ALEXANDRIA, Va. (1/6/14, UPDATED: 4:35 P.M. ET)--National Credit Union Administration field staff "will take into account a credit union's good-faith efforts to comply" with new qualified mortgage regulations as they conduct their early-stage examinations, the agency said in a just-released supervisory letter to credit unions (14-CU-01).
The Credit Union National Association has repeatedly urged the agency and the Consumer Financial Protection Bureau to provide flexibility to credit unions as they work to come into compliance with the new rules.
"NCUA field staff will be placing particular emphasis on the safety and soundness implications of mortgage lending under this new paradigm. Whether your credit union originates Qualified or non-Qualified Mortgages, examiners will be evaluating credit risk, liquidity risk, and concentration risk," the agency added.
NCUA Chairman Debbie Matz in the letter emphasized that non-QM lending "can be an effective member service if conducted safely and soundly." The agency, she said, "will not subject a mortgage to safety-and-soundness criticism solely because of the loan's status as a QM or non-QM.
However, "credit unions choosing to make non-QMs will need to take into account the potential new market and legal risks," Matz added.
CUNA also urged NCUA to clarify that non-QM loans that otherwise meet applicable regulatory requirements should not be discouraged by examiners.
The new QM rule becomes effective on Jan. 10, and will apply to all federally insured credit unions.
For the full letter, use the resource link.