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CUNA Home Act notice regs should apply to mortgages only
WASHINGTON (1/20/10)--The Credit Union National Association (CUNA) in a Tuesday letter commented on portions of Federal Reserve Board rules which implement the Helping Families Save Their Homes Act that require financial institutions to notify consumers if their mortgages have been sold or transferred to another party. In the letter, CUNA did not object to the 30-day notice requirements for mortgage loans but did not support these requirements for loan participations. “ Participation transactions are complicated” and borrowers may be confused “when they receive a notice that details the various parties who have purchased portions of these loans ,” CUNA senior assistant regulatory counsel Jeff Bloch wrote. According to CUNA, “the confusion for borrowers outweighs the benefits this information provides.” CUNA also urged the Fed to "review the applicability of this rule with regard to participation loans" and to “expand the exception to participation loans in which legal title transfers for some portion, but not for the entire loan, especially when the servicer does not change.” Under the Act, purchasers and assignees that acquire a mortgage loan must provide the notice within 30 days after the loan is acquired, which provides information about the transfer. The notice required under the Act would be provided by the purchaser or assignee of the loan, and while credit unions typically do not purchase loans, the rule would apply to credit unions that purchase loans via participation agreements or merge with other credit unions, CUNA said. According to CUNA, the rule would also apply to credit union service organizations (CUSOs) that purchase mortgage loans from credit unions. Consumers will also "have little interest” in these notifications if the mortgage servicer does not change, as the mortgage servicer collects the mortgage payments “and serves as the main contact for the borrower.” CUNA's letter was developed with CUNA's consumer protection subcommittee, chaired by Idaho CU League President Alan Cameron. For the full comment letter, use the resource link.
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