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Sunday, June 19, 2011

Current Issues in Credit Unions Episode #60.

Andrea Stritzke from PolicyWorks joins Hal, Guy, Katherine and Rob on the show this month. Also, we say goodbye to our good friend Anthony who has left the show (because of a terrific promotion). Here are the topics:

–CFPB Shenanigans.
–EW on The Daily Show.
–Interchange
–Model forms
–Politics.

–Update on the Texas CUSO rule.
–ADA Compliance dates for ATMs.
–Bylaws best practices.
–Big K Roundup.

Sound editing by Victor Khaze

The CIiCU hosts are:

Brian Witt
Hal Scoggins
Farleigh Wada Witt,
Attorneys at Law
121 SW Morrison Street, Suite 600
Portland, Oregon 97204
Telephone: 503-228-6044 503-228-6044 Fax: 503-228-1741
http://www.fwwlaw.com

Guy Messick
Katherine Weber
Messick & Weber P.C.
211 North Olive Street
Media, PA 19063
Telephone 610-891-9000 610-891-9000 Fax 610-891-9008
http://www.cusolaw.com

Faith Anderson
American Airlines Credit Union
P.O. Box 619001
MD 2100
DFW Airport, TX
75261-9001
(800) 533-0035 (800) 533-0035
https://www.aacreditunion.org/default.asp

Robert Rutkowski
Shareholder
Weltman, Weinberg & Reis Co., L.P.A.
323 W. Lakeside Avenue, Suite 200

Thursday, June 16, 2011

Credit Card Reform OUCH!

The Credit Card Reform Act of 2009 was a well-intended and long overdue attempt to stop the credit card fee insanity that imprisons many consumers. But, the Feds underestimated the creativity of their opponents, and they made a big mistake in giving the card companies warning. So what happened? Faster than reform could be implemented card companies rushed to the offense and implemented aggressive sneak attacks before they became illegal.

You became a risk
At one time card companies could raise your credit card rate if you were late on any other bill, even if you were never late on your credit card bill. It was called “universal default”. They justified this by claiming you were a risk. But since the Reform will eliminate this type of action, the card companies rushed to get rate hikes in.

They changed your minimum payment requirements
Say you signed up ABC Bank’s great balance transfer deal way back in 2008. This was a great deal because you took your high-interest balance from XYZ Bank’s card and transferred it to a really low interest card, saving you a bundle in interest rates. But suddenly the economy takes a dive and ABC Bank is suffering from loan loss and the challenges of Credit Card Reform, where are they going to look for money? Why, to you, of course! They do this by raising your minimum balance from 2% to 5%. The result is that you asked to pay a lot more each month. What if you can’t? You call ABC Bank and they’ll offer to lower your minimum payment back down at or close to the 2%, but they ski rocket your interest rate much higher than your initial great deal. This has nothing to do with your payment history, which could be perfect. You just get a lousy rate.

Your credit limit drops
A reduced credit limit can hurt your credit score because part of the formula used to calculate your score is the amount of credit available. A big gap between how much you spend and how much you have available is viewed as responsible credit handling. This is especially important if you have a need for a loan, like a mortgage for example. If a credit card suddenly reduces your credit limit, it looks like you’ve done something wrong when in reality you may not have done anything to hurt your credit.

These actions hurt many consumers deeply. So how do you fix credit card wounds? Go shopping, for a different card that is. Start with Coors Credit Union and you’ll find the following:

1. Our cards don’t offer too-good-to-be-true rates. Always be skeptical of cards that offer incredibly low rates.

2. Simple terms. The longer the terms and disclosures the more traps.

3. No account opening fees. Subprime credit cards often implemented a fee just to open the card, putting the user into a situation similar to payday loans. The Reform Act limits the amount of this fee. Coors Credit Union has never charged account opening fees and does not offer subprime credit cards.

See all the benefits that make the Coors Credit Union a trustworthy credit card.

Wednesday, June 15, 2011

Time is Ticking on Extended Version of Home Buyer Tax Credit

To the joy of many homebuyers the First-Time Homebuyers Tax Rebate program was extended last November with a new deadline of June 30, 2010. But if you've been waiting for the spring crop of available houses, you could be waiting too long. The revisions to the program specify that homebuyers who want to get the rebate need to have a house under contract by April 30th. Closing papers must be filed by the June 30th deadline. Okay, maybe it's still only February, but the last thing you want to do when buying a home is to rush to meet a deadline. Finding a home you'll be happy with takes time. Getting a rebate on your purchase isn't something you should let slip by.
Now, let's review the requirements for the Rebate once more. Pay attention because even if you you didn't qualify for the first version of the program you may qualify for the extended version.

Place a new or used home under a binding contract between Jan. 1, 2009 and April 30, 2010.To be considered a First-Time Buyer you must not have owned a principal residence in the last three years.Rebate value equals 10% of the purchased home value, up to $8,000.Income limits for sales after November 6, 2009 are $125,000 if you are single, $225,000 for couples filing jointly. If you earn more, the rebate amount is reduced. If you earn $145,000 (single) or $245,000 (joint) you won't get a rebate at all. If you earn something between these amounts your rebate will be reduced proportionately. $6,500 for Repeat or Move-Up Buyers
You must have owned and lived in your home five of the past eight years. Rebate is equal to 10% of purchased home's value up to $6,500.The new purchase value cannot exceed $800,000Same income limits as the First-Time Buyer program
Remember, this is a rebate program, not a loan. However, if you should sell the house or you do not use it as your primary residence within three years after purchase, you will be required to repay the money.

New Credit Standards Not Really Worth Your Worry

Bankrate.com recently posted Good credit score of past not so good now which opens with the following:
“Those with good credit may well recall being showered with praise by a mortgage broker during the initial purchase for that solid credit score. That was then. This is now.”

The article goes on to warn readers that while you might have sparkling credit it may not be enough to earn you a better lending rate. Reading this article could put fear into the hearts of would be buyers or at least make you feel like things are really spiraling out of your control. But, just how bad is it?

I asked Coors Credit Union Senior Mortgage Consultant, Ron LoSasso for his take on new credit standards.

So, Ron, how worried should buyers be?

He replied, “Although there are now adjustments in the rate due to credit scores the typical
increase is only an 1/8 to the rate. On a $200,000 loan amount this is an increase of the monthly payment of approximately $16.00 per month. Perhaps the cost of one Grande Latte per week.”

While you shouldn’t be scared off by new credit standards, it is helpful to understand how we got here. The new standards are neither arbitrary nor a result of tightened lending. All banks, brokers and credit unions must abide by the same standards. The change came about as Fannie Mae and Freddie Mac, the nation’s two largest lenders, redefined risk after suffering huge losses last year.

So the new standards really don’t affect the lending landscape much. You’ll still be making fair comparisons when shopping for a mortgage. But, as Ron says, “One advantage to coming to a credit union is to compare all loan programs including these agency type loans to the Portfolio
Loans that credit unions may offer.”

Another advantage is that credit union lending is strong. In contrast to many major banks, very few credit unions were burned by foreclosures; therefore they’re still able to give good rates on home loans.

And don’t let the new score standards turn you into a procrastinator. Yes, if you score is poor or even good you should take some time to clean up errors, pay down debt, or other actions to increase your score. But, if you’ve already got an excellent score of say 720 and you’re thinking of eating ramen for a few months to get it up to 740 you could be taking a big gamble You could miss out on current low rates or while you are working to better your score, you’d only be saving a few lattes worth a month.

The best way to prepare for purchasing a home is to get in and speak with a Home Loan Consultant. They can tell whether your score is in need of help or if you should start shopping now.

Tuesday, June 14, 2011

Credit Union College Scholarships: Apply Now

Spring is the season for applying for scholarships and deadlines are rapidly approaching. Here is some info on two credit union scholarships that any credit union member who is a student should consider.

But first a word about taxes. The FAFSA (Free Application For Student Aid) requires tax/income information. So, parents, you should not slack off and wait until the eve of April 15th to do your taxes. Many scholarship applications require a copy of the FAFSA. College financial aid office deadlines for FAFSA applications may be much later, but many scholarships deadlines are in March.

And students, Yes, applying for scholarships is not fun, but it may be the most anyone will ever pay you to write an essay. It won't hurt.

So here are two credit union scholarships for you:

Coors Credit Union Scholarship

Our scholarship program (available to high school seniors and undergraduate students) awards two (2) $1,000 scholarships to student members of the credit union who demonstrate a caring spirit and appreciation for others Download and Complete the Coors® Credit Union Application

Eligibility Requirements

Scholarship applicant must be:
• A member in good standing with Coors Credit Union.
• A graduating senior or current college student
• Accepted as an incoming freshman or already attending a college, university, trade or craft school. Deadline To Apply

Application and supporting documents must be received together by March 31, 2010.

Notice of Awards

Winners will be notified by May 14, 2010.

Braymen-Beach Scholarship

Offered by Board of Directors of the Credit Union Foundation of Colorado and Wyoming. One $5,000 scholarship award will be given to a student seeking a business degree from a four-year accredited institution, who is a member of a credit union affiliated with the Credit Union Association of Colorado. The deadline for applications is Tuesday, March 31, 2010.

To download the brochure and application go to: www.colocu.com/brayman-beach

Qualifications

* Must be a U.S. citizen, at least 16 years of age

* Member of a Colorado credit union affiliated with the Credit Union Association of Colorado

* Interest in pursuing a business degree

* Beginning freshman, sophomore, junior or senior at a four-year accredited institution conferring bachelor degrees located in the US

* Scholarship funds must be used by January 31 of the year following award, or the funds will be forfeited

* Submit a complete application with required documents

Application must be post-marked, emailed or faxed by MARCH 31, 2010

Selection Criteria

· * Grades

· * Academic Goals

· * Professional Goals

· * Financial Need

· * Community Service

· * Extracurricular activities

Selection of the recipient is the sole discretion of the Board of Directors of the Credit Union Foundation of Colorado and Wyoming

Winner

· * Will be notified in writing within 60 days of application deadline

· * Funds will be transmitted directly to the institution for credit to the
student's tuition, room, board and fee account.

Gather Your Questions for Credit Card Reform

The Credit Card Reform Act that's been phasing in for practically ever is scheduled to firm on February 22. We've all heard dribbles and bits about the Act, but a survey by Consumer Federation of America and the Credit Union National Association found that most of us don't really know what it's all about.

The White House is hosting a Town Hall Meeting with White House Economic Advisor, Austan Goolsbee on Feb. 22 at 2pm, eastern time. You can submit your questions regarding the Credit Card Reform ahead of time.

You can also submit questions for the town hall through Twitter. Just be sure to include the hashtag #cardlaw in your Tweet.

In the meantime, here's a brief run-down of how the Act affects consumers:
• Consumers must be given 45 days' notice of any changes in the interest rates of future balances or in other key terms of a credit card account.
• Hikes in the interest rates of existing balances are generally prohibited. Exceptions: If a promotional rate expires, if the cardholder makes a late payment, or if the contracted rate was variable. That last one -- a variable interest rate -- is a key loophole that many credit card issuers have been exploiting by changing consumers to variable rate cards prior to Feb. 22.
• Consumers have the right to "opt out" of significant changes that might be imposed on their accounts. To do so, they merely have to close their accounts and pay off the existing balances within five years.
• Limitations are imposed on the issuance of credit cards to anyone under the age of 21.
• Customers who maintain monthly balances must be told how long it will take to pay off that balance if they make only the minimum monthly payments.
• Bills must be mailed at least 21 days before payment is due.
• Credit card issuers must apply any payments to balances carrying the highest interest rates first, and issuers cannot impose over-the-limit fees unless customers specifically authorize such transactions.

Sunday, June 12, 2011