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Washington
CUNA Fed credit insurance disclosures may mislead consumers
WASHINGTON (12/28/10)--The Credit Union National Association (CUNA), in a comment letter to the Federal Reserve filed Dec. 22, urged the Fed in the strongest terms to revise and improve proposed disclosures for credit protection products that, if adopted, “will be misleading to consumers and flow from faulty assumptions about credit insurance.” The proposed disclosures were issued for comments by the Fed in September as part of a comprehensive proposal on home secured credit. CUNA in the letter said that the Fed should not adopt the credit protection product proposal in its current form. CUNA and CUNA Mutual Group met with the Fed to discuss these disclosures earlier this month, and previously had raised serious concerns about the proposed disclosures, saying that they go well beyond insuring that consumers are informed about these products. Instead, CUNA said, the disclosures cast these products in a negative light and strongly discourage consumers from purchasing them. These concerns were stressed in the comment letter. In the letter, CUNA Deputy General Counsel Mary Dunn emphasized that “credit unions support fair and accurate disclosures that inform consumer about the terms of credit protection products.” However, she stated that credit protection products provided by credit unions “provide meaningful benefits to members,” including those who would not otherwise have access to such protection. She also noted that the products protect credit union from potential charge offs and loan losses. “In many instances, the proposed language is ambiguous, incomplete and fails to fully inform consumers about the features of credit protection products,” Dunn said. “We urge the board to revise dramatically the disclosure requirements for credit protection products so that compliance will not result in a death sentence to these products.” CUNA’s 14-page letter also addresses the proposal’s treatment of interest rates for variable-rate home equity lines of credit, principal prepayments, and adjustable-rate mortgage and refinancing disclosures. Fee disclosures, The Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act, and other issues are also covered in the comment letter. For the full comment letter, use the resource link.


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