WASHINGTON (11/17/10)--State-chartered credit unions, which would fall under a proposed Federal Trade Commission (FTC) rule addressing unfair and deceptive (UDAP) mortgage practices, need flexibility in meeting the UDAP requirements, the Credit Union National Association (CUNA) said in a recent comment letter. CUNA recommended that the FTC should allow state-chartered credit unions to be in compliance with the proposed rule if those credit unions are successfully following current and future mortgage lending rules that apply to all financial institutions. The FTC proposal, which does not impact federal credit unions, would ban "all material misrepresentations in advertising about consumer mortgages." The proposed rule, which also does not cover banks and thrifts, specifically targets mortgage lenders, brokers, and servicers; real estate agents and brokers; advertising agencies; home builders; lead generators; rate aggregators; and other entities under the FTC's jurisdiction. The proposal, originally released in September, would, in part, ban misrepresentations in commercial communications and advertisements regarding any term of any mortgage credit product and would also impose corresponding recordkeeping requirements. CUNA's comment letter emphasizes that state-chartered credit unions are already heavily regulated and should treated like other financial institutions, and not be covered under this rule. The FTC rule would be duplicative of other current mortgage rules, as well as future rules under the Dodd-Frank Act, and would unnecessarily add to the already “staggering” compliance burden of state-chartered credit unions. While CUNA supported the FTC’s efforts to do more to address predatory lending practices, CUNA also noted that credit unions have not engaged in any of the practices addressed in the FTC proposal. CUNA has also recommended that the FTC's rules focus on practices that are not adequately addressed under current law, but not prohibit or favor certain practices. The National Association of State Credit Union Supervisors (NASCUS,) in a separate comment letter also supported exempting state-chartered credit unions from the proposed mortgage rule, saying that "while consumer protection is a critical regulatory issue," additional advertising rules and record retention requirements should not be extended "exclusively to a single depository charter, particularly when the proposed rules are duplicative of existing rules." NASCUS instead recommended that the FTC "focus its efforts on filling in regulatory gaps and addressing non depository entities lacking the existing comprehensive regulation of credit unions and banks." For the full CUNA comment letter, use the resource link.