Recent Advocacy Successes
Federal Level: Support Commonsense Regulatory Reform
(Support) S. 2155, the Economic Growth, Regulatory Relief and Consumer Protection Act, relieves credit unions and other small community financial institutions of a significant level of regulatory burden. The bill was signed into law (P.L. 115-174) by President Trump on May 24, 2018. For credit unions and small banks with under $10 billion in consolidated assets — every credit union in Michigan — the bill established a safe harbor from certain requirements for a loan to be considered a Qualified Mortgage for purposes of the Ability to Repay Rule, so long as the loan is held in portfolio by the credit union.
The bill also includes changes to HMDA reporting requirements by rescinding the additional data points required under HMDA for insured credit unions that originate fewer than 500 closed-end and/or 500 open-end lines of credit. Section 105 of the bill was included specifically for credit unions and it provides parity between credit unions and banks with regard to 1-4 non-owner-occupied units. The provision allows credit unions to classify loans for these types of properties as residential real estate loans, as banks currently do, rather than business loans.
Below are some additional provisions contained in the bill that are beneficial to credit unions:
- Section 109 removes the three day waiting period required for the combined TILA/RESPA mortgage disclosure if a creditor extends a consumer a second offer of credit with a lower annual percentage rate.
- Section 216 requires the U.S. Treasury to study the risks that cyber threats pose on financial institutions.
- Section 303 provides legal immunity to properly trained financial service employees who disclose concerns about financial exploitation of senior citizens.
- Section 307 addresses long-held concerns about Property Assessed Clean Energy (PACE) loans, primarily that the same consumer protections in place with respect to mortgage lending are nonexistent for PACE loans.
For several years prior to the passage of S. 2155, MCUL and Michigan credit union advocates met with members of the Michigan congressional delegation and their staff to educate them on the impact that burdensome regulations have on credit unions and credit union members — their constituents. These advocacy efforts peaked in the spring of 2018 when credit unions leaders met with members of Congress during the CUNA GAC and requested support for S. 2155. During that period, credit union advocates also sent some 1,700 messages to delegation members, placed calls to their offices and submitted op eds to local media outlets in support of S. 2155.
Federal Level: Protect the Credit Union Not-for-Profit Tax Status
(Support) On December 22, 2017 President Trump signed into law H.R. 1, the Tax Cuts and Jobs Act (P.L. 115-97). The bill made significant changes to the U.S. tax code including lowering tax rates for individuals and corporations. As it pertains to credit unions, MCUL’s primary objective was to ensure language was not included in the bill that would in any way alter the credit union not-for-profit tax status.
the weeks and months leading up to final passage of the bill, MCUL and credit union advocates met with members of the delegation during Hike the Hill, CUNA GAC and at in-district/state meetings to educate them on the credit union difference, the importance of the credit union tax status and to urge legislators to oppose any effort that would change the credit union not-for-profit tax status. addition, all fourteen Michigan members of the House and both of U.S. Senators provided MCUL with statements supporting the tax status.
State Level: E-Notary Reform
(Support) Current law requires that an individual seeking the performance of a notarial act must physically appear before a notary public for positive identification. While Michigan has adopted the Uniform Electronic Transaction Act, it does not participate in electronic notarization (e-notary). Notaries must verify the identity and signature of the individual signing the document. The signor must be in the physical presence of the notary and all signatures must be an original to obtain notarization. MCUL collaborated with the Department of State on legislation that would allow for e-notarization. Senator Peter MacGregor is the main sponsor of the legislation (SB 664). The legislation was signed by the Governor on Dec. 5, 2018.
State Level: Loss of Collateral on Abandoned Vehicles
(Support) Several Michigan credit unions have reported an increase in delayed or untimely notices from tow and storage facilities on vehicles considered to be abandoned or involved in a crime. Under the Michigan Vehicle Code, credit union interest is that of a secured party, not an owner. It is presumed that the last titled-owner is responsible for abandoning the vehicle. Under current law, the Secretary of State has 7 days to notify the owner and lienholder of record that the vehicle has been abandoned. The owner or lienholder then can redeem the vehicle by paying the towing and storage fees in their entirety. If they do not pay the fees within 20 days of receiving notice, the vehicle can then be sold at auction.
MCUL worked with Representative Diana Farrington on legislation (HB 5181) that would allow lienholders to have the ability to inspect a vehicle that has been deemed abandoned for a nominal fee. HB 5181 also now allows the lienholder to redeem their collateral 10-days after receiving notification from the SOS that the vehicle has been deemed abandoned. This allows credit unions to cut down on the cost of tow and storage fees that would otherwise be accruing for an additional 10 days. Lienholders now have the ability to contest fees that they believe are unreasonable. In the event that the fees are deemed unreasonable by a magistrate the lienholder will be refunded the amount that they were charged in overage. This legislation has passed both Chambers and was signed by the Governor on October 16th (PA 347).
State Level: GSE Investment Authority
After nearly five months of work by Chuck Holzman, Dow Chemical Employees CU and assistance from MCUL, DIFS Director Pat McPharlin issued Order No. 18-063-CU, granting Michigan’s state-chartered credit unions the authority to invest, without limitation, in Fannie Mae, Freddie Mac, FHLB and FCS. The order highlights the following:
- Domestic credit unions may invest, without limitation, in the obligations of Fannie Mae, Freddie Mac, FHLB and entities in the FCS in a safe and sound manner.
- Domestic credit unions do not currently have authority under state or federal law or regulations to invest, without limitation, in the obligations of Fannie Mae, Freddie Mac, FHLB and entities in the FCS.
- Competing providers of financial services already have authority to invest, without limitation, in obligations of Fannie Mae, Freddie Mac, FHLB and entities in the FCS, thereby placing domestic credit unions at a competitive disadvantage if they do not have the same authority.
- Granting this additional authority is appropriate and necessary to enable domestic credit unions at a competitive disadvantage if they do not have the same authority.