WASHINGTON (10/21/13)--Some credit unions may be forced to discontinue, delay, or reduce their mortgage loan product offerings due to Consumer Financial Protection Bureau mortgage regulation changes that are set to take effect in January, a Credit Union National Association survey has revealed.
Around 60% of credit unions that responded to the survey said they were considering scaling back their mortgage practices. And, while many have been diligently working throughout 2013 toward meeting the compliance deadline, they may not be fully prepared to comply when the regulations take effect.
"These survey results are troubling for consumers," CUNA President/CEO Bill Cheney said. "CUNA has urged the CFPB to allow more time for compliance, since seven rules will hit within a two-week period, which poses a monumental compliance challenge. This is a particularly daunting task for smaller credit unions, given their small staffing resources," he added.
Half of the credit unions that responded said they have not decided whether or not they would offer non-qualified mortgage (QM) loans, write only QM loans, or reduce the number of non-QM loans that they make for their members. "This indicates that some credit worthy borrowers who would otherwise have qualified for a mortgage may not receive loans from their credit union," Cheney said.
The survey showed the pending regulations will also impact third party vendors: Ten percent said they would not be able to develop programming until after January 2014, and 41% of credit unions indicated their vendor has not yet promised a delivery date.
The lack of programming updates could mean that credit unions may miss their Internal Revenue Service deadlines and/or CFPB compliance dates. Overall, the survey showed that 86% of responding credit unions are using third party vendors to assist in implementing the rules, while 69% of this 86% are using multiple vendors.
"CUNA will continue to do all we can to help minimize the impact of these rules," Cheney added. "We are aware that the CFPB has talked with prudential regulators such as [the National Credit Union Administration] and that examiners should allow several months after the effective date before instructions that are seeking to comply are cited for violations. We are also concerned about protecting credit unions from litigation, and we will continue to pursue that issue as well."