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NAFCU to NCUA: Defer to FCUs, FICUs on mortgage servicing rights rule
NAFCU Regulatory Affairs Counsel Aminah Moore wrote to the NCUA Friday to offer support for the agency's proposed rule to remove the current prohibition on federal credit unions' (FCUs) ability to purchase mortgage servicing rights (MSRs) from the investment and deposit activities rule and offer credit union insights. A rule on MSRs was included in the agency's fall rulemaking agenda.
The proposed rule, amending parts 703 and 721 of the NCUA's regulations, would allow FCUs to purchase MSRs from other federally-insured credit unions (FICUs) as a permissible investment. However, in order for an FCU to purchase MSRs, the loan must be one that the FCU was empowered to grant, within the limitations of the board of directors’ written purchase policies, and there must be prior approval by the board of directors or investment committee.
“This additional flexibility would allow smaller institutions who want to grow and sell their mortgages to have more options to sell while also allowing growth opportunities for the FCUs who purchase those MSRs,” wrote Moore.
In addition to offering support for flexibility, Moore cautioned the NCUA against putting unnecessary limitations and requirements for such transactions.
“NAFCU encourages the NCUA to defer to FCUs and FICUs to mitigate any potential risks associated with the purchase and sale of MSRs as credit unions already have ample experience servicing their own mortgages and should be able to make risk assessments regarding investments into MSRs without NCUA interference,” added Moore.
Read the full letter. NAFCU sent members a Regulatory Alert on the proposed rule earlier this month and will continue to work with the NCUA to ensure credit union concerns are heard.