WASHINGTON (12/5/13)--The U.S. Congress must delay the private right of action associated with recently finalized Consumer Financial Protection Bureau mortgage rules, a move that would grant credit unions and their vendors a full year to come into compliance with pending mortgage regulations, the Credit Union National Association said in a Wednesday letter to U.S. House and Senate leaders.
Six CFPB mortgage product and service rules are set to go into effect in January 2014. The rules include the bureau's Ability-to-Repay and Qualified Mortgage standards.
CFPB Director Richard Cordray has said bureau examiners would provide some leeway to credit unions and other institutions that are making good faith efforts to comply with these regulations, but have not fully complied when the January deadline arrives. The CFPB director said he could not give an official cutoff date for when this leeway would end, but said the leeway would be granted for several months.
"Nevertheless," CUNA President/CEO Bill Cheney wrote, "the laws under which these rules have been promulgated carry a private right of action that only Congress can delay." The letter was sent to Senate Banking Committee Chairman Tim Johnson (D-S.D.), ranking committee Republican Sen. Mike Crapo (Idaho), House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and ranking committee Democrat Maxine Waters (D-Calif.).
"Without this delay, this means attorneys may be able to sue credit unions for any violations no matter how minor," Cheney added. Credit unions that are working with their vendors to comply with the new rules could be sued for noncompliance, and this litigation threat has many credit unions considering whether to suspend mortgage lending either entirely, or limit the offerings of certain mortgage loan products until they are certain that they are in compliance, he said.
"We hope Congress would agree that having small lenders exit mortgage lending, even temporarily, during the fragile housing recovery we are experiencing would be bad for borrowers, communities and the economy," Cheney wrote.
For the full CUNA letter, use the resource link.