February 19, 2019

NAFCU to VA: CUs don't engage in predatory lending

military memberNAFCU's Kaley Schafer, in a letter to the Department of Veterans Affairs (VA), raised concerns about increased regulatory burdens the VA's interim final rule amending its regulations regarding VA-guaranteed or insured cash-out refinance loans could have on credit unions and argued that "credit unions do not engage in the types of predatory lending practices that this rule intends to target."

The rule is only applicable to credit unions that refinance VA loans. It implements a provision of the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) aimed at protecting veterans from predatory lending. More information is available through a NAFCU Final Regulation.

Schafer, NAFCU's regulatory affairs counsel, said the association and its members "appreciate the VA's leadership and commitment to curtailing predatory lending practices targeting veterans."

"NAFCU's members are proud to serve veterans, and support regulations aimed at curbing lending that could jeopardize their financial security," Schafer wrote. She added that NAFCU is generally supportive of the interim rule, but asked for clarification of the timing of the net tangible benefit test's loan comparison disclosure and guidance on the required standardized form that must be used.

In addition, Schafer requested a 30-day delay to the rule's effective date – which was Friday – "to ensure credit unions are provided with a reasonable timeframe to adopt the rule's changes into their lending practices."