Steve Bumann Elected to FHLB of Des Moines Board
 Steve Bumann, CFO of BankWest in Pierre, has been elected to the Federal Home Loan Bank of De Moines Board of Directors.
South Dakota was recently granted a new opportunity to have a second member director seat on the FHLB of Des Moines Board. Also running for the new seat was Brent Heinert, president of Plains Commerce Bank in Hoven. Of the 67 institutions eligible to vote, 25 took part in the election.
Bumann, who is also a member of the SDBA Board of Directors, joins Van Fishback, vice chairman of Fishback Financial in Brookings, on the FHLB of Des Moines Board. Bumann's three-year term begins on Jan. 1, 2015.
Elsie Meeks, South Dakota state director of rural development with the U.S. Department of Agriculture in Huron, was elected to fill a public interest director seat on the FHLB of Des Moines Board. Her four-year term also begins Jan. 1.
The Board of Directors of FHLB Des Moines certified the results of the 2014 member and independent director elections on Nov. 12. Read more.
ABA Seeks Changes to USDA Guaranteed B&I Loan Proposal
The U.S. Department of Agriculture’s proposed changes to the business and industry guaranteed loan program run by the Rural Business-Cooperative Service risk limiting credit to rural America, ABA warned in a comment letter last Friday.
By reducing loan guarantee levels for lenders and borrowers, as well as increasing costs for lenders -- through reduced reimbursements for legal fees, changes in how interest accrues and limits on late fees and bad debt writedowns -- the changes would increase uncertainty for institutions currently participating and lenders considering it.
Although the proposal’s criteria for non-regulated lenders is warranted due to recent controversy over the sale of fraudulent B&I loan guarantees, ABA said, it urged USDA to reinstate existing guarantee rates for participating lenders and modify other provisions associated with the costs of servicing guaranteed loans. Read the letter.
SDDA Makes Changes to Farm Loan Mediation Rules
The South Dakota Department of Agriculture (SDDA) recently made changes to its administrative rules for the Agricultural Mediation Program, in addition to promulgating rules for the new areas of federal lands and oil and gas mediation. These rules become effective on Dec. 2, 2014.
The filing fee for farm loan mediations is increasing from $50 to $100 per party to cover the first hour of mediation. The fee for any additional hours of mediation will not change, which is $25 per hour per party.
Mandatory mediation is required for any agricultural debt over $50,000 before a creditor can proceed with legal action. SDDA encourages voluntary mediation if a creditor or debtor feels communication can be restored with a third-party mediator. Mediation is a great resource for both sides looking to resolves disputes and avoid a costly legal process. Financial counseling is also available for our mediation clients.
For more information on the Ag Mediation Program or any other SDDA financial programs, call 605.773.5436. View the new rules.
ABA, Groups Call for Renewal of Debt Forgiveness Tax Relief
The taxability of mortgage loan forgiveness is hurting already-struggling mortgage borrowers and increasing the risk of foreclosure, ABA and several other trade groups told Congress yesterday. They urged Congress to extend debt forgiveness tax relief by two years and make it retroactive to when it expired on Jan. 1, 2014.
When a lender approves a short sale or principal modification on an underwater mortgage, the debt forgiveness becomes a taxable event to the borrower. Without tax relief, the amount owed can be in the tens of thousands of dollars, making foreclosure a more affordable option to the borrower -- even though foreclosure is much more damaging to neighborhoods, families and individual credit reports.
“Because the tax relief from mortgage debt forgiveness has been allowed to expire, the federal government is now spending money on programs to prevent foreclosures while threatening to tax the very homeowners they are trying to help,” the groups said. Read the letter.
ABA, ABIA Support Private Flood Insurance
Despite congressional efforts to reduce the federal backstop for flood insurance, the bungled implementation of the 2012 Biggert-Waters flood insurance reform law has reduced private-sector involvement in the market, ABA and its American Bankers Insurance Association subsidiary told the House Financial Services Committee yesterday. In a statement submitted for the record, the associations called for Congress to pass legislation increasing the private share of the market.
Biggert-Waters has failed to stimulate a private insurance market because it codified previous interagency guidance requiring private insurance to mirror National Flood Insurance Program policies -- thus disincentivizing private competition, the groups said.
Meanwhile, pending ABA- and ABIA-supported legislation, H.R. 4558, would remove the array of requirements around private flood insurance offerings, returning regulatory authority to the states. “The intersection of state regulation of insurance broadly, federal regulation of the NFIP, and bank compliance examination have made it clear that further clarification and guidance is needed,” the groups said. Read the statement.
CFPB Issues Warning on Documenting Disability Income
Probing for details on a potential borrower’s Social Security disability benefits runs afoul of the Equal Credit Opportunity Act and Regulation B, the Consumer Financial Protection Bureau said in a bulletin on Tuesday.
Although lenders may generally consider the duration of public benefits when documenting income, pressing too far on the details of a disability -- by requiring a doctor’s note, for example -- raises fair lending risks, the Bureau said.
The CFPB reiterated its guidance under the Ability-to-Repay/Qualified Mortgage rule, which allows lenders to document disability income through a benefit verification letter from the Social Security Administration. Should the letter not specify an expiration of benefits within three years of origination, “the creditor shall consider the income effective and likely to continue,” the bureau said. Read the bulletin.
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