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Proposed Treatment Of Credit Life Insurance Positive, CUNA Tells CFPB
WASHINGTON (7/23/13)--A Consumer Financial Protection Bureau amendment to the mortgage loan originator (MLO) compensation rules regarding the payment of monthly credit-related insurance premiums in connection with certain home loans is positive, according to the comment letter filed yesterday by the Credit Union National Association.
"Where creditors are adding a monthly credit insurance premium to the principal balance of the loan, but subtracting the premium from the principal balance immediately or as soon as the premium or fee is paid," this would not constitute prohibited financing of such premiums in a prohibitive way under the proposal, CUNA noted.  
Nonetheless, credit union mortgage lenders remain "extremely concerned" about their compliance responsibilities in order to be ready for a January 2014 implementation of various mortgage rules recently issued by the Consumer Financial Protection Bureau, CUNA noted in its comment letter to the agency listing 14 separate areas under mortgage rule requirements.
In the letter commenting on mortgage rules under the Equal Credit Opportunity Act (Reg B), the Real Estate Settlement Procedures Act (Reg X) and the Truth in Lending Act (Reg Z), CUNA also urged the agency to set up a compliance "hotline" for creditors to use in the first part of 2014 to direct their questions and concerns about compliance to the CFPB.
"We also urge the agency to agree to review the implementation of mortgage-related rules in the summer of 2014 and in January 2015 through stakeholder meetings to determine whether further changes are needed to minimize regulatory burdens without jeopardizing the purpose of Dodd-Frank Act mortgage credit provisions," CUNA wrote.
Moreover, where credit unions have evidence of working with their members to avoid foreclosures, CUNA is also seeking flexibility so that an inevitable foreclosure does not have to be delayed 120 days. Also properties should not be allowed to fall within disrepair during the pre-foreclosure period, CUNA stressed, to avoid further losses to the credit union that are born by all other members.   
The 14 areas that the letter addresses are:
  • Regulation B "Valuation" Amendments;
  • Loss Mitigation Procedures;
  • Application Time Period Disclosures;
  • Foreclosure Sale Clarification;
  • Short-Term Forbearance Clarifications;
  • Reasonable Expectation of Completeness;
  • Pre-Foreclosure Review Period Clarifications;
  • 120-Day Foreclosure Period;
  • Clarification of Points and Fees;
  • Rural & Underserved Exception;
  • Escrow Exception;
  • Loan Originator Clarifications;
  • Prohibition on Financing of Credit Insurance Premiums or Fees;
  • Effective Date for Other Provisions of the Mortgage Loan; and Originator Compensation Rule
The CUNA letter can be accessed through the link below.
Other Resources

CUNA Comment Letters

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