WASHINGTON (5/24/12)—Credit unions should not be subjected to new regulatory requirements that could be created by pending mortgage origination regulation changes, Lisa Brown, president/CEO of Tallahassee-Leon FCU, Tallahassee, Fla., told Consumer Financial Protection Bureau (CFPB) officials at a Small Business Regulatory Enforcement Fairness Act (SBREFA) panel discussion held Wednesday in Washington, D.C.
The CFPB is considering imposing certain restrictions on the charging of up-front points and fees, proposals for new rules regulating mortgage originator standards and compensation, and rules that would address mortgage loan originators' qualifications and compensation. (See related May 10 News Now story: Rules on mortgages fees, origination in the works, CFPB says)
The agency said it is considering:
- Requiring lenders to give borrowers at least a certain minimum reduction of the interest rate in return for paying discount points on a mortgage;
- Requiring lenders to offer consumers a no-discount-point loan option; and
- Banning mortgage loan origination charges that vary with the size of the loan, instead allowing brokerage firms and creditors to only charge flat origination fees.
Brown, who was one of many financial services representatives that spoke during the meeting, stressed that smaller credit unions are carefully watching the CFPB's mortgage lending work, and are concerned by the impact that additional regulatory requirements could have on credit unions and their members. She said potential changes to mortgage fee structures could impact the mortgage market in general, as well.
Generally, Brown noted, any increased regulation would put undue burdens on credit unions in an environment where the writing and re-writing of rules is already costing her members.
Credit Union National Association (CUNA) Senior Assistant General Counsel Jared Ihrig, Ronald Lauren, CEO of SIR FCU, Negaunee, Michigan, and representatives from community banks, mortgage bankers, and mortgage brokers also attended the SBREFA panel. The CFPB is required to hold SBREFA panels to gauge the potential impact that upcoming regulations could have on small businesses.
The CFPB is also considering setting qualification and screening standards for loan originators, and Brown warned that these additional potential requirements could prove costly for credit unions.
A full slate of mortgage rules is expected to be proposed by the CFPB this summer and finalized by January 2013. The agency said it could provide an implementation period of up to one year, but has not decided how long of a transition period is necessary yet.
The CFPB also continues to work on revised mortgage applications and mortgage loan closing documents, and proposed forms of these disclosures are scheduled to be released in July.