The Credit Union National Association (CUNA) staff joined several credit union executives for a meeting with Consumer Financial Protection Bureau (CFPB) Director Richard Cordray regarding pending mortgage-related rules including the Truth-in-Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) rule, the Ability-to-Repay rule involving qualified mortgages, the proposals to amend Regulation Z and Regulation X in connection with the mortgage servicing rules, the mortgage loan originator and compensation rule.
While the meeting focused primarily on mortgage issues, the group did take an opportunity to urge the Bureau to be more flexible with the recently finalized international remittances regulation, and commended the Director for delaying the rule and re-opening the comment process for certain portions of the rule.
On the mortgage front, several credit union executives discussed their concerns over the proposed more-inclusive definition of “finance charge” and the associated elevation of the Annual Percentage Rate (APR), and urged the Bureau to not move forward with this aspect of the proposed TILA-RESPA rule. CUNA has repeatedly urged the Bureau to not promulgate new regulations in areas where the law does not require such rules, and the finance charge aspect of the TILA-RESPA proposed rule is one of the changes being considered by the CFPB that is not required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). CUNA and credit union representatives in attendance reiterated the fact that the APR and finance charge remain extremely confusing to consumers.
The importance of a safe harbor approach to the qualified mortgage definition contained within the Ability-to-Repay rule, which is required by the Dodd-Frank Act to be finalized not later than January 21, 2013, was discussed. Under a safe harbor, lenders would have more protection from liability to consumers, but the Bureau is also considering providing a rebuttable presumption of compliance, which would lead to increased legal exposure. Director Cordray indicated that the agency is aware of the importance of getting this rule “right,” and also shared that it is likely that the rule will provide for an implementation period of twelve months, once finalized.
Other issues discussed during the meeting involved multiple concerns with the agency’s proposed rules to amend Regulation Z and Regulation X as they relate to mortgage servicing. These rules are also required to be finalized by January 21, 2013.