WASHINGTON (7/12/12)--The Credit Union National Association (CUNA) encouraged members of the U.S. Congress to support extending the compliance date for pending mortgage rules, and to urge the Consumer Financial Protection Bureau (CFPB) to exempt credit unions from the mortgage rules where possible, in a Wednesday statement.
The letter was submitted for the record ahead of a Wednesday U.S. House Financial Services financial institutions and consumer credit subcommittee hearing on the Dodd-Frank Wall Street Reform Act's impact on the mortgage market. The CFPB, which was created by the Dodd-Frank Act, earlier this week proposed a new, simplified mortgage disclosure form that combines elements of Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) disclosure forms into a single document. New mortgage rules were also proposed to implement these RESPA/TILA changes, and CUNA's letter focused on these rules.
CUNA said it is still reviewing the 1,099 page proposal, but one initial concern is a CFPB claim that the proposed mortgage changes would not increase the cost of mortgage lending. "A dollar spent on regulatory compliance is a dollar diverted from lending. So, in fact, some mortgage reforms in the Dodd-Frank Act do negatively impact access to mortgage credit for consumers," CUNA said.
As it reviews the CFPB proposal, CUNA is also focusing on how the rule's proposed revision of the finance charge definition could impact credit unions. In the letter, CUNA said that expanding this definition could change home appraisal, escrow and ability-to-repay requirements in some cases.
CUNA said it generally supports the CFPB's proposed definition of a "qualified mortgage," and particularly backed portions that would treat qualified mortgages as a legal safe harbor. Without adequate safe harbor, credit unions could be faced with frivolous foreclosure defense litigation, CUNA said.
The CFPB is still determining a final compliance date for its proposed RESPA/TILA mortgage rules. The agency should give credit unions "as much time as possible" to comply with the rules, once they are finalized, CUNA said.
Overall, CUNA said, the CFPB should use the authority granted to it by Congress to exempt credit unions from new regulations as much as possible. CUNA said the CFPB has greater exemption authority than it has been exercising, and is concerned that the CFPB "seems to be picking and choosing" when to provide regulatory relief.