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CUNA witness stresses CUs' difference at CFPB mortgage hearing
ATLANTA, Ga. (1/18/13)--Credit unions did not create the mortgage market issues that the Consumer Financial Protection Bureau seeks to address through its new regulations, and therefore should be shielded from regulatory burden where possible, Credit Union National Association witness Pam Davis said at a Thursday hearing.

Click to view larger image Pam Davis of Delta Community CU, Atlanta, Ga., said new CFPB mortgage servicing regulations will benefit borrowers. She encouraged the agency to recognize the differences between credit unions and for-profit institutions as it develops regulations. (CUNA Photo)


Davis also represented the Georgia Credit Union Affiliates.

The hearing was held just after the CFPB released a final rule addressing mortgage servicing on Thursday morning. Regulatory measures addressing mortgage loan origination (MLO) and high-risk mortgage appraisals are also on the agency's docket: There is a Jan. 21 deadline for their release. The CFPB last week unveiled final rules regarding ability-to-repay requirements, escrow accounts, and "high-cost" mortgages.

Davis, who serves as vice president of real estate services at Delta Community CU, Atlanta, said CUNA and credit unions are "concerned about the regulatory burden imposed on lenders and will be reviewing the new rules from that perspective."

The CFPB's final mortgage servicing rule requires mortgage servicers to simplify billing statements, provide additional notice of rate changes to borrowers and help ensure that consumers know all of their options to prevent foreclosures.

The servicing rule contains a number of exemptions for credit unions and other small financial institutions that service 5,000 or fewer loans that they or an affiliate originated.

Those credit unions will be exempted from periodic statement requirements, general servicing policies, procedures and requirements, early intervention and continuity of contact provisions with delinquent borrowers and a vast majority of the loss mitigation procedures, CUNA Deputy General Counsel Mary Dunn noted.

They will not, however, be exempted from the information request and error resolution requirements, Dunn said.

Davis during the hearing said the CFPB's mortgage servicing regulations "do address a number of problem areas" and will be helpful for borrowers. The servicing rules will also address some of the problems associated with misaligned incentives in the servicing market. However, Davis noted, CUNA and credit unions "want to ensure that responsible lenders are not unduly burdened in the process."

Regarding the pending MLO final rules, Davis said, "There is absolutely no evidence that credit unions have engaged in abusive practices regarding mortgage loan originator compensation and additional requirements will needlessly add to the regulatory burden credit unions already face."

CUNA has advised the CFPB to eliminate the use of "proxy factors" to restrict compensation to loan originators, revise proposed restrictions on upfront points and fees, and provide credit unions with some flexibility on the use of arbitration clauses, Davis said.
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