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NAFCU's widely-read NAFCU Today is credit union leaders' go-to source for the latest on issues impacting the credit union industry. For those short on time, here's a roundup of this week's top need-to-know news related to the National Defense Authorization Act (NDAA), nomination developments, government funding, and more.

Join the fight against banker-sought NDAA provision

After the House and Senate named members to the fiscal year 2021 NDAA conference committee Wednesday, NAFCU Vice President of Legislative Affairs Brad Thaler sent an advocacy update to member credit unions on the banker-sought provision that would require the Department of Defense (DoD) to treat all banks, even large ones like Wells Fargo, the same as credit unions when it comes to nominal leases on military bases. "With the conference committee now at work, it is vital that you reach out to the conferees in those states or districts that your credit union has a presence and let them know your concerns on this issue," Thaler wrote. Credit unions are encouraged to use NAFCU's Grassroots Action Center to contact representatives and senators directly.

NAFCU has partnered with the Defense Credit Union Council and CUNA to ardently oppose this provision, which was included in the Senate-passed NDAA but not the House-passed version, as it would disadvantage credit unions. Their efforts have effectively kept the provision from being included in the final NDAA the past several years.

In addition to working to ensure the nominal lease provision is not included in the final bill, NAFCU advocated for Bank Secrecy Act (BSA)/anti-money laundering (AML) reforms to be included. House Financial Services Committee Chairwoman Maxine Waters, D-Calif., who is serving on the conference committee, announced Thursday that she had secured the NAFCU-sought BSA/AML provision's inclusion in the final bill. Stay tuned to NAFCU Today for the latest developments as conferees hash out differences between the two chambers' bills.

Where key nominees stand

During the lame duck session, the Senate is poised to vote on several nominations, including some that could impact credit unions. Earlier this week, Senate Majority Leader Mitch McConnell filed cloture on Kyle Hauptman's nomination to the NCUA Board for a term that would expire in 2025. The chamber's vote is expected to take place in December; see a recap of Hauptman's priorities should he be confirmed.

In addition, the Senate this week attempted to confirm Judy Shelton to the Federal Reserve Board, but the vote failed 47-50. Shelton's nomination was advanced out of the Senate Banking Committee along party lines. Christopher Waller's nomination to the Fed is also awaiting a confirmation vote.

President Donald Trump this week also announced the nomination of Brian Brooks to serve as Comptroller of the Currency; Brooks currently serves in the role in an acting capacity. NAFCU has been engaged with Brooks following his announcement that the OCC would move forward with its narrow-purpose payments charter. NAFCU and other trades have outlined concerns with the charter, arguing that it could introduce risks to the financial system and undermine consumers' trust in their financial institution.

Hope ahead of government funding deadline

Federal government funding is currently set to expire Dec. 11. House and Senate appropriators are in discussions this week working to reach an agreement on the 12-bill omnibus package that would provide funding for the remainder of fiscal year 2021. While there are still several issues to hash out, the White House has indicated the president would support the omnibus. Should an agreement not be reached, Congress could pass another short-term continuing resolution to prevent a government shutdown.

NAFCU will continue to advocate for full funding for credit priorities and caution against House-passed provisions the association is opposed to, such as a pilot postal banking program.

Reg Z, M, higher-priced mortgages thresholds unchanged

The Federal Reserve and CFPB this week announced that exemption thresholds for appraisals for higher-priced mortgage loans and Regulations Z and M will not change in 2021. The revised thresholds reflect the annual percentage increase in the consumer price index (CPI) as of this June 1. The thresholds are adjusted annually by the annual percentage increase in the CPI for Urban Wage Earners and Clerical Workers.

The exemption threshold affecting appraisal requirements for higher-priced mortgage loans in 2021 will remain at the same level as it was in 2020: $27,200.

The threshold for transactions exempt from Regulation Z and M, which implement the Truth in Lending Act and Consumer Leasing Act, will also remain at $58,300. The threshold applies to most consumer credit transactions and consumer leases. Private education loans and loans secured by real property, such as mortgages, are subject to Reg Z, however, regardless of the amount of the loan.

Fed's Bowman flags potential concerns in mortgage market

Federal Reserve Board Governor Michelle Bowman Thursday provided an update on financial stability, focusing on the status of the mortgage market, amid the coronavirus pandemic during an event hosted by the Federal Reserve Bank of Cleveland. Bowman, with whom the NAFCU Board of Directors is set to soon hold a virtual meeting, highlighted vulnerabilities in the mortgage market related to lending and loan servicing by nonbank mortgage companies. As more consumers seek forbearance as financial hardships continue and servicers face possible losses or delayed payments, risks to these companies rise as they have less diversified portfolios than traditional lenders, such as banks and credit unions, Bowman said.

"If these firms collapse, what are the repercussions?" Bowman asked. "Clearly, there is considerable potential for harm to consumers, and that harm would likely be concentrated in communities that are traditionally underserved. In recent years, mortgage companies originated the majority of the mortgages obtained by Black and Hispanic borrowers as well as the majority of mortgages to borrowers living in low- or moderate-income areas."

Bowman outlined several responses the Fed and other regulators have taken to support the mortgage market, lessons learned, and issues she will continue to monitor. Read her full remarks here.