Press

Dear Director Cordray:

Thank you for your letter of July 14, 2015, addressing the agency’s response to the definition of “creditor” under TILA and the Know Before You Owe (KBYO) rule. We greatly appreciate your attention to this matter and the ongoing conversations we have had with your staff at the Consumer Financial Protection Bureau (CFPB).

Nevertheless, CUNA remains concerned that the information distributed by the CFPB has created confusion throughout the industry with respect to the applicability of the small creditor exemption under TILA and the KBYO rule as discussed in our previous letter. In fact, we are now aware of several groups engaged in training who continue to mimic the erroneous information previously provided by the CFPB. I have attached copies of relevant pages from these trainings which demonstrate the confusion propagated in part by the CFPB summary materials, guides and supplementary information to the final rule. As you can see, consultants are informing their clients that they are not required to comply with the KBYO rule if they originate 5 or fewer mortgages a year when this may not be the case. We have further identified potentially 700 credit unions that might be operating under the premise that they are exempt from the rule, and we imagine many other creditors may also be following this incorrect interpretation.

While we appreciate the CFPB correcting the discrepancy in its recent iteration of the Small Entity Compliance guide and offering to provide credit unions with an additional webinar on the new rules, we believe the agency needs to go further and make a clear public announcement and correction of this issue so the incorrect interpretation is not further perpetuated throughout the industry. We believe such a public announcement and correction is critical given that other smaller creditors, in addition to credit unions, may not understand this nuance in the rule and it could lead to non-compliance and liability throughout the industry.

Furthermore, while we thank you for extending the compliance deadline for the KBYO rules to October 3, 2015, we believe this miscommunication in the final rules and summary materials warrants an extended compliance deadline or safe harbor from enforcement and legal liability until January 1, 2016, at the earliest. We have heard from some credit unions that the recent discovery that they have to comply with the rules has led them to stop mortgage lending completely due to concerns they will not be able to comply by the deadline at this late stage. This lack of access to credit is damaging to consumers, particularly those in rural and underserved areas with limited credit options available.

Thank you for your prompt attention to this matter. I look forward to discussing this and other matters with you when we are together next; in the meantime, please do not hesitate to contact me if you have questions or concerns. CUNA remains committed to ensuring proper compliance with the KBYO rule and welcomes your request for collaboration on publicly clarifying this issue.

Sincerely,

Jim Nussle President & CEO

Attachments
cc: The Honorable Debbie Matz, Chairman, NCUA