February 06, 2020

Ahead of hearing, NAFCU offers CFPB improvements

CapitolAhead of today's House Financial Services Committee hearing reviewing the CFPB, NAFCU Vice President of Legislative Affairs Brad Thaler sent a letter to the committee suggesting areas where NAFCU believes the structure and operations of the CFPB could be enhanced.

Specifically, Thaler highlighted NAFCU’s position on the CFPB’s ongoing rulemaking to revise the definition of qualified mortgage (QM) in light of the scheduled expiration of the government sponsored enterprise (GSE) patch. NAFCU has previously met with representatives at the CFPB to discuss the GSE patch, and last month, NAFCU signed on to a joint trades letter calling for the continued use of a modified debt-to-income ratio in conjunction with certain compensating factors, which could be used in the underwriting process and supporting significant changes to Appendix Q.

“In NAFCU’s comments on the rulemaking, we emphasize that the GSE Patch has been a key factor in credit unions’ ability to lend to members of their communities, especially those of low- and moderate-income, to help them achieve homeownership,” Thaler noted. “We asked that the CFPB grant an extension of the GSE Patch until revisions to the QM definition are finalized to alleviate market disruptions.

“Above all, we think maintaining access to affordable and sustainable mortgage credit should be a key objective of this rulemaking, and we ask the Committee to help enforce this message to the CFPB,” he added.

Additionally, Thaler expressed support for bureau Director Kathy Kraninger’s efforts to provide financial institutions with regulatory certainty and targeted relief, while continuing the CFPB’s focused efforts on bad actors of the financial crisis. For example, following calls by NAFCU to clarify the "abusive" prong of the unfair, deceptive or abusive acts or practices provision and efforts last year to gather feedback on the issue, the CFPB last month released a policy statement "providing a common-sense framework" for addressing it in supervision and enforcement matters.

“Credit unions have a long history of providing affordable and responsible financial services to their members and were not responsible for the predatory lending practices that led to the financial crisis,” Thaler concludes.

Read Thaler’s full letter. The hearing is set to begin at 10 a.m. Eastern.