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Fed should withdraw Reg Z mortgage proposal CUNA
WASHINGTON (11/24/10)--The Credit Union National Association (CUNA) has requested that the Federal Reserve Board withdraw an interim final rule that revises several Regulation Z mortgage loan disclosure requirements “as soon as possible” and “impose a general moratorium on the overall Regulation Z rulemaking process that is currently in progress.” While CUNA has always supported reasonable pro-consumer disclosures, the disclosures required under the Fed’s rule “will impose significant burdens on credit unions that will serve only to confuse consumers, without any corresponding benefits,” CUNA said in a comment letter. The Fed changes will implement provisions of the Mortgage Disclosure Improvement Act (MDIA), which was enacted in 2008, and will require lenders to disclose how borrowers’ mortgage payments will change over time so they may be alerted to the risks of payment increases before they consummate the loan. The rule also requires lenders to disclose a statement that there is no guarantee the consumer will be able to refinance the loan to obtain a lower rate and payment. CUNA in the comment letter said that the disclosures required by the rule are duplicative of disclosures that are currently required under the Real Estate Settlement Procedures Act (RESPA), and would likely need to be changed again in the near future. Specifically, the recently enacted Dodd-Frank Act will soon require RESPA disclosures to be combined with the Truth in Lending Act (TILA) disclosures. Though CUNA has advocated that the Fed withdraw the rules entirely, CUNA has also proposed changes to the rule if it remains set to come into effect. The compliance burdens associated with the Fed’s current plan to provide borrowers with an estimate of the maximum mortgage rate during the first five years of their loan would not provide any great benefit to consumers. Instead, CUNA has proposed that the Fed require financial institutions to provide these disclosures at the time that the mortgage is first adjusted. CUNA has also asked the Fed to provide additional guidance on proposed escrow payment disclosures, and has asked the Fed to delay the current Jan. 30, 2011 effective date if the rule is not removed altogether. The full comment letter is available as a link below.
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