Removing Barriers Blog

Comments submitted to CFPB re: Higher-priced mortgage loans
Posted September 21, 2020 by CUNA Advocacy

CUNA submitted comments supporting the Consumer Financial Protection Bureau’s proposed rule on higher-priced mortgage loan (HPML) exemptions. The CFPB proposed several amendments to Regulation Z to exempt certain insured depository institutions and insured credit unions from the requirement to establish escrow accounts for HPMLs.

 “We believe that this exemption represents a positive step forward to ensure that small, leanly staffed credit unions are not burdened with costly regulatory obligations that could prevent them from offering mortgage products that are right for a members’ financial situation,” the letter states. “We commend the Bureau for this codification of the statutory exemption.”

Specifically, the proposed new regulatory exemption applies to insured depository institutions or insured credit unions when the loan is secured on a borrower’s principal dwelling and the covered entity:

  • Has assets of $10 billion or less;
  • Originated, together with its affiliates, 1,000 or fewer first lien mortgage loans for principal dwellings during the preceding calendar year; and
  • Meets certain other escrow exemption criteria including requirements to:
    - Extend credit in a rural or underserved area;
    - Exclude any loans from the exemption that have forward commitments to transfer or sell the loan to a purchaser that is ineligible for the exemption, and
    - Not require or maintain escrow accounts for other mortgage products.

CUNA also recommended that the CFPB:

  • Explore flexibilities to update spreads for first lien and subordinate lien HPMLs; and
  • Extend the “established HPML escrow” exclusion to 120 days after the publication of the final rule to give credit unions time to review the rule and update systems and processes if they decide to pursue any HPML lending under this exemption.