50 Million Shades of Mandate Relief

by Henry Meier

A lot of public officials talk about the need for relieving smaller financial institutions from regulatory burdens but few of them actually do anything about it.  Yesterday, the CFPB coupled its announcement of the new qualified mortgage regulations with a proposal to exempt certain credit unions and community banks with assets of $2 billion or less and who meet certain other requirements from parts of the new regulation.  NCUA also surprised me by changing the definition of small credit union from one with less than $10 million to one with less than $50 million.  We ran some quick numbers and this means that approximately 74% of all New York credit unions will now be classified as small.  In another bit of good news, these “small” credit unions will not have to comply with NCUA’s new mandate that credit unions have interest rate risk policies.

All of this is great news and I don’t want to sound like the guy who opens up the gift on Christmas morning and can’t hide being a little disappointed because he got a Kindle Fire instead of an iPad (let’s face it the iPad is cooler), still when it comes to the qualified mortgage exemption, credit unions should understand that it comes with many strings attached and to maximize its effectiveness, the industry should push the Bureau to do away with some of these qualifications during the comment period.  Most importantly, the qualified mortgage exception would generally only apply to credit unions with $2 billion or less in assets that hold the mortgages for at least three years in their own portfolio and that make 500 or fewer mortgages a year.

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