Mortgage loans form the longest lasting bond between a credit union and its members.  Most members “lock-in” for a 30 year relationship with their credit union through a mortgage.    A 30-year product lifecycle is a remarkable opportunity by any industry’s standards.  However, mortgage lending is being held under scrutiny by the U.S. federal government.  With unethical mortgage lending cited as one of the factors that caused the Great Recession, the Consumer Financial Protection Bureau (CFPB) was created to place more regulations on financial institutions to avoid another financial crisis.  Regulations mean more detailed reporting.  With new CFPB rules on mortgages going into effect October 3^rd, credit unions are scrambling to adjust their systems to accommodate new data requirements.  By utilizing a data warehouse and analytics, credit unions will be able to go from maintaining compliance to developing a core competency in mortgage analytics.

New CFPB Rules

The CFPB has been authorized to integrate the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) required disclosures to borrowers.  This has become known as TILA-RESPA Integrated Disclosure (TRID).  Communication between a mortgage lender and borrowers is essential.  Many times, borrowers are not clear about the obligations they are signing up for.  The new disclosure rules have been implemented to form a stronger communication channel between lenders and borrowers.  Credit unions were already strong advocates for clear communication before the CFPB initiated new regulations.  However, the reliance on software has begun to make regulations system-focused instead of member-focused.

 

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