Credit Unions Point to Troubling Aspects of Proposed CFPB Rules
The FHA Condos Approval Company, Inc.
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The National Association of Federal Credit Unions expressed its opposition to the Consumer Financial Protection Bureau’s proposed rule on mortgage application and settlement disclosures. The association asserted Tuesday in a letter to the federal agency that the rule places undue regulatory burdens on credit unions and will likely cause some institutions to leave the mortgage market altogether.
In the first quarter of this year, credit unions originated about 8 percent of mortgages nationwide, an increase over the previous record high of 5 percent. This increase, according to NAFCU Vice President Carrie Hunt, is evidence “that members are not only highly satisfied with their credit unions but also that consumers overall are increasingly aware of the value that credit unions provide.”
However, despite the fact that more consumers are turning to credit unions more often for mortgage-related services, Hunt foresees some credit unions cutting down or eliminating their mortgage divisions due to “the costs and burden associated with the constantly increasing and unforgiving intensity of regulations imposed on credit unions.”
In the letter to the CFPB, NAFCU points to several specific areas of concern.
As stated, the CFPB’s proposed rule makes an exception for lenders that originate no more than five mortgages per year. NAFCU suggests the exemption instead be extended to any credit union with $175 million or less in assets.
The association suggests this would better fit the CFPB’s obligation to offer some regulatory relief to small businesses, something the Dodd-Frank Act expressly requires the government agency to consider.
Another area of concern stated by the NAFCU is construction-only and vacant land loans. The CFPB’s rule provides exemptions for home equity lines of credit and reverse mortgages but neglects to mention construction-only or vacant land loans.
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Credit Unions Point to Troubling Aspects