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CUNA: Concerns Linger About CFPB Small Servicer Exemption
WASHINGTON (6/5/13)--While it supports some of the Consumer Financial Protection Bureau's proposed mortgage servicing changes, the Credit Union National Association in a comment letter said the agency has more latitude to exempt small servicers from the servicing requirements and should use it.

The comment letter follows bureau-proposed amendments to provisions regarding the small servicer exemption under Regulation X, Real Estate Settlement Procedure Act, eligibility for determining qualified mortgage status under Regulation Z, Truth in Lending Act, and other issues.

"The proposed changes reflect concerns that CUNA has raised with the CFPB, and we support the agency's efforts to factor credit unions' issues into its rule makings," CUNA Deputy General Counsel Mary Dunn wrote.

She particularly noted the CFPB's proposed change under section 1026.41(e)(iii)(A) of Reg Z that would allow credit unions and others to exclude mortgage loans they voluntarily service for nonaffiliated entities when determining whether the small servicer exemption applies "is an important change."

However, Dunn wrote, credit unions and CUNA are concerned by portions of the proposal that would grant exemptions to some credit union servicers based on the number of loans they actually service, but disqualify them from this exemption when they utilize a third party subservicer to service even one of their loans if the third party services more than 5,000 loans.

"Being able to use a subservicer facilitates a credit union's ability to make loans. We are hopeful that the CFPB will give this issue further consideration and allow servicers that predominately service their own loans but that also use a subservicer for some, say up to 25% of their loans, to continue to be exempt from key provisions of the servicing rule," Dunn wrote.

CUNA plans to discuss this issue with the CFPB in the future.

For the full comment letter, use the resource link.
Other Resources

CUNA Comment Letters
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