CUNA Comment Letter

November 12, 2008

Ms. Joy Lee
Director - Division of Supervision
Office of Examination and Insurance
National Credit Union Administration
1775 Duke Street
Alexandria, Virginia 22314-3428

Dear Ms. Lee:

The Credit Union National Association (CUNA) would like to take this opportunity to raise a number of issues and concerns with regard to the mortgage registration provisions of the Housing and Economic Recovery Act of 2008 (Act). CUNA represents approximately 90 percent of our nation’s 8,200 state and federal credit unions, which serve nearly 92 million members.

The Act requires the creation of a national registry for all mortgage originators and the licensing of non-depository institution mortgage originators. Under this system, any individual who originates residential mortgage loans as an employee of any state or federal credit union will have to register on an annual basis. The Act also requires NCUA and the federal banking agencies to develop and maintain the system for registering bank and credit union employees, in conjunction with the nationwide database for mortgage professionals that was developed recently by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators. This registry program must be in place by August 2009, and it is our understanding that the agencies will soon begin the process of working together to develop this new mortgage registration system.

As part of this process, we would request that NCUA include CUNA as part of these efforts to develop the national registry. We have been actively involved in both providing information to our members about the new mortgage registration system and soliciting their views and concerns with regard to both the burdens and the areas in which further clarification is needed. We believe NCUA and the federal banking agencies would benefit from understanding these concerns at this time to ensure they are addressed before the registry is finalized next year. It is our understanding that Ross Kendall from the Office of General Counsel is also involved in the process of developing the new mortgage registration system, and we would welcome the opportunity to meet with either you or Ross at your earliest convenience to discuss these issues.

In preparation for such a meeting, we want to highlight some of the issues and concerns that have been brought to our attention, which include the following:

• NCUA and the federal banking agencies need to provide more guidance as to who has to register. For example, there needs to be clarification as to whether everyone involved in the loan process needs to register or whether these requirements only apply to the mortgage loan decision maker. Although we understand the Act exempts administrative and clerical staff from these requirements, there needs to be further definition as to who would fit under this exempt category. For example, there needs to be clarification as to whether these requirements apply to individuals collecting the information as part of the loan application process and whether they apply to call center staffers who provide both information and advice with regard to mortgage loans. In general, we believe there needs to be significant limitations as to who must comply with these registration requirements. Otherwise, a significant number of individuals may have to register, which will be very burdensome for credit unions.
• Similarly, there is the issue as to whether these registration requirements should apply only to those who are paid by the loan or whether they should cover salaried employees.
• There are also situations in which an employee is substituting for another employee, who is away from the office for a period of time, and is making loans for a temporary time period. The issue here is whether an employee has to register even if it is not normally his or her job to make mortgage loans.
• As mentioned above, registration is not required until the agencies issue rules, which will be on or before July 31, 2009. We urge NCUA and the federal banking agencies to provide sufficient lead time so that credit union staff has sufficient time after the rules are issued to complete the registration process. For this reason, we believe the requirements under these rules should not be mandatory until at least six months after they are published in final form, although we may suggest an additional period as we continue to review these issues.
• There are a number of privacy issues in which credit unions have expressed concerns. Under these mortgage registration provisions, consumers will have access to prior employment history, as well as access to information regarding unrelated civil and administrative proceedings. We question the need for consumers to have access to this information, especially to unrelated proceedings, such as divorce and landlord/tenant disputes, which are unrelated to the employee's job. Although we recognize that much of this is public information, we do not believe it needs to be further highlighted through these registration requirements. There are similar issues with regard to the disclosure of an employee's address, telephone number, and other personal information. In general, sufficient safeguards must be in place to protect the confidentiality of this type of information.
• We also have concerns with regard to mobile homes and home equity loans. Mobile home loans are often considered consumer loans and we question as to whether those who make these loans should have to comply with these new registration requirements. Although home equity loans are covered under the Act, these are often made as consumer loans, which may complicate the registration requirements for credit unions.

We appreciate your attention to these matters and would welcome the opportunity to meet with you at your earliest convenience to further discuss our concerns. You or your staff may contact Senior Vice President and Deputy General Counsel Mary Dunn or me at (202) 638-5777 with any questions and to schedule a meeting to discuss these issues.

Sincerely,

Jeffrey Bloch
Senior Assistant General Counsel

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