WASHINGTON – Credit unions celebrated yesterday when the Consumer Financial Protection Bureau announced it was expanding the exemption criteria for its new mortgage servicing rules – but that celebration may have been premature.

The original carve-out applied to any financial institution that originates and services fewer than 1,000 mortgage loans. CFPB then increased that threshold to 5,000 mortgage loans. According to CUNA SVP-Research & Policy Analysis Bill Hampel, said there are 545 credit unions that surpass the original threshold of 1,000 and just 131 that surpass the new threshold of 5,000. Then there’s another 4,280 that make fewer than 1,000 mortgages.

The problem is, a good number of those credit unions, regardless of how many mortgages they originate and service, that work with subservicers, and those subservicers must comply with the rule, Hampel said. “If the credit union works with a subservicer, that entire transaction has to comply with the rule,” he explained. “So, even a number of those 4,280 that are making fewer than 1,000 mortgages will have to comply with this rule if they work with a subservicer.”

And since many of those credit unions may only use subservicers on a portion of their mortgage portfolio, that means those credit unions could be in a situation where they’ll have to comply with the rule on some mortgages but not others. As a result, Hampel said he couldn’t offer a strong estimate of how many credit unions actually will benefit from the carve-out.

And in a twist on the old 80/20 rule, Hampel pointed out that while the 131 credit unions that definitely must comply with the rule represent only 2.5% of all mortgage-originating credit unions, their mortgages make up 55% of the dollar amount of credit union mortgages.

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