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CUNA to Fed Expand definitions in new TILA proposal
WASHINGTON (5/2/11)--The Credit Union National Association (CUNA) has urged the Federal Reserve to adopt more expansive definitions of “underserved” and “rural” that include areas that have been determined to be “underserved” or “rural” by other federal agencies as the Fed implements new Truth in Lending Act (TILA) mortgage escrow account requirements. The Fed has proposed regulations that would change the requirements for when financial institutions must establish mortgage escrow accounts for higher-priced mortgage loans and also change mortgage escrow account disclosure requirements. Creditors that mainly operate in underserved and rural areas, make 100 or fewer mortgages, and do not resell those mortgages on the open market would not be subject to these proposed escrow requirements. CUNA in a Friday comment letter said that limiting the definitions of “underserved” and “rural” to only the most underserved and the most rural counties will limit access to mortgage credit in many underserved areas. Expanding the definitions of these terms to encompass National Credit Union Administration (NCUA) and other federal agency definitions of “underserved” and “rural” would help financial institutions that operate in underserved and rural areas “continue to provide needed mortgage credit to their communities without incurring additional regulatory burden,” the letter adds. CUNA did note, however, that many aspects of the proposal—including portions of the proposal that define “higher-priced” mortgages and many of the proposed disclosure requirements—are expressly required by the Dodd-Frank Act and leave the Board with limited discretion in implementing these statutory provisions. In addition to requesting several additional clarifications and technical changes, the CUNA comment letter also asked the Fed to delay compliance with the rule for a six month to one year period after the agency issues the final version of the regulation so that credit unions and their third-party vendors have sufficient time to comply with the new requirements.


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