Newsroom
October 30, 2013
NAFCU urges CFPB, HUD to delay QM rules
Oct. 31, 2013 – NAFCU President and CEO Dan Berger on Wednesday urged CFPB Director Richard Cordray to delay the seven significant mortgage-related rules it has scheduled to go into effect in January 2014.
Berger, in a letter, wrote, "The rules directly affect or indirectly impact every aspect of a credit union's mortgage operations, including origination, servicing, loan originator compensation, escrow, insurance-related matters, and appraisals." Berger emphasized that the delay must be for at least 12 months so credit unions can prepare adequately without incurring unnecessary costs.
NAFCU Senior Regulatory Affairs Counsel Tessema Tefferi also wrote the Department of Housing and Urban Affairs Wednesday to request that it work with CFPB to delay the implementation of both agencies' proposed rules on qualified mortgages.
Tefferi praised HUD for proposing a rule in advance of the effective date of the CFPB's QM rule, as many FHA loans would otherwise not qualify for the CFPB's safe harbor treatment and would be treated as higher-priced mortgage loans. However, he urged the agency to work further with the CFPB to postpone the effective dates of both QM rules.
"As we have communicated with the CFPB, the complexity of the CFPB's QM rule in and of itself has caused significant compliance challenges and significant costs for credit unions," Tefferi wrote. "The challenges are compounded, however, by the fact that there are seven mortgage-related rules with which credit unions must comply by January, 2014. For credit unions, as non-profit cooperative entities that rely on retained earnings as their sole source for capital, delaying the effective dates of the rules is crucial."
Tefferi also responded to HUD's request for comment on whether its proposal should distinguish between safe harbor FHA loans and rebuttable presumption FHA loans: "NAFCU does not believe that it is either necessary or appropriate to make this distinction; all FHA-insured loans should be granted safe harbor protection." Tefferi explained that a two-tiered approach would increase compliance costs for credit unions unnecessarily.
However, Tefferi also proposed an alternative interpretation of the two-tiered approach – suggesting that HUD make a threshold determined by the combination of the maximum MIP (mortgage insurance premium) and the CFPB's annual percentage rate threshold (which requires the APR be no more than 150 basis points above the APOR, or average prime offer rate).
Tefferi also discussed how HUD's adoption of the CFPB QM definition of "points and fees" would undermine many credit unions' practice of pooling their resources to create Credit Union Service Organizations; the credit unions would be forced to offer their members services through more costly non-affiliates or to offer less flexibility for borrowers in using points to lower rates.
Berger, in a letter, wrote, "The rules directly affect or indirectly impact every aspect of a credit union's mortgage operations, including origination, servicing, loan originator compensation, escrow, insurance-related matters, and appraisals." Berger emphasized that the delay must be for at least 12 months so credit unions can prepare adequately without incurring unnecessary costs.
NAFCU Senior Regulatory Affairs Counsel Tessema Tefferi also wrote the Department of Housing and Urban Affairs Wednesday to request that it work with CFPB to delay the implementation of both agencies' proposed rules on qualified mortgages.
Tefferi praised HUD for proposing a rule in advance of the effective date of the CFPB's QM rule, as many FHA loans would otherwise not qualify for the CFPB's safe harbor treatment and would be treated as higher-priced mortgage loans. However, he urged the agency to work further with the CFPB to postpone the effective dates of both QM rules.
"As we have communicated with the CFPB, the complexity of the CFPB's QM rule in and of itself has caused significant compliance challenges and significant costs for credit unions," Tefferi wrote. "The challenges are compounded, however, by the fact that there are seven mortgage-related rules with which credit unions must comply by January, 2014. For credit unions, as non-profit cooperative entities that rely on retained earnings as their sole source for capital, delaying the effective dates of the rules is crucial."
Tefferi also responded to HUD's request for comment on whether its proposal should distinguish between safe harbor FHA loans and rebuttable presumption FHA loans: "NAFCU does not believe that it is either necessary or appropriate to make this distinction; all FHA-insured loans should be granted safe harbor protection." Tefferi explained that a two-tiered approach would increase compliance costs for credit unions unnecessarily.
However, Tefferi also proposed an alternative interpretation of the two-tiered approach – suggesting that HUD make a threshold determined by the combination of the maximum MIP (mortgage insurance premium) and the CFPB's annual percentage rate threshold (which requires the APR be no more than 150 basis points above the APOR, or average prime offer rate).
Tefferi also discussed how HUD's adoption of the CFPB QM definition of "points and fees" would undermine many credit unions' practice of pooling their resources to create Credit Union Service Organizations; the credit unions would be forced to offer their members services through more costly non-affiliates or to offer less flexibility for borrowers in using points to lower rates.
Share This
Related Resources
Add to Calendar 2024-04-25 14:00:00 2024-04-25 14:00:00 ChatGPT: What AI can do for you! ChatGPT has been created with one main objective – to predict the next word in a sentence, based on what's typically happened in the gigabytes of text data that it's been trained on. Did you ever hear of the saying, “People fear the unknown?” Artificial intelligence scares people, but it is the future, and you need to understand the tools and resources it offers. It’s also about saving time, that’s what technology and in this case, artificial intelligence can do for you. If you want to save time and have a better quality of life, this training is for you. Once you give ChatGPT a question or prompt, it passes through the AI model and the chatbot produces a response based on the information you've given and how that fits into its vast amount of training data. It's during this training that ChatGPT has learned what word, or sequence of words, typically follows the last one in a given context. During this webinar, ChatGPT: What AI can do for you, you’ll discover the background, purpose, usability, and the pros and cons. Don't miss this opportunity! Key Takeaways Learn the background of AI Understand the purpose of AI Identify the pros and cons Register Now $295 Members | $395 Nonmembers(Additional $50 for USB)One registration gives your entire team access to the live webinar and on-demand recording until April 25, 2025Go to the Online Training Center to access the webinar after purchase » Who Should Attend NCRMs Risk titles Education Credits NCRMs will recieve 1.0 CEUs for participating in this webinar Web NAFCU digital@nafcu.org America/New_York public
ChatGPT: What AI can do for you!
Credits: NCRM
Webinar
Add to Calendar 2024-04-25 14:00:00 2024-04-25 14:00:00 Unifying Two Different Executive Benefits Programs About the Webinar In part one we discussed how to retain key positions during a time of transition. In part two, we will look at how to combine executive benefits programs from two different organizations into a single high-performing program. Evaluating each program includes many different facets, from strategy and expense to performance and servicing. This session will provide important considerations, whether or not you have pending M&A activity. Key Takeaways: Is the plan design both retentive and efficient? Is the benefit expense properly mitigated? Does the legal agreement reflect the board’s intent? View On-Demand Web NAFCU digital@nafcu.org America/New_York public
Unifying Two Different Executive Benefits Programs
preferred partner
Gallagher
Webinar
Add to Calendar 2024-04-24 14:00:00 2024-04-24 14:00:00 Optimize Liquidity, Maximize Loan Growth: The Network Lending Advantage About The Webinar Join us to learn more about network lending, a cooperative model allowing credit unions to optimize liquidity and achieve loan growth. Discover how credit unions can participate in loan pools with other institutions, allowing them to diversify portfolios, access loans with potentially lower risk and higher yields, and expand lending capacity without necessarily needing a surge in deposits. Delve into how credit unions can pool their resources, set common underwriting and pricing standards, and collectively originate, buy, and sell loans to optimize liquidity management. Hear from your peers about best practices, case studies, and practical strategies to harness the full potential of network lending and how it's helped their credit unions. Don't miss this valuable opportunity to learn how to strengthen your credit union's position in today’s competitive environment. Key Takeaways: How network lending differs from traditional lending The benefits of participating in loan pools with other credit unions How credit unions can set common underwriting and pricing standards and collectively originate, buy and sell loans to optimize liquidity management Why network lending is critical to loan growth Watch On-Demand Web NAFCU digital@nafcu.org America/New_York public
Optimize Liquidity, Maximize Loan Growth: The Network Lending Advantage
preferred partner
LendKey
Webinar
Add to Calendar 2024-04-23 14:00:00 2024-04-23 14:00:00 Monitoring the Latest Litigation Risks Credit unions’ operations pose litigation risks, with more of these cases being filed as class action lawsuits. In this Monitoring the Latest Litigation Risks for Credit Unions webinar, you’ll review some of the specific kinds of lawsuits impacting credit unions and what potential claims could be on the horizon. You’ll also examine some options for mitigating risks. Key Takeaways Review the current lawsuit trends. Understand the potential claims risks Explore options for mitigating risks. Register Now $295 Members | $395 Nonmembers(Additional $50 for USB)One registration gives your entire team access to the live webinar and on-demand recording until April 23, 2025Go to the Online Training Center to access the webinar after purchase » Who Should Attend NCCOs NCRMs Compliance and risk titles Education Credits NCRMs will recieve 1.0 CEUs for participating in this webinar NCCOs will recieve 1.0 CEUs for participating in this webinar Web NAFCU digital@nafcu.org America/New_York public
Monitoring the Latest Litigation Risks
Credits: NCCO, NCRM
Webinar
Get daily updates.
Subscribe to NAFCU today.