WASHINGTON (1/30/14)--New Consumer Financial Protection Bureau mortgage rules define "small creditor" in several ways, and how the definition impacts your credit union's practices depends on which provision you are working with, the Credit Union National Association's CompBlog
"There is a definition for small creditor in the CFPB's qualified mortgage rule, and a variation of that definition for balloon payments. The CFPB has also referred to the escrow account exemption as a small creditor exemption. And at times the small servicer definition gets mixed up in the confusion," CUNA Senior Compliance Counsel Mike McLain notes in a CompBlog
In his post, McLain attempts to clear up some of the confusion surrounding these definitions.
The QM rule, and portions of the QM rule addressing balloon payments, defines small creditor this way:
During the preceding calendar year, the credit union and its affiliates together originated 500 or fewer first-lien, closed-end mortgage loans; and
As of the end of the preceding calendar year, the credit union had total assets of less than $2.028 billion. This threshold will adjust automatically every year by the CFPB.
Creditors must generally hold loans in their portfolios for three years to maintain their QM status.
These rules will be tweaked after Jan. 10, 2016, and those changes are outlined in the blog.
For more small issuer definitions, including definitions related to small creditor escrow accounts and small servicer mortgage servicing, use the resource link.