Press
NAFCU letter in connection with CFPB’s field hearing on Nov. 20, 2013
ARLINGTON, VA (November 22, 2013) —
The Honorable Richard Cordray
Director
Consumer Financial Protection Bureau
1700 G Street, NW
Washington, DC 20552
RE: Know Before You Owe – November 20, 2013, Field Hearing
Dear Director Cordray:
On behalf of the National Association of Federal Credit Unions (NAFCU), the only trade association that exclusively represents federal credit unions, I would like to submit this letter for the record in connection with the Consumer Financial Protection Bureau (CFPB) November 20, 2013, field hearing held in Boston, Massachusetts.
NAFCU would like to express our appreciation to the CFPB for holding today’s field hearing. We believe it is important that the agency continues to engage in discussion with credit unions and others, as it is doing today, about all regulations it prescribes and other actions it takes.
Credit Union Mortgage Lending
Credit unions are not-for-profit member-owned cooperative financial institutions that have provided affordable and dependable alternative financial services to their members for over one-hundred years. Approximately 96 million people rely on their credit unions for a range of financial services and products, including mortgage loans. In large part due to their well-earned reputation as dependable and consumer-friendly lenders, credit unions’ share of the mortgage market has steadily increased to approximately 7 percent of the mortgage market.
Credit unions have offered mortgage loans to their members for decades. In recent years, the number of mortgages that they have extended has increased despite the downturn in the housing market and the economy as a whole. As of July 30, 2013, there were nearly 2 million first mortgage loans outstanding that were issued by federally-insured credit unions (FICUs), totaling $253.9 billion. In the first two quarters of 2013, FICUs issued 565,305 first mortgage loans, totaling $65.7 billion, compared to 732,202 first mortgage loans, totaling $123 billion they issued in 2012.
Despite the increased participation in the mortgage market, credit unions still constitute a small portion of the industry and the vast majority of credit unions mortgage operations are relatively small. Accordingly, we continue to urge the CFPB to refrain from prescribing regulations that yield little to no benefit to consumers while creating more and more burden and cost on credit unions.
TILA/RESPA Integrated Disclosures
NAFCU supported the integration of disclosures separately required under the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) even before the CFPB was created. We believe that consumers are unnecessarily confused by separate disclosures and consolidation of the forms, if done appropriately, would address this matter.
NAFCU has expressed concerns regarding the CFPB’s approach to integrating the disclosures; in particular, we have expressed concerns about the agency’s proposed actions relative to the definition of “finance charge” and changes to the current tolerances. As we have indicated in the past, we believe that the process of the mortgage loan transaction will be more complicated for both the consumer and credit unions under the new system.
Effective Date
As the CFPB is aware, there are seven mortgage-related rules for credit unions to implement by January, 2013. Since the issuance of the final rules in early 2013, credit unions have spent significant amount of resources to take the necessary actions to ensure compliance by the effective dates of the rules. NAFCU expects that credit unions will continue to address implementation issues with these rules at least until the end of 2014.
NAFCU, thus, requests that the CFPB provide adequate time for credit unions to comply with the TILA/RESPA combined disclosures rule.
If you have any questions or concerns, please feel free to contact me at mcoleman@nafcu.org or (703) 842-2244.
Sincerely,
Michael Coleman
Director of Regulatory Affairs