The regulatory environment continues to be active in 2015, and it is important for the credit union industry to advocate for regulatory relief.
Credit union industry leaders and trade associations continue to actively advocate for credit unions—and it seems Congress is listening.
Here are three areas to watch and advocate for favorable regulatory actions:
The Truth in Lending Act/Real Estate Settlement Procedures Act (TILA-RESPA) Integrated Disclosure rule (TRID) takes effect Aug. 1, 2015.
The TRID rule combines TILA-RESPA disclosures for closed-end credit transactions secured by real property (subject to a few exceptions) into a loan estimate and closing disclosure. The credit union industry, bankers, and realtors are lobbying the Consumer Financial Protection Bureau (CFPB) to provide a grace period for enforcement.
NCUA has informally indicated that it will consider credit unions’ good faith efforts to comply with the rule by Aug. 1.
The effective date of the rule does not provide for early compliance. That means on Aug. 1 credit unions must flip the switch to begin providing the new disclosures for any loan applications taken on or after this date.
Thus, credit unions are limited to test systems in real time before the effective date even though the rule requires major changes by document providers, loan origination systems, settlement service providers, and credit unions, all who must coordinate these changes.
The CFPB has proposed Home Mortgage Disclosure Act (HMDA) changes that amend Regulation C. These are the next major home-secured rule changes, and could require credit unions to report 37 new data fields for HMDA.
Because the Dodd-Frank Act requires less than half of the proposed new data fields, advocacy efforts have been focused on the nonrequired fields and on exempting a larger subset of credit unions.
The challenge for credit unions will be implementing another high-impact home-secured rule that requires major process and systems changes.
3. Fair lending
Credit unions are expected to implement a fair lending compliance management system (CMS). The CMS should contain these elements:
In addition to concerns over how to implement a manageable fair lending CMS, credit unions are still trying to understand and comply with the CFPB’s 2013 Bulletin regarding fair lending for indirect auto lenders.
The CFPB’s guidance seeks to indirectly regulate auto dealers by regulating the indirect auto lender as the creditor. This bulletin has received congressional attention, and there will likely be more discussion and advocacy focused on the issue.
Credit unions should continue to advocate for changes to proposed and final rules as there is a lot of room for regulatory relief—and these are just a few of the areas.
ANDREA STRITZKE is the director of lending compliance for CUNA Mutual Group. Contact her at 608-665-7054. Information provided in this article should not be construed as legal services, legal advice, or in any way establishing an attorney-client relationship. Credit unions should contact their own legal counsel for advice.