April 30, 2014

CFPB's proposed QM rule adjustment helps CUs

May 1, 2014 – Credit unions would benefit under proposed minor adjustments to CFPB's mortgage rules affecting the points and fees for qualified mortgages.

CFPB's proposed amendments, announced Wednesday, would allow financial institutions to refund excess points and fees to the mortgage borrower if it is discovered, under certain circumstances, that the borrower has paid fees in excess of the 3 percent threshold mandated by the bureau's qualified mortgage rule.

A credit union could use the provision on a loan that is originated in good faith and as a qualified mortgage. The refund would have to be paid within 120 days.

We appreciate the CFPB's review of mortgage rules in order to afford credit unions some regulatory relief while allowing them to continue to offer mortgages to their members," said NAFCU Director of Regulatory Affairs Michael Coleman. "However, more work needs to be done regarding the rules' treatment of points and fees and other areas of the mortgage rules. We continue to work with the Bureau to help alleviate the regulatory burden on credit unions and help ensure they may continue to provide their members access to credit."

The other parts of CFPB's proposal seek to define nonprofit small servicers and nonprofit ability-to-repay exemptions. These amendments will not affect credit unions, which are not within the group of tax-exempt organizations falling under section 501(c)(3) of the Internal Revenue Code. Federal credit unions are deemed federal instrumentalities and are therefore tax-exempt under a different provision, 501(c)(1).

CFPB will seek public comment on this proposal once it is published in the Federal Register. NAFCU continues its conversations with CFPB regarding its qualified mortgage rules and will keep credit unions updated on further proposals and changes to the rules.