The Credit Union National Association (CUNA) told the CFPB in a letter last week that the agency should amend its mortgage rules to expand the small servicer exemption.
Currently, the CFPB proposes to allow nonprofit groups that are part of a larger association of nonprofits to be exempt from certain requirements. Title XIV mortgage rules allow for four exceptions to rules that apply to small creditors—in order to qualify for the exemption, the creditor must originate less than 500 first-lien loans and have less than $2 billion in assets in the preceding calendar year.
CUNA said, however, that the exemption should be expanded to include the approximate 200 credit unions in the country that have less than $2 billion in assets but originated over 500 loans the previous year.
“Raising the limit to at least 5,000 originations on first-lien loans will allow many more credit unions to take advantage of the exceptions available, which will allow more credit union lenders to provide an increased level of mortgage credit availability,” CUNA Associate General Counsel Jared Ihrig said.
The CFPB’s proposal, according to CUNA, includes a “cure mechanism” for lenders that originate loans intended to be qualified mortgages (QM) but have points and fees that exceed the three percent cap.
Under the present proposal, lenders have 120 days to issue a refund to the consumer of the excess amount of the allowable cap if the loan was made in “good faith” and meets other QM requirements.
CUNA said, however, the 120-day period may not be enough time for credit unions to refund the consumer because many outsource post-execution mortgage loan reviews, adding that the period should be extended to at least 180 days.