January 02, 2014

Compliance Monitor eyes QM, NCUA risk guidance

Jan. 3, 2014 – The January NAFCU Compliance Monitor is available and provides in-depth articles on CFPB's qualified mortgage rule, NCUA's supervisory guidance on enterprise risk management and important compliance deadlines for 2014.

In response to concerns about the 43 percent debt-to-income ratio limitation from the general QM definition, NAFCU Director of Regulatory Compliance JiJi Bahhur focused on the three categories of mortgages that are still afforded QM status even though there is no 43 percent or less debt-to-income ratio requirement. Bahhur provided the function of each of these QM categories and how credit unions can comply with the requirements.

"If it is the policy of your credit union to make mortgage loans using a DTI ratio over 43 percent, it does not necessarily mean that the loan will not receive the protections of a qualified mortgage," Bahhur wrote. "The final rule provides three other categories of loans with bright line requirements that will receive qualified mortgage status if certain criteria are met."

The Monitor also provides a chart detailing the basic components of an enterprise risk management framework, as established by the NCUA guidance issued in November. Senior Regulatory Compliance Counsel Bernadette Clair wrote on how credit unions of varying sizes can benefit from the core principles of this guidance.

Finally, the Monitor also features the "Compliance Forum" of frequently asked or particularly important compliance questions and answers from NAFCU staff. This month's "Forum" includes discussion of NCUA's 18 percent interest rate cap on business credit cards, Regulation CC, new mortgage rules and share insurance coverage.