November 03, 2020

NAFCU outlines CFPB's final rule extending the GSE patch

Final RegNAFCU Monday sent members a Final Regulation summary on the CFPB's final rule extending the government-sponsored enterprise (GSE) patch and offered highlights on how the final rule impacts credit unions.

The final rule extends the GSE patch under the Truth in Lending Act until the mandatory compliance date of a final rule amending the general qualified mortgage (QM) loan definition in Regulation Z or the GSE’s exit conservatorship; the GSE patch was originally set to expire Jan. 10, 2021.

In the Final Regulation, NAFCU highlights that the bureau had previously stated it hoped to have the general QM rule finalized by April 2021. However, NAFCU notes, the CFPB’s final rule indicates that the bureau will "afford credit unions time to implement the new rule and the GSE Patch may be used during that time frame."

NAFCU has previously called for the bureau to allow for an 18- to 24-month extension of the GSE patch, at a minimum. Earlier this year, the association joined with nine other organizations to urge CFPB Director Kathy Kraninger to delay rulemakings on the general QM definition and extend of the patch in the wake of the coronavirus pandemic, in addition to calling on Congress to establish an emergency QM standard with flexible requirements and extend the patch if the CFPB did not provide one.

NAFCU has met with representatives at the CFPB to discuss the patch and highlighted the benefits of the GSE patch in providing credit unions with the ability to sell their loans into the secondary market – generating "vital" liquidity enabling credit unions to make more loans to their members, especially those of low- or moderate-income.

For more on the CFPB’s final rule, including a section-by-section analysis, read the Final Regulation.

NAFCU will continue its effort to ensure that credit unions are given enough time to prepare for the elimination of the GSE patch and urge the bureau to consider a longer extension.