ARLINGTON, VA (November 22, 2013) --
Monica Jackson
Office of the Executive Secretary
Consumer Financial Protection Bureau
1700 G Street, N.W.
Washington, D.C. 20220
RE: Docket No. CFPB-2013-0031-001
Dear Ms. Jackson:
On behalf of the National Association of Federal Credit Unions (NAFCU), the only trade association that exclusively represents federal credit unions, I write to you regarding the Consumer Financial Protection Bureau’s (CFPB) interim final rule on changes to Regulation Z, Regulation X and the agency’s final rules issued throughout 2013 related to mortgages. See 78 Fed. Reg. 62993 (October 22, 2013).
NAFCU appreciates the CFPB’s efforts and willingness to review its mortgage-related rules, make necessary changes and provide clarifications where appropriate. We generally support the clarifications made in the interim final rule; however, we would like to take this opportunity to provide comments on several specific matters that are germane to this rulemaking.
Sections 1024.39 (D) and 1026.20(c)(1)(II) – Exemptions from Certain Disclosure Requirements
The interim final rule, and associated CFPB Bulletin 2013-12, provides exemptions and a safe harbor from liability for two servicing communications — the requirement in § 1026.20(c) for a notice of rate change for adjustable-rate mortgages (ARMs) and the early intervention requirements in § 1024.39. Under the interim final rule, these communications would not be required when a borrower has properly invoked the Fair Debt Collection Practices Act (FDCPA) cease communication protections. The interim final rule also exempts servicers from the early intervention requirements and from the periodic statement requirements under § 1026.41 for borrowers while they are in bankruptcy. Lastly, the interim rule exempts servicers from the requirement to provide disclosures to consumers with ARMs each time an interest rate adjustment causes a corresponding change in payment when the servicer is a debt collector under the FDCPA and the consumer has exercised the right to “cease communication.”
NAFCU appreciates and supports this aspect of the interim rule. As we have discussed with the agency, it is crucial that the CFPB continuously examines unintended consequences prior to and after credit unions and others begin implementing the mortgage servicing rule. In this case, the CFPB correctly identified that servicers, including credit unions, are subject to inconsistent, if not conflicting, laws and regulations. By providing the exemptions and safe harbor, the CFPB is alleviating concerns.
Homeownership Counseling Requirement
The interim final rule clarifies that while homeownership counseling disclosures are required for loans for manufactured housing that do not involve residential real property, the Good Faith Estimate and closing disclosures under the Truth in Lending Act are not required to be provided. NAFCU appreciates and supports this clarification. However, we do ask that the CFPB clarifies that the new Closing Disclosure, which will be required after August 1, 2015, is also not required in these circumstances.
NAFCU would like to take this opportunity to request that the CFPB reconsiders the application of the counseling requirement to closed-end home equity loans and home equity lines of credit. NAFCU does not believe that consumers will benefit from the disclosure. Further, the requirement that counseling occurs between disclosure and closing will prevent credit unions from meeting needs for credit in emergency or other situations where the member needs access to the credit in a short time period. As a result, the member may choose more costly alternatives. Simply put, requiring the disclosure will make the loan transaction more onerous than necessary for all parties and potentially more costly for members.
NAFCU appreciates the opportunity to comment on this proposed rule. If you have any questions or concerns, please feel free to contact me at (703) 842-2268 or ttefferi@nafcu.org.
Sincerely,
Tessema Tefferi
Senior Regulatory Affairs Counsel