NCUA Issues Regulatory Alert Regarding Ability-To-Repay and Qualified Mortgage Rule

The National Credit Union Administration has issued a new Regulatory Alert 14-RA-09 to remind credit unions of the compliance requirements for the Consumer Financial Protection Bureau’s Ability-to-Repay/Qualified Mortgage (ATR/QM) Rule.  The new Regulatory Alert supersedes and replaces the previous Regulatory Alert 14-RA-01; it clarifies the points and fees limit for each loan-amount threshold and types of charges included in the calculation.

If your credit union makes closed-end consumer loans secured by a dwelling, you must comply with the CFPB’s ATR/QM Rule.  The rule requires you to assess a member’s ability to repay for virtually all closed-end residential mortgage loans secured by the member’s dwelling and provides your credit union with certain protections from legal liability for compliance with the rule.

The NCUA’s Regulatory Alert provides details that include:

  • Which loans are covered by the rule?
  • What are the basic ability-to-repay requirements?
  • What are the eight ATR underwriting factors?
  • What are other ATR considerations?
  • How to verify ATR information.
  • Records retention and compliance with ATR requirements.
  • How do Qualified Mortgages provide safe harbor?
  • What are the different types of QMs?
  • What are the caps on QM points and fees?
  • How do QMs protect against liability?
  • What makes a QM loan higher-priced?
  • When are prepayment penalties allowed for QM loans?
  • What other guidance is available?

The Regulatory Alert also contains links to an updated ATR/QM small-entity compliance guide, a general comparison chart, and a small creditor QM flowchart.

Question of the Week

What happens if the person who is renting a safe-deposit box passes away? Who has access?

A credit union must exercise due care to prevent the opening of a safe-deposit box by any person other than the renter or his or her duly authorized agent.  A duly authorized agent includes a personal representative, attorney-in-fact, special representative, or a trustee acting under a revocable living trust. Upon the death of an individual, a personal representative will be appointed to settle the estate. The court will determine the proper personal representative and issue letters testamentary to the appointed executors.  An individual attempting to gain access to a safe-deposit box of a deceased member should present to the credit union letters testamentary stating they are the personal representative.

In addition, ownership of the contents of the safe-deposit box is not determined by any lease provisions creating a joint tenancy or transfer at one lessee’s death.  For instance, a lease provision stating that two or more individuals have access to the box, attempts to create joint tenancy in the contents of the box, or attempts to vest ownership of the contents in the surviving lessee, is ineffective to create joint ownership of the contents or to transfer ownership at death of one lessee to the survivor. Ownership of the contents will be determined by rules of law without regard to lease provisions.

Related Links:

RCW 22.28.030

RCW 11.28.010

RCW 11.48.010

RCW 11.02.130

ORS 708A.655

Legal Briefs

National Credit Union Administration (NCUA)

The NCUA, jointly with other agencies, issued a proposed rule on minimum requirements for appraisal management companies. The rule would require, among other things, that appraisal management companies register in the state and become subject to its supervision, require use of only state-certified or licensed appraisers for federally related transactions, and requires that appraisals comply with the Uniform Standards of Professional Appraisal Practice.

The NCUA is hosting a webinar to help credit unions learn more about promoting financial literacy. The webinar will be held on Thursday, April 3.

The NCUA posted its Board Action Bulletin, discussing the outcome of the March board meeting.

Consumer Financial Protection Bureau (CFPB)

The CFPB is asking for comments on two model disclosures it has created that would be used to disclose certain aspects of prepaid cards. 

The CFPB released its 2014 Annual Report on Fair Debt Collection Practices Act.

The White House

President Barack Obama signed the Homeowner Flood Insurance Affordability Act into law. Among other provisions, the law delays the effective date of the escrow requirement from July 6, 2014, to Jan.  1, 2016.

Housing and Urban Development Department (HUD)

HUD issued a proposed rule that will change the way FHA payments are handled.

Federal Reserve Board (FRB)

The Federal Open Market Committee released a statement detailing its March 2014 meeting.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of March 20. The last update prior to this was March 17.

Questions? Contact the Compliance Hotline: 1.800.546.4465,

Posted in Compliance News, NCUA.