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CUNA says mortgage disclosure fixes needed by CFPB
WASHINGTON (11/7/12)--Credit unions are concerned that the Consumer Financial Protection Bureau's (CFPB) proposed mortgage disclosure changes could increase the cost of providing those loans, Credit Union National Association (CUNA) Senior Assistant General Counsel Jared Ihrig wrote in a Tuesday comment letter.

CUNA in the comment letter offered a number of recommendations that--if adopted--would mitigate the impact of the CFPB's pending mortgage disclosure proposals on credit unions while fully protecting consumers' access to key information about home mortgage products.

The CFPB proposal, which is expected to be made final early next year, attempts to combine the complicated documents required under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) into a single disclosure.

CUNA wrote that it supports the objective of consolidated mortgage disclosures, but noted that the proposed rule would be overly burdensome for credit unions to properly complete, generate, deliver and explain to mortgage loan applicants.

To ease the process, CUNA urged the agency to consider a number of recommendations, including:
  • Exempting credit unions from certain portions of the final rule to minimize costs for credit unions where possible;
  • Providing further clarity concerning the definition of "application" under RESPA for purposes of requiring the issuance of the CFPB's proposed Loan Estimate;
  • Releasing explicit guidance regarding how to handle mortgage loan transactions that are initiated under existing Regulation Z and Regulation X rules, but are not yet consummated as of the time that new rules become effective;
  • Eliminating portions of the mortgage disclosure proposal that would require lenders to maintain "standardized, machine-readable" electronic versions of loan estimates and closing disclosures provided to consumers; and
  • Allowing a lengthy implementation period and a delayed mandatory compliance date that is at least 18 to 24 months after the adoption of any final rule to implement the new mortgage disclosures.
CUNA also suggested that the CFPB retain the existing 10% tolerance level as required by current RESPA regulations with respect to third party charges such as appraisal and title services.

In the letter, CUNA said it also strongly supports the CFPB's proposal to eliminate the total interest percentage and lender cost of funds disclosures required by Section 1419 of the Dodd-Frank Act, as these are of questionable value to consumers.

For the full CUNA comment letter, use the resource link.

A second CUNA comment letter on portions of the TILA/RESPA changes that impact finance charges will also be released this week.


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