WASHINGTON (11/8/13)--A short, reasonable delay in enforcement and legal liability of new mortgage rules required under the Dodd-Frank Act would prove enormously useful to creditors as they work to meet their responsibilities, wrote Credit Union National Association President/CEO Bill Cheney in an op-ed piece in American Banker Thursday.
Importantly, he added, consumers would not be measurably affected by these delays, particularly if institutions establish benchmarks toward full compliance.
The Credit Union National Association has been taking every opportunity to articulate to members of the U.S. Congress and to federal regulators credit unions' compliance concerns related to Consumer Financial Protection Bureau's new mortgage rules.
In the op-ed, Cheney wrote that while there are a number of exemptions from the rules, lenders that originate or service loans above the exemption levels are "feeling the pain of the compliance countdown, particularly in light of concerns about their vendors' readiness."
Cheney acknowledged that the CFPB has made it clear compliance deadlines will not be moved given its mandate from Congress. (See related story: Cordray Seems Firm On Mortgage Rule Compliance Dates.) But, he said, that does not mean relief is "off the table" if federal regulators and lawmakers act quickly to make it happen.
The op-ed noted two significant, recent events: CFPB Director Richard Cordray has indicated that good faith efforts of financial institutions to comply should be recognized, and: a letter circulating Capitol Hill letter urging a one-year delay of these new mortgage rules has already attracted 118 lawmakers.
"That is why we believe the prudential regulators should issue a public statement very soon indicating that examiners will generally not write creditors up or subject them to sanctions for violations until, say, September 2014," Cheney recommended.
He added that while enforcement relief is critical, a short delay before private rights of action may accrue could be very helpful to creditors as they work to meet their responsibilities under the rules.
"No one knows for sure the extent to which creditors will or will not be sued for noncompliance, but the uncertainty is unnerving, given the possibility that trial lawyers are trolling for cases," Cheney said.