Actually, The Wait Is Not Quite Over: Asking the Bureau to Implement S.2155
Written By Reginald Watson, NAFCU Regulatory Compliance Counsel, NAFCU
Greetings Compliance Friends!
Do you ever get that feeling that you have really accomplished something important, but your work is only beginning?
Last time I blogged, we discussed the impact of the recent passage of the Economic Growth Act (S.2155) (the Act) and how section 109 was intended to reduce regulatory burdens in mortgage lending by enabling credit unions to offer lower rates during the days leading up to consummation without triggering an additional three-day waiting period which is necessary when the APR reflected on the Closing Disclosure (CD) becomes inaccurate. While this was the intent of Congress, a watchful eye discovered that section 109 technically amends section 129(b) of the Truth in Lending Act (TILA) at 15 U.S.C. §1639(b), which contains the waiting period requirements for high-cost mortgage loans. After a few bedtime reading sessions of the TRID preamble, it appears that the requirements for when a credit union must provide the CD before consummation are actually based upon 15 U.S.C. §1638(b)(2)(B)(ii) and (b)(2)(D) of TILA, and not §1639(b). This apparent inconsistency has caused some confusion in the credit union industry, but no need to fear, NAFCU has already presented these concerns to the Bureau's attention via a hand delivered letter to CFPB Acting Director Mulvaney last week. Hopefully we don't have to wait too much longer for some much needed clarification and regulatory relief! Here is a brief breakdown of some of the other clarifications and guidance NAFCU has requested from the Bureau:
QM - Minimum Standards for Residential Mortgage Loans
Section 101 of the Act adds another safe harbor category of qualified mortgages (QMs) to the applicable section of TILA which applies to loans made by insured depository institutions with less than $10 billion in assets when certain conditions are met. NAFCU requested that the Bureau provide guidance to credit unions that further explains the qualifications and clarifies the type of documentation necessary for this new QM category.
HMDA – Adjustment and Study
Section 104 of the Act added a new threshold whereby credit unions with less than 500 closed-end mortgage loans or less than 500 open-end lines of credit in each of the two preceding calendar years are exempt from certain disclosure requirements under HMDA, as implemented by Regulation C, specifically, the additional Dodd-Frank data points required as of January 1, 2018. The new threshold does not change the definition of financial institution under Regulation C, thus some data collection is still required, specifically, that which was required prior to January 1, 2018. Thus, NAFCU requested that the Bureau harmonize its transactional thresholds under Regulation C to achieve parity with the exemption contained in section 104 of the Act. The Bureau communicated to NAFCU in a recent phone conversation that they are in the process of reviewing the impact of S.2155 on HMDA and Regulation C and plan to issue guidance, although no definitive timetable was provided.
Fair Credit Reporting Act Amendments
Section 301 amended the Fair Credit Reporting Act (FCRA) to required credit reporting agencies to provide fraud alerts for consumer files for at least one year when a consumer indicates he or she has become a victim of fraud or identity theft. Section 302 of the Act also amended the FCRA to require that certain medical information for veterans be excluded from the veteran's credit report for up to a year after the medical services were provided, and completely in certain situations. NAFCU requested that the Bureau quickly implement new rulemakings to facilitate these amendments and provide clear guidance to help credit unions protect consumers and members of the military.