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CFPB Director Richard Cordray told a banking conference Monday that CFPB's new mortgage rules are aimed at protecting consumers from the abuses that helped fuel the financial downturn – practices that NAFCU, CFPB and many in Congress recognize have never been in use by credit unions.

In comments to the American Bankers Association Annual Convention in New Orleans yesterday, Cordray said the bureau's qualified mortgage and ability-to-repay rules, which take effect in January, are aimed at ending "irresponsible lending practices." He said the mortgage servicing rules "contain provisions designed to clean up many sloppy and unsatisfactory practices."

Corday has pointed out in industry speeches and testimony before Congress that credit unions generally did not participate in such practices.

David Carrier

NAFCU, the only financial services trade association to oppose credit unions of any size being placed under direct CFPB regulatory authority, remains concerned about the adverse impact CFPB's mortgage rules will have on credit unions and their members. "We are already seeing the housing market cool in response to higher interest rates and the weak economy," said David Carrier, NAFCU's chief economist and director of research. "Existing-home sales decreased almost 2 percent in September, and new-home sales were down 33,000 from the June peak."

Noting past findings about the rule's impact on credit unions, Carrier added, "Many credit unions can't afford to take on any additional risk by offering non-qualifying mortgages. So while the CFPB's intentions may be good, the unintended consequence is that the QM rule would not only slow or reverse the recent boom in credit union mortgages, but worse, it could potentially choke off the fragile recovery we're seeing in housing markets generally."

NAFCU, through its August Economic and CU Monitor survey, found that of member credit unions that originate mortgages that do not satisfy the QM rule, 79 percent said they would cease or reduce those originations, and only 21 percent said they would continue to offer non-QM loans. Those numbers were similar to a May 2013 Economic and CU Monitor survey, where only 12 percent said they would continue to offer non-QM loans.