-assessment activities.  The tools are not examination programs and the FFIEC members take a risk-focused approach to examinations.  As cyber risk evolves, examiners may address areas not covered by all tools.

Williams Chosen as Confidential Assistant to NCUA Chairman Hood

ALEXANDRIA, Va. (Aug. 28, 2019) – The National Credit Union Administration today announced the selection of Hallie Williams as confidential assistant to NCUA Chairman Rodney E. Hood.

Williams began her duties August 26.

“I’m pleased to welcome Hallie to NCUA, and I look forward to the contributions she will make to the management team,” Hood said.

Prior to joining NCUA, Williams worked in several capacities, including executive assistant and scheduler, to Sen. Bob Corker (R-TN) in his Washington, D.C., office.  While working for Senator Corker, Hallie was on the Senator’s leadership team.

Williams holds a bachelor’s degree in business administration from the University of Tennessee.

FFIEC Announces Availability of 2018 Data on Mortgage Lending

The Federal Financial Institutions Examination Council (FFIEC) today announced the availability of data on mortgage lending transactions at 5,683 U.S. financial institutions covered by the Home Mortgage Disclosure Act (HMDA). Covered institutions include banks, savings associations, credit unions, and mortgage companies. Released today are loan-level HMDA data covering 2018 lending activity that were submitted on or before August 7, 2019.

The data include a total of 48 data points providing information about the applicants, the property securing the loan or proposed to secure the loan in the case of non-originated applications, the transaction, and identifiers. Many of the data points are available for the first time in the 2018 HMDA data. A complete list of HMDA data points and the associated data fields is found in Appendix A of the FFIEC’s Filing Instructions Guide for HMDA Data Collected in 2018.1 Certain smaller-volume financial institutions are not required to report all of these data, pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA).2

The HMDA loan-level data available to the public will be updated, on an ongoing basis, to reflect late submissions and resubmissions. Accordingly, loan-level data downloaded from https://ffiec.cfpb.gov/ at a later date will include any such updated data. An August 7, 2019 static dataset used to develop the observations in this statement about the 2018 HMDA data is available here https://ffiec.cfpb.gov/data-publication/. In addition, beginning in late March 2019, Loan/Application Registers (LARs) for each HMDA filer of 2018 data, modified to protect borrower privacy, became available at https://ffiec.cfpb.gov/data-publication/.

Understanding the Data

The 2018 HMDA data use the census tract delineations, population, and housing characteristic data from the 2011–2015 American Community Survey (ACS). In addition, the data reflect metropolitan statistical area (MSA) definitions released by the Office of Management and Budget in 2017 that became effective for HMDA purposes in 2018.

Caution should be used when comparing HMDA data across multiple years due to changes in HMDA definitions, values, and thresholds. Also, caution is required for certain geographic areas due to the changes in MSA and census tract boundaries and updates to the population and housing characteristics of census tracts, especially those that follow the decennial census and five-year updates based on the ACS data.

The HMDA data are the most comprehensive publicly available information on mortgage market activity. Among other uses, the data help the public assess how financial institutions are serving the housing needs of their local communities and facilitate federal financial regulators’ fair lending, consumer compliance, and Community Reinvestment Act examinations. For example, when these regulators evaluate an institution’s fair lending risk, they analyze HMDA data in conjunction with other information and risk factors, in accordance with the Interagency Fair Lending Examination Procedures available at https://www.ffiec.gov/PDF/fairlend.pdf.

HMDA data alone cannot be used to determine whether a lender is complying with fair lending laws. The data do not include some legitimate credit risk considerations for loan approval and loan pricing decisions. Therefore, when regulators conduct fair lending examinations, they analyze additional information before reaching a determination about an institution’s compliance with fair lending laws.

Observations from the 2018 Data3

For 2018, the number of reporting institutions declined by about 2.9 percent from the previous year to 5,683. The 2018 data include information on 12.9 million home loan applications. Among them, 10.3 million were closed-end, 2.3 million were open-end, and, for another 378,000 records, pursuant to the EGRRCPA’s partial exemptions, financial institutions did not indicate whether the records were closed-end or open-end. A total of 7.7 million applications resulted in loan originations. Among them, 6.3 million were closed-end mortgage originations, 1.1 million were open-end line of credit originations, and, pursuant to the EGRRCPA’s partial exemptions, 283,000 were originations for which financial institutions did not indicate whether they were closed-end or open-end. The 2018 data include 2.0 million purchased loans, for a total of 15.1 million records. The data also include information on approximately 177,000 requests for preapprovals for home purchase loans.4

The total number of originated loans decreased by about 924,000 between 2017 and 2018, or 12.6 percent. Refinance originations decreased by 23.1 percent from 2.5 million, and home purchase lending increased by 0.3 percent from 4.3 million.

A total of 2,251 reporters made use of the EGRRCPA’s partial exemptions for at least one of the 26 data points eligible for the exemptions. In all, they account for about 425,000 records and 298,000 originations.

From 2017 to 2018, the share of home purchase loans for first lien, 1-4 family, site-built, owner-occupied properties (1-4 family, owner-occupied properties) made to low- and moderate-income borrowers (those with income of less than 80 percent of area median income) rose slightly from 26.3 percent to 28.1 percent, and the share of refinance loans to low- and moderate-income borrowers for 1-4 family, owner-occupied properties increased from 22.9 percent to 30.0 percent.5

In terms of borrower race and ethnicity, the share of home purchase loans for 1-4 family, owner-occupied properties made to Black borrowers rose from 6.4 percent in 2017 to 6.7 percent in 2018, the share made to Hispanic-White borrowers increased slightly from 8.8 percent to 8.9 percent, and those made to Asian borrowers rose from 5.8 percent to 5.9 percent. From 2017 to 2018, the share of refinance loans for 1-4 family, owner-occupied properties made to Black borrowers increased from 5.9 percent to 6.2 percent, the share made to Hispanic-White borrowers remained unchanged at 6.8 percent, and the share made to Asian borrowers fell from 4.0 percent to 3.7 percent.

In 2018, Black and Hispanic-White applicants experienced higher denial rates for 1-4 family, owner-occupied conventional home purchase loans than non-Hispanic-White applicants. The denial rate for Asian applicants is more comparable to the denial rate for non-Hispanic-White applicants. These relationships are similar to those found in earlier years and, due to the limitations of the HMDA data mentioned above, cannot take into account all legitimate credit risk considerations for loan approval and loan pricing.

The Federal Housing Administration (FHA)-insured share of first-lien home purchase loans for 1-4 family, owner-occupied properties declined from 22.0 percent in 2017 to 19.3 percent in 2018. The Department of Veterans Affairs (VA)-guaranteed share of such loans remained at approximately 10 percent in 2018. The overall government-backed share of such purchase loans, including FHA, VA, Rural Housing Service, and Farm Service Agency loans, was 32.0 percent in 2018, down slightly from 35.4 percent in 2017.

The FHA-insured share of refinance mortgages for 1-4 family, owner-occupied properties decreased slightly to 12.8 percent in 2018 from 13.0 percent in 2017, while the VA-guaranteed share of such refinance loans decreased from 11.3 percent in 2017 to 10.2 percent in 2018.

The share of mortgages originated by nondepository, independent mortgage companies has increased in recent years. In 2018, this group of lenders accounted for 57.2 percent of 1-4 family, owner-occupied home-purchase loans, up from 56.1 percent in 2017. Independent mortgage companies also originated 56.1 percent of 1-4 family, owner-occupied refinance loans, an increase from 55.8 percent in 2017.

The HMDA data also identify loans that are covered by the Home Ownership and Equity Protection Act (HOEPA). Under HOEPA, certain types of mortgage loans that have interest rates or total points and fees above specified levels are subject to certain requirements, such as additional disclosures to consumers, and also are subject to various restrictions on loan terms. For 2018, 6,681 loan originations covered by HOEPA were reported: 3,654 home purchase loans for 1-4 family properties; 448 home improvement loans for 1-4 family properties; and 2,579 refinance loans for 1-4 family properties.

The 2018 HMDA data contains a variety of information reported for the first time. For example, the data indicated that approximately 424,000 applications were for commercial purpose loans and approximately 57,000 applications were for reverse mortgages.

In addition, among the 12.9 million applications reported, 1.3 million included at least one disaggregate racial or ethnic category. The two most commonly reported disaggregate groups were Mexican and Other Hispanic, which were reported by 3.0 percent and 1.5 percent of applicants, respectively. For approximately 6.3 percent of applications, race and ethnicity of the applicant were collected on the basis of visual observation or surname.6 The percentage was slightly higher for sex at 6.5 percent.

For the newly-reported age data point, the two most commonly reported age groups for applicants were 35-44 and 45-54, with 22.7 and 22.4 percent of total applications, respectively. Just under 3.0 percent of applicants were under 25 and just under 4.0 percent of applicants were over 74.

Credit score information was reported for 73.1 percent of all applications. Equifax Beacon 5.0, Experian Fair Isaac, and FICO Risk Score Classic 04 were the three most commonly reported credit scoring models at 22.8 percent, 18.8 percent and 18.2 percent of total applications, respectively. For originated loans, the median primary applicant scores for these three models were between 738 and 746. This compares to medians ranging from 682 to 686 for denied applications.

Combined loan-to-value ratio (CLTV) was reported for 74.3 percent of total applications. For originations of closed-end, conventional home purchase loans, the median CLTV was 80, with 46.2 percent of originations over 80.0. For originations of closed-end, FHA-insured home purchase loans, the median CLTV was 96.5, with 24.9 percent over 96.5.

Debt-to-income ratio (DTI) was reported for 75.3 percent of total applications. Approximately 45.1 percent of applications had DTIs between 36.0 percent and 50 percent, with 7.0 percent of applications with less than 20 percent, and 7.1 percent with greater than 60 percent.

The 2018 HMDA also contains additional pricing information. For example, the median total loan costs for originated closed-end loans was $3,949. For about 42.5 percent of originated closed-end loans, borrowers paid no discount points and received no lender credits. The median interest rate for these originated loans was 4.8 percent. The median interest rate for originated open-end lines of credit excluding reverse mortgages was 5.0 percent.

Additional HMDA Information

Financial institution disclosure statements, MSA and nationwide aggregate reports for 2018 HMDA data, and tools to search and analyze the HMDA data are available at https://ffiec.cfpb.gov/data-publication/. More information about HMDA data reporting requirements is also available at https://ffiec.cfpb.gov/.

Questions about HMDA supervision should be directed to the institution’s supervisory agency at the following phone numbers:

  • Federal Deposit Insurance Corporation: 877.275.3342; hearing impaired — 800.925.4618
  • Board of Governors of the Federal Reserve System, HMDA Assistance Line: 202.452.2016
  • National Credit Union Administration, Office of Consumer Financial Protection: 703.518.1140
  • Office of the Comptroller of the Currency, Compliance Risk Policy Division: 202.649.5470
  • Consumer Financial Protection Bureau: 202.435.7000
  • Department of Housing and Urban Development, Office of Housing: 202.708.0685
Agency Contact Phone
CFPB Marisol Garibay 202.435.7170
FDIC David Barr 202.898.6992
Federal Reserve Susan Stawick 202.452.2955
NCUA Ben Hardaway 703.518.6333
OCC William Grassano 202.649.6870