WASHINGTON – Credit unions are raising concerns over a whirlwind of mortgage regulations that have come out of the Consumer Financial Protection Bureau, which has produced nearly 3,000 pages of proposed new rules in the past six weeks alone.
The most recent proposal to come out of the CFPB was announced on Friday, with the agency now seeking comment on a proposed rule aimed at making it easier for consumers to understand mortgage costs and compare loans.
“We are very concerned about the breadth and scope of the changes CFPB is looking to make to the mortgage market overall,” said Dillon Shea, regulatory affairs counsel for NAFCU. “They’ve put out 2,800 pages of proposed regulations over just the last six weeks. It’s a lot to take in with a very short turnaround.”
Shea said NAFCU was pleased to see CFPB assert its exception authority with regard to certain provisions, but getting those exceptions is not easy. “Credit unions will have to do a lot of jumping through hoops to get those exceptions,” he said.
The more-than-300-page proposed regulation that was released on Friday afternoon had both NAFCU and CUNA wading through it at press time. “CUNA is still reviewing this lengthy proposed rule,” Mary Dunn, CUNA Deputy General Counsel, told Credit Union Journal. “While we initially see several positive elements – such as CFPB’s decision not to expand the certification test to cover registered mortgage loan origination employees – we remain concerned about the overall impact of this rule on credit unions. We will be analyzing the rule carefully with these concerns in mind.”
One question NAFCU hopes the new rule will address has to do with compensating mortgage loan officers. “Hopefully, this will help answer what credit unions can do in terms of incentives and bonus programs for internal mortgage loan officers,” Shea related. “Some of the rules could make it very difficult to provide any sort of annual bonus for credit union mortgage loan officers, again, without having to jump through a lot of hoops. What is of great concern to us with all of the recent proposed regulations coming out of Dodd-Frank is that they all say they recognize that credit union were not part of the problem, but credit unions are still getting hit with a huge compliance cost.”
In a statement released with the proposal, CFPB Director Richard Cordray said, “Consumers have a hard time comparing loans when they are dealing with a bewildering array of points and fees. We want to provide consumers with clearer options and enable them to choose the loan that they believe is right for them.”
The proposed rules would:
* Require lenders to make a “No-Point, No-Fee” loan option available, enabling consumers to compare offers and determine if they are better off making upfront payments in exchange for lower monthly loan payments.
* Require an interest-rate reduction when consumers elect to pay upfront points or fees. The CFPB is specifically seeking comment on proposals to require that any upfront payment, whether it is a point or a fee, must be “bona fide,” which means that consumers must receive at least a certain minimum reduction of the interest rate in return for paying the point or fee.
* Set qualification and screening standards, eliminating the patchwork quilt of different standards or different types of originators.
* Prohibit payment of steering incentives to mortgage loan originators.
* Restrict arbitration clauses and financing of credit insurance.
Comments are due Oct. 16, with the CFPB shooting to issue final rules in January 2013.