Originally published in CU Insight. Written by Brandy Bruyere, NCCO, Vice President of Regulatory Compliance, NAFCU
Within the past year, the Bureau of Consumer Financial Protection (BCFP) has gone through numerous changes reflecting new leadership. Many of these changes came as a result of reviewing various regulatory rulemakings that have had a significant impact on the credit union industry.
NAFCU continues to fight on behalf of the credit union industry, as credit unions are still in need of additional relief. Here are five issues the bureau can immediately address to improve the regulatory environment.
- Remittance relief
Since 2013, when the bureau made changes to its remittance rule, NAFCU has been concerned about the rule's highly burdensome compliance costs for credit unions.
Responding to the bureau's assessment of the rule last year, NAFCU asked that credit unions be exempted from the rule. "Numerous credit unions have been forced to stop offering remittance transfer services because the compliance burden is simply too high … With fewer credit unions continuing to provide such services, consumers' options and ability to shop are severely limited," NAFCU wrote to the bureau. Last year, the bureau said it would issue its assessment report by Oct. 28.
- Complaint database
NAFCU has pressed the bureau to stop publicly publishing complaint information that cannot be fully verified in order to reduce the risk of reputational harm.
In a recent letter to the bureau on the issue, NAFCU highlighted that credit unions take their member-owners' issues seriously and work to resolve them efficiently and effectively, but that "current public reporting practices skew transparency and do not work as intended." When unverified complaints are published on the bureau's consumer complaint database, it "can pose serious reputational risks to targeted institutions."
NAFCU provided a list to the bureau of ways to improve consumer reporting practices, which can be read here.
- HMDA relief
While some Home Mortgage Disclosure Act (HMDA) relief was passed into law as part of the NAFCU-backed Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155), the association continues to push for more.
A provision in S. 2155 would exempt depository institutions that have originated fewer than 500 open-end lines of credit and or fewer than 500 closed-end mortgages in the previous two years from certain HMDA reporting and recordkeeping requirements. The law also requires the Comptroller General to conduct a study to evaluate the HMDA amendments and submit a report on the results to Congress.
The association has also asked that the bureau review its HMDA data collection activities, including limiting the collection to only those fields mandated under the Dodd-Frank Act.
- PALs safe harbor
In May, the NCUA proposed NAFCU-sought changes to expand its payday alternative loans (PALs) program to offer a second PALs option – PALs II, and explore a third option – PALs III. NAFCU has long advocated for additional mechanisms to allow credit unions to provide more small-dollar, short-term loans to members in need, and also hosted a small-dollar lending working group to explore additional small-dollar lending options for credit unions.
NAFCU has asked the bureau to expand the safe harbor exemption to include all PALs loans not only to provide regulatory relief, but also to encourage more credit unions to begin or expand PALs programs.
- Qualified mortgage safe harbor
As a result of the bureau's ability-to-repay and qualified mortgage (QM) rules, many of NAFCU's members have decided to extend only those mortgages that meet the definition of a QM because of the legal and regulatory risks associated with extending non-QMs.
While recent changes to the Dodd-Frank Act have provided some relief with the addition of a new safe harbor category for loans held in portfolio, more can be done. NAFCU has recommended that the bureau reconsider the 2021 expiration of the temporary government-sponsored enterprise QM category, and make this category a permanent safe harbor exemption. Doing so would ensure that credit unions continue to have access to a healthy and functioning secondary market.