With Mick Mulvaney testifying before the House Financial Services Committee for the first time since taking over as acting director of the Consumer Financial Protection Bureau, the two major credit union trade associations each sent letters detailing the regulatory relief they would like to see from the CFPB.

On Wednesday, Mulvaney is scheduled to give testimony on “The 2018 Semi-Annual Report of the Bureau of Consumer Financial Protection,” as required by the Dodd-Frank Act. Letters from the Credit Union National Association and the National Association of Federally-Insured Credit Unions were addressed to Jeb Hensarling (R-Texas), committee chairman, and Maxine Waters (D-Calif.), ranking member.

Mick Mulvaney, acting CFPB director.
Mick Mulvaney, acting CFPB director. Bloomberg News

The letters, written by Carrie Hunt, NAFCU’s executive vice president of government affairs and general counsel, and Jim Nussle, CUNA’s president and CEO, cover several similar topics, including mortgages, mortgage servicing, the Home Mortgage Disclosure Act, remittances, the authority by the CFPB to create more carve-outs and exemptions for credit unions, and urging Congress to change the CFPB’s leadership structure from a single director to a five-member, bipartisan commission.

Regarding mortgages, CUNA’s Nussle thanked the CFPB for expanding the qualified mortgage safe harbor for certain small creditors, but he added such exemptions “did not provide full relief for many credit unions, who in some instances were forced to change their product offerings.”

“All credit unions, not just the very smallest, have a different operating structure than banks and for-profit lenders,” Nussle wrote. “The regulatory changes implemented by the CFPB should reflect this difference. Modifications in the ATR/QM rule for all credit unions would be appropriate to ensure they can continue to effectively serve their members.”

In her letter, Hunt said NAFCU believes the definition of qualified mortgage “must be revised in a number of ways to reduce the enormous negative impact the rule undoubtedly has on credit unions and their members.” In particular, Hunt pointed to the debt-to-income threshold of 43 percent of the total loan and the inclusion of affiliate fees in the calculation of points and fees.

In the section regarding HMDA, CUNA’s Nussle declares it is “another example of a rule that was overly burdensome for credit unions.”

“While the CFPB made an appearance of accommodating small mortgage lenders, the accommodations the original rule did not go nearly far enough,” Nussle asserted. “That is why we have long advocated for additional changes, including raising the threshold for reporting to 500 closed-end and open-end loans in a calendar year.”

NAFCU’s Hunt decried the sharp increase in data collected under the CFPB’s newest HMDA rules, and urged limiting changes to the HMDA data set to those mandated by Dodd-Frank. She further said HELOCs should be exempted from HMDA data collection, or at least higher thresholds applied.

Both trade associations agreed remittances at credit unions have been all but killed by CFPB rulemaking, pushing consumers to large banks for those services.

Contrasting requests

Not all details of the two letters were the same. NAFCU’s Hunt offered critiques of the CFPB’s debt collection and overdraft rules, said the bureau’s Consumer Complaint Database poised a reputation risk for credit unions, and said the CFPB has not supplied sufficient clarity as to what is expected by CUs under the law.

“Of special concern are those areas of the law, such as a call for a focus on unfair, deceptive, or abusive acts and practices (UDAAP), that provide few or no specific directives for implementation and for which neither CFPB nor the National Credit Union Administration has provided any specific guidance,” Hunt argued, adding UDAAP-based enforcement actions have created “uncertainty.”

CUNA’s Nussle spotlighted several areas where he said credit unions should get carve-outs, including small-dollar lending. He said the CFPB should transfer examination and supervision for compliance with consumer protection regulation of all credit unions, including those with more than $10 billion in assets, to the NCUA.

“This change will enable the Bureau to fully focus its examination and enforcement on Wall Street banks and other abusers of consumers, while ensuring that credit unions continue to be adequately supervised,” Nussle wrote.

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