FARMERS BRANCH, Texas (7/21/14)--Representatives from the Cornerstone Credit Union League and a group of El Paso-area credit unions last week met with Consumer Financial Protection Bureau (CFPB) Director Robert Cordray and his staff to discuss the impact on credit unions of recent regulatory changes by the agency.
The forum was part of several roundtables in the El Paso area with different groups to discuss issues pertaining to the CFPB's operations (Leaguer July 18).
Several credit unions indicated that they would continue to write non-QM loans because members are unable to qualify for loans under the QM rules. Cordray expressed support for non-QM loans, as many lenders have shifted to only issuing QM loans due to perceived risks.
Cordray also addressed remittance transfers, and how the CFPB believes misinformation about the new requirements convinced many smaller entities to leave the market. Several of the credit unions indicated that they no longer provide remittance services as a result of the rule, due to vendor issues and possible risk in the error resolution process.
Much of the discussion centered on "pain points" created by the implementation of the Dodd-Frank Act, especially the new ability-to-repay and qualified mortgage (QM) rules. Cordray asked about specific staffing issues at each credit union, and how staffing changes were incorporated into operations.
Cordray expressed confidence that credit unions could continue to provide remittances under the new rule, and would lend the CFPB's assistance in working with vendors to fix remittance issues. He stressed the importance of financial service providers participating in the remittance process. Their departure might force members to look to less reliable services for remittances, he said.
Overall, Cordray praised credit unions for their efforts in assisting low-income consumers, especially those in the El Paso area. He encouraged credit unions to continue to be a market leader in providing short-term, small-dollar loans as a preferred alternative to predatory payday lenders. With the CFPB assuming regulatory authority over nonbanking entities, including payday lenders, he also asked that credit unions partner with the CFPB in reporting any abusive practices by these companies.