WASHINGTON-Both credit union trade groups are objecting to proposals from the Consumer Financial Protection Bureau and NCUA, but over different issues.
In a letter, CUNA told the CFPB and NCUA that the interagency proposed rule related to appraisals and valuations for mortgages will mean new regulatory burdens and costs. Regarding higher risk mortgage loans, said CUNA, the use of a "transaction coverage rate" (TCR) solely for determining whether a loan is a "higher risk mortgage loan" is "likely to lead to confusion among consumers and within the industry."
In addition, CUNA said requiring a second, additional appraisal be obtained in cases where property is being resold at a higher price within a 180-day period would have unintended consequences (such as creditors choosing to stop offering "higher-risk mortgage loans" due to costs and burden association with an additional appraisal). The trade group said higher-risk mortgage loans made in rural areas should be exempt from the appraisal requirement, where finding two independent appraisers can be difficult.
Meanwhile, in a letter to the CFPB regarding its proposal to amend Reg B (Equal Credit Opportunity Act, ECOA), regarding copies of appraisals and valuations, CUNA expressed concerns over "examples of valuation" in the proposed commentary that it said appear to include items that are beyond statutory definition. CUNA noted the congressional directive regarding "valuation" is simply to require the numerical value of the estimate of the property and does not include other items, such as "written comments and other documents" the CFPB has proposed to include.
CUNA also encouraged the CFPB to work with NCUA before finalizing the rule in order to assess how the final rule may be able to retain some flexibility for federal credit unions that is provided now by an exemption for FCUs.
For its part, NAFCU said the plan to remove the current exemption for credit unions from Regulation B's appraisal delivery requirements "comes at a time when the bureau is in the midst of a litany of other rulemakings that will undoubtedly lead to wholesale changes in the mortgage lending arena."
NAFCU called on the CFPB to "withdraw the proposal or withhold issuing a final rule until the Dodd-Frank Act-required rules are fully implemented and credit unions are provided adequate time to take the necessary actions for compliance."