NAFCU: CFPB’s ability-to-repay rule should preempt state law to ensure consistency

NAFCU_logo_editedTessema Tefferi, the senior regulatory affairs counsel for the National Association of Federal Credit Unions, said recently that the CFPB’s ability-to-repay/qualified mortgage rule should preempt state law to ensure clarity and consistency in its application.

In response to a proposal by the CFPB last month, Tefferi said NAFCU supports a rule that Regulation X, which implements the Real Estate Settlement Procedures Act, preempts inconsistent state law but added the organization does not support providing exceptions to state law that offer greater protection than federal law.

“Federal credit unions, chartered by an agency of the federal government, should be able to rely on a uniform set of mortgage servicing rules,” Tefferi said. “Should the CFPB move forward with [its proposed] interpretation, the cost of compliance for a federal credit union that operates in multiple states would increase [to include] initial and ongoing legal fees to analyze state laws and to design and implement multiple compliance programs.”

Tefferi pointed to the proposal’s inclusion of limiting factors that narrow the number of exempt servicers, saying NAFCU supports expanding the exemption to 10,000 mortgages. He also reiterated the organization’s call to exclude affiliate fees from the calculation of points and fees, as well as opposition to the 43 percent DTI limit for QMs.

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