Many proposed changes have taken place within the Consumer Financial Protection Bureau (CFPB) as of late, including those associated with Home Equity Lines of Credit (HELOC). As of now, financial institutions are required to report HELOCs if they’ve made 100 loans in the last two years, however the CFPB proposal would increase that number to 500 for the 2018-2019 year while they test if it should be a permanent change.
In regards to this change, the National Association of Federally-Insured Credit Unions (NAFCU) submitted a letter proposing three changes to the proposed rule. First, according to the NAFCU, the definition of a small credit union needs to be revised. Under the Home Mortgage Disclosure Act (HDMA), the asset-size exemption is $44 million, meaning credit unions with assets at or below this amount are exempt from collecting HDMA data however, the NAFCU wants this to be in line with the National Credit Union Administration’s (NCUA) definition. According to the NCUA, a small credit union has $100 million or less in assets for purposes of the Regulatory Flexibility Act, and was set after intense study of the industry.
Though the NAFCU supports the increase in required reporting of HELOCs, the group would like to have the change be not only permanent, but raised higher. It would also like the closed-end mortgage loan threshold raised from 25 to, at minimum, 150 for the next two years.
According to the NAFCU, the complexity of the regulatory requirements and the industry goes through a great deal to make sure they are in compliance with the latest rules. With that in mind, the Final Rule will cause more costs to credit unions and the NAFCU would like the CFPB to further delay the HDMA’s effective date.
Overall, the NAFCU finds compliance a top concern, especially now that 2018 is less than six months away. By implementing these suggestions, the NAFCU believes much relief will be provided to credit unions.
"As not-for-profit, member-owned financial institutions, credit unions have served a vital role as affordable and responsible lenders in their communities," Andrew Morris, NAFCU's Regulatory Affairs Counsel, wrote in Monday's comment letter. He said the rule "must undergo substantial adjustment to fairly achieve these statutory purposes."