Jan. 16, 2013 – Several NAFCU recommendations are addressed in an interagency final rule on higher-priced mortgages that is making the rounds of federal regulators for sign-off, but NAFCU still has some concerns.
NCUA’s board approved the rule by notation vote last Friday, and FDIC has approved and published its version of the text on its website. The draft final rule text shows the measure would take effect Jan. 18, 2014.
“We appreciate that our concerns regarding the consistency between ‘higher-risk’ and ‘higher-priced’ mortgage rule and the exemption of certain loans have been heeded,” said NAFCU General Counsel and Vice President of Regulatory Affairs Carrie Hunt. “Nonetheless, NAFCU continues to have concerns about the undue regulatory burden on credit unions.”
NAFCU made recommendations in a comment letter last year. Several are reflected in the final rule, among them:
- The rule uses the term “higher-priced” mortgage, harmonizing the verbiage describing what the rule covers. (The proposal toggled between “higher-priced” and “higher-risk” loans.)
- The rule does not include “transaction coverage rate” as an alternative method of calculation (though this could be revisited later).
- Exemptions cover, among other things, initial construction loans and bridge loans to purchase a new dwelling.
NAFCU-sought exemptions from a requirement for second appraisals were also included. These are for loans where the seller is a government agency; and loans where the property is acquired by inheritance, through divorce decree or other court decrees.
The rule, detailed for the NCUA Board during the Jan. 10 open meeting, was proposed by NCUA, CFPB, FDIC, the Federal Reserve Board, Federal Housing Finance Agency and Office of the Comptroller of the Currency. Both NCUA and the FDIC have approved the final rule; the CFPB and OCC have representatives on the FDIC board.
An announcement of the approved final rule is expected by week’s end.