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Washington
Alternative mortgage changes would not harm CUs CUNA
WASHINGTON (7/25/11)--The Consumer Financial Protection Bureau’s interim final rule that amends the Alternative Mortgage Transaction Parity Act (AMTPA), which became effective on July 22, would only impact a minimal number of state-chartered credit unions, the Credit Union National Association said. So-called “alternative-mortgage transactions” are transactions in which the interest rate or finance charge may be adjusted or renegotiated. Mortgages that feature adjustable interest rates, negative amortizations, balloon payments, shared equity, or shared appreciation are among these alternative transactions. Under AMTPA, state-chartered credit unions are permitted to take part in these types of mortgages, regardless of their home state’s laws. However, the mortgages must also meet standards set by the National Credit Union Administration. The CFPB’s AMTPA changes would remove portions of the Act that allowed credit unions and other institutions to make negative amortization or balloon payment mortgages. Some other preemption authorities that were granted under the Act would also be scaled back, as AMTPA would only preempt state laws that limit interest rate or finance charge changes. AMTPA also would not preempt state laws addressing late fees, rate increases due to late payment, prepayment penalties, interest-only payment periods, and negative amortization, According to CUNA, state-chartered credit unions that are permitted to follow federal mortgage regulations, or credit unions that elected to opt out of AMTPA, will not be impacted by the changes. CUNA has communicated with credit unions on the issue, and continues to monitor the progress of the AMTPA changes. The CFPB is accepting public comment on the AMTPA changes until Sept. 22. For more, use the resource link.
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