Removing Barriers Blog

House to Consider Two Removing Barriers Bills
Posted July 13, 2015 by CUNA Advocacy

On Tuesday, the House of Representatives will consider bills important to credit unions: H.R. 1408, the Mortgage Servicing Asset Capital Requirements Act, and H.R. 1529, the Community Institution Mortgage Relief Act.  CUNA strongly supports both measures:  each represents a small step in the right direction toward removing barriers that keep credit unions from more fully serving their members.

H.R. 1408 would direct federal banking regulators to further study appropriate capital requirements for mortgage service assets held by nonsystemic banking institutions.  It would put a temporary delay on the implementation of the mortgage servicing rights aspect of NCUA’s risk-based capital proposal.   In a letter of support that we sent to the sponsors of the legislation, Representative Ed Perlmutter (D-CO) and Blaine Luetkemeyer (R-MO), earlier this year, we said:

Many credit unions retain the servicing rights of loans they originate, retaining and developing their member relationships. Under the National Credit Union Administration’s Risk Based Capital Proposal, higher risk weightings are placed on mortgage servicing assets. CUNA strongly believes nothing should be done by regulation that would negatively impact the relationship between a credit union and their member-owners. Unnecessarily high risk weightings on mortgage servicing assets could potentially make mortgages more costly to the consumer or disadvantageous to the credit union to pursue these services.

H.R. 1529, sponsored by Representatives Brad Sherman (D-CA) and Blaine Luetkemeyer (R-MO) would make two changes to the Real Estate Settlements Procedures Act (RESPA) to reduce the burden on small financial institutions. It would exempt mortgage loans made by financial institutions under $10 billion in assets and held in portfolio for three years from RESPA’s escrow requirements; and, it would also exempt mortgage servicers that service fewer than 20,000 mortgages annually from the requirements of Section 6 of RESPA.  We think these changes are important to encourage credit unions to continue to offer certain higher-priced mortgages.

The unfortunate thing about H.R. 1529, as we noted in our support letter earlier this year, we believe the CFPB had authority under law right now to provide these accommodations.  They have been unwilling to do so, which is why it is necessary for Congress to act.