WASHINGTON (9/10/13)--While many credit unions are not motivated to offer Higher-Priced Mortgage Loans (HPMLs) to their members, more and more of them are becoming subject to HPML regulations as a result of Dodd-Frank Act definition changes, and any additional regulatory relief that can be provided is welcome for covered credit unions, Credit Union National Association Senior Assistant General Counsel Luke Martone wrote.
Martone's comments came in a comment letter filed with the Consumer Financial Protection Bureau. The letter addressed a joint proposal that would provide additional exemptions from HPML appraisal requirements under Regulation Z. The proposal, which was issued by the CFPB, National Credit Union Administration, and other federal financial regulators, would exempt certain transactions from the appraisal requirements for HPMLs, as set forth in the joint final rule adopted in January of this year.
Martone said CUNA generally supports the proposal. However, the comment letter did make some suggestions to improve the proposal.
The final rule lays out certain appraisal requirements for loans that qualify as HPMLs, which the rule defines as a closed-end loan secured by the consumer's principal dwelling where the annual percentage rate exceeds the average prime offer rate by:
1.5 percentage points for a first-lien non-jumbo loan;
2.5 percentage points for a first-lien jumbo loan; or
3.5 percentage points for a junior-lien loan.
The final rule exempts certain transactions from the appraisal requirements, such as qualified mortgages and reverse mortgages.
The proposal would provide additional exemptions from the HPML appraisal requirements, including:
Transactions secured by existing manufactured homes excluding land;
Certain streamlined refinancings; and
Transactions of $25,000 or less.
Improvements suggested by CUNA include increasing the $25,000 threshold to $50,000, and providing up to six months of additional compliance time to help covered credit unions implement changes required under the rule.
For the full comment letter, use the resource link.