Oct. 16, 2012 – An interagency proposed rule setting new requirements for credit unions that issue higher-risk mortgage loans is just the type of rulemaking NAFCU has sought to discourage, the association told regulators Monday.
The proposal was issued jointly by NCUA, the Consumer Financial Protection Bureau, Federal Reserve Board, FDIC, Federal Housing Finance Agency and Office of the Comptroller of the Currency. NAFCU Regulatory Affairs Counsel Tessema Tefferi, in an official comment letter, said the rule would negatively impact credit unions’ mortgage lending business and could negatively affect credit union members. At the very least, its implementation should be delayed, he wrote.
The proposal would require creditors to obtain written appraisals conducted by a certified or licensed appraiser based on a physical inspection of the interior of the property in question. It is being promulgated at the same time that credit unions must contend with a myriad of other mortgage-related proposals from the CFPB, Tefferi noted. On their own and even more so when combined, the rulemakings “will lead to fundamental changes in credit unions’ mortgage lending business,” he cautioned.
Tefferi urged the agencies to refrain from undertaking rulemakings where Congress provided discretion or did not place a date certain for implementation. If they go forward with this one, however, he urged that they:
- exempt from the definition of “higher-risk mortgage loans” several classes and types of loans, including a transaction to finance the initial construction of a dwelling, a temporary or bridge loan with a term of 12 months or less, a home equity loan and other types of loans with unique characteristics;
- ensure the definitions of “higher-risk mortgage loans” and “higher-priced mortgage loans” are as consistent as possible;
- consider using a term other than “higher-risk mortgage loans”;
- allow more exemptions from the second-appraisal requirement;
- ensure against rule conflicts with Fannie Mae and Freddie Mac requirements; and
- make the rule more clear and provide a sample disclosure statement credit unions can use to comply.
For more, see the full comment letter.