CUNA Regulatory Advocacy Report

CUNA Regulatory Advocacy Report: August 31, 2012

Good afternoon. We are pleased to share with you our most recent CUNA Regulatory Advocacy Report which reflects the issues we have been pursuing this week to minimize regulatory burdens on credit unions.  

  • CFPB Extends Comment Dates for “Finance Charge” and HOEPA   Proposed Changes
  • CFPB Director Cordray Responds to CUNA Members on CUNA Audio Conference Call
  • Federal Reserve Board Is Seeking Data from Smaller Institutions Re Debit Card Interchange
  • CUNA Meeting with NACHA
  • CUNA Comments to the CFPB on Reverse Mortgages
  • Recent CFPB Postings
  • CUNA Chart of Current CFPB Rulemakings: Updated 8/31

CFPB Extends Comment Dates for “Finance Charge”And HOEPA Proposed Changes

The Consumer Financial Protection Bureau has delayed the comment deadline from September 7th to November 6th for two important proposals, one on the definition of “finance charge” under the “Know Before You Owe” combined Truth-in-Lending and Real Estate Settlement Procedure Act forms proposal, and the other to implement changes to Regulation Z under the Home Ownership and Equity Protection Act (HOEPA) as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The decision to delay the comment period for those proposals came about 24 hours after CUNA’s audio conference call with CFPB Director Richard Cordray in which compressed comment periods and the need for more time to comment as well as get ready to comply with new rules was raised.

The expanded definition of “finance change” is tricky. On the one hand, having a definition that is more inclusive of charges borrowers face in connection with loans might be useful for lenders and borrowers alike. On the other hand, if the definition is approved as proposed, a number of fees that are not included now, such as fees for third party closing agents and credit insurance products, would be incorporated into the finance charge. That would mean that more mortgage loans would likely be subject to regulatory requirements and restrictions under HOEPA.

CUNA has developed a survey on the definition of “finance charge” and will be sending it to leagues and then to credit unions to obtain their responses on the proposed definition.  The survey will be distributed in the next several days, after the Labor Day holiday. 

The Dodd-Frank Act requires the proposal to implement the combined forms to be issued for comments by July 21, 2012 but did not indicate a compliance date. Additionally, the Dodd-Frank Act requires a number of new disclosures that have a statutory deadline of January 2013. The agency is seeking comments on when compliance with the rule should become mandatory and also on delaying the effective date of the new disclosures to coincide with compliance with the overall rule. Comments on these issues are STILL due September 7th. CUNA will strongly support a delay and encourage an overall compliance date that will provide ample time for affected credit unions to get ready to meet new requirements.

The HOEPA proposal, which also has delayed comments until November 6, 2012, would expand the types of mortgage loans that are subject to the protections of HOEPA, by revising and expanding the triggers for coverage under HOEPA, and by imposing additional restrictions on such loans, including a pre-loan counseling requirement. The Dodd-Frank Act also amends the Truth in Lending Act and the Real Estate Settlement Procedures Act by imposing certain other requirements related to homeownership counseling.

CFPB Director Cordray Responds to CUNA Members on CUNA Audio Conference Call

As mentioned on the audio conference call yesterday with CFPB Director Richard Cordray, I have been at CUNA for over two years now, and regulatory burdens are one of the most frequent issues that credit unions raise with me, including their concerns about the CFPB. That is why we organized the call yesterday with Director Cordray to allow him to hear more first-hand questions and concerns that credit unions have about his agency and the regulations it is implementing. The call lasted an hour and a range of issues was discussed including the mortgage-related proposals and international remittances. During the call, Director Cordray reaffirmed his invitation for CUNA to organize a small group of credit unions to meet with him at the CFPB next month on remittances.  CUNA is conducting a survey on concerns with the final remittances rule and is encouraging credit unions that offer these services to complete the survey and get it back to us as soon as possible.  The survey asks for optional identifying information so we may follow up with those who respond and organize the small group quickly.   Please check out the survey here. 

Director Cordray also invited CUNA to organize a separate credit union group on the definition of “qualified mortgages” under the ability to repay proposal  We will be assembling that group soon as well, which will also be meeting with Director Cordray to address concerns about how the agency’s treatment of a “qualified mortgage” could impact mortgage lending for credit unions.  We will coordinate with the leagues and CUNA councils on the organization of both working groups.  

The director said the agency plans to do a better job of providing executive summaries to stakeholders of its lengthy regulations, one of the issues CUNA has been requesting the agency to address.  He said that while he knows there are concerns about CFPB proposals, including among credit unions, he said they don’t want to write rules just to meet deadlines. “We want to write rules that will make a difference for consumers without imposing an undue burden on those that have to comply, such as credit unions.”

In response to a question about the agency’s authority to delay compliance of rules so that institutions can get ready, he said that unless otherwise required by statute, they have a strong preference for setting an implementation date of 2014 for many of the mortgage-related provisions they have proposed. He said the TILA-RESPA “Know Before You Owe” combined forms proposal would be adopted likely in early 2013. He said other mortgage related proposals would be approved by January. 

However, where the statute does not set an implementation date, he said, the agency would go with “what is reasonable.”  He said they want to be mindful of the need for ample time to comply and will be “listening closely” to operational concerns that could support longer times to comply. He said the agency has set up a complaint procedure for consumers, but that any complaints for institutions with assets of $10 billion or under would be directed to their prudential regulator.  

A question arose about the mortgage servicing proposal and concerns about monthly statements that servicers will be required to send to the borrowers. He said he was aware of those concerns and noted that there is an exemption for smaller servicers that 1) service no more than 1,000 mortgages and 2) that they either own or originated.  He said they were willing to look at these issues and there is no justification for the agency to impose burdens on small servicers. Director Cordray will announce the new Consumer Advisory Board and Credit Union Advisory Council “within about two weeks” and it may be sooner.        

Federal Reserve Board Is Seeking Data from Smaller Institutions Re Debit Card Interchange 

The Federal Reserve Board is conducting a new data collection effort involving a random sample of 1,000 depository institutions that are exempt from the Board’s interchange fee standards under Regulation E, Electronic Fund Transfers Act, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Financial institutions that have assets of less than $10 billion are in the sample, which includes some credit unions,  and are being asked to complete the voluntary online questionnaire by October 31.  The survey is available here.

The survey seeks general information about debit card programs.  It also is asking for information on general use prepaid cards and costs associated that apply to all institutions providing debit cards of complying with the network exclusivity provisions of the debit interchange regulation.  Credit unions that have questions about the survey are directed to contact Edith Collis, Board of Governors of the Federal Reserve System, Washington, DC 20551, 202-452-3638.

CUNA Comments to the CFPB on Reverse Mortgages 

Today, CUNA submitted a comment letter to the CFPB on the agency’s request for information on the use of reverse mortgages, consumer use of the loan proceeds, and business practices on reverse mortgages.  As detailed in our comment letter, CUNA appreciates the CFPB’s ongoing efforts to study reverse mortgages and efforts to prevent and reduce abusive practices on such products for consumers.  Only about 25 credit unions offer reverse mortgages, and it is our understanding that they provide reasonable terms and adequate disclosures of the benefits and risks on such products to their older members.  We are aware that there are serious concerns about reverse mortgages offered by other types of lenders, and we urge the agency to focus on those mortgages that are not properly disclosed and are abusive to borrowers, rather than on credit union products.  

Recent CFPB Postings

This week, the CFPB has published several new items on its Web site concerning the CFPB’s various initiatives, so we wanted to take a moment to be sure you are aware of these items.  On Wednesday of this week, the CFPB posted Updates to its Private Student Lending Loan Report, stating that since the release of their original report to Congress in July, they have “developed ways to make better estimates on certain market statistics, particularly in areas where [their] data set was incomplete.”  The updates focus primarily on the proportion of private student loan borrowers who exhausted their Federal Stafford Loan options, and the extent to which schools certified a borrower’s need for a private student loan.  You may access the entire updated report here.

Another item posted yesterday focuses on 401(k) plans and the fees charged to consumers. This blog posting discusses what impacts fees can have on an investor’s 401(k) retirement funds, and links to a video developed by the Department of Labor’s Employee Benefits Security Administration which further discusses specifics relating to 401(k) plans and retirement investing.  You can find more information about the Department of Labor’s retirement plan initiative here.

This morning the CFPB posted a blog entry entitled “Student Banking 101.”  In this most recent post, the CFPB details specific advice for students on how to select their first “bank account,” as students head back to school this fall.  Notably, this latest blog entry discusses overdrafts and overdraft fees, and instructs students on how to avoid these fees and what features to look for when selecting an account with a financial institution.  In a time when there has been much press as of late centered on the mortgage markets and the CFPB’s multiple mortgage proposed rules, it is important for credit unions to be mindful that the CFPB’s overdraft initiative has not been forgotten, and CUNA anticipates that the CFPB will continue its efforts and we will see more information on this topic into 2013.  We will continue working with CUNA’s Consumer Protection Subcommittee and others as additional details emerge in this area. 

Meeting with NACHA 

On Thursday, CUNA Regulatory Advocacy staff met with NACHA – The Electronic Payments Association President and CEO, Janet Estep and senior staff, to discuss ACH-related issues from credit unions’ perspectives.  The meeting included discussions on ACH network rule improvements and opportunities for credit unions, such as current proposals, mobile payments, and person-to-person (P2P) payments.  CUNA continues to work with NACHA to advocate for credit union interests on ACH network rules.  In addition, we continue to coordinate with NACHA on payment system developments, such as joint advocacy efforts to seek improvements on the CFPB’s remittance transfers regulation.

CUNA Chart of Current CFPB Rulemakings: Updated 8/31

As promised, here is our updated chart on CFPB rulemakings. Next week we will expand the chart to include all agency rulemakings that are recent or pending that impact credit unions. We will update it every week.               

(Click to access)


I hope you find this information useful.  In the meantime, if you have any questions or comments about this report, please feel free to contact Mary Dunn, Bill Hampel, or me.  I hope you all have a great weekend! 

Best regards, 

Bill Cheney


Posted in Advocacy News, CU4Kids, CUNA, Federal, NCUA.