Newsroom

June 4, 2013 – The CFPB's ability-to-repay/qualified mortgage rule should preempt state law across the board to ensure federal credit unions and their members clarity in the application of the rule, NAFCU Senior Regulatory Affairs Counsel Tessema Tefferi said Monday.

Responding to a May 2 CFPB proposal, Tefferi said NAFCU supports a general rule that Regulation X, implementing the Real Estate Settlement Procedures Act, preempts inconsistent state law, but he said NAFCU does not support excepting from that rule state laws that offer greater protections than federal law.

"Federal credit unions, chartered by an agency of the federal government, should be able to rely on a uniform set of mortgage servicing rules," Tefferi wrote. "Should the CFPB move forward with [its proposed] interpretation, the cost of compliance for a federal credit union that operates in multiple states would increase [to include] initial and ongoing legal fees to analyze state laws and to design and implement multiple compliance programs."

Tefferi also took issue with the following:

• 5,000-loan threshold for small-servicer exemption: The proposal includes numerous limiting factors that greatly narrow the potential field of exempt servicers. Tefferi said NAFCU believes the exemption should be broader, not narrower. He said if the CFPB goes forward with a threshold, it should raise that threshold to 10,000 mortgages.
• Points and fees: Tefferi reiterated NAFCU's call for the CFPB to exclude affiliate fees from the calculation of points and fees.
• Debt-to-income ratio: Tefferi reiterated NAFCU's opposition to the 43 percent DTI limit for "qualified mortgages." He said even the Federal Housing Finance Agency, which now says Fannie Mae and Freddie Mac can only purchase QM loans, has excluded the CFPB's cap from applicable criteria.