WASHINGTON (1/13/14)--The Credit Union National Association is calling for credit unions to be exempt from new Ability to Repay/Qualified Mortgage rules on two fronts: A letter that will be submitted for the record of a Tuesday congressional hearing, and a Friday letter to Consumer Financial Protection Bureau Director Richard Cordray.
The letter to Congress will be submitted for the record of the House Financial Services subcommittee on financial institutions and consumer credit hearing titled, "How Prospective and Current Homeowners Will Be Harmed by the CFPB's Qualified Mortgage Rule."
The CFPB has the legal authority to provide an exemption from the ATR/QM rule, according to the CUNA congressional statement.
In a separate letter to Cordray, CUNA noted that portions of the Dodd-Frank Act and other related consumer laws provide the CFPB with express authority to provide exemptions from the requirements of statutes or implementing regulations generally or the requirements of certain provisions specifically.
While it is early to assess the impact of the ATR/QM rule, which went into effect Jan. 10, on the housing market, credit unions are concerned that it will have a negative impact on their mortgage lending and operations, CUNA says in the statement to Congress.
"Credit unions agree that it is always in the best interest of the credit union to assess a member's ability to repay when offering them a loan. That is what credit unions routinely did, even before the adoption of the rule," the CUNA statement adds.
However, the ATR/QM rule was designed to address problems credit unions did not engage in, and there is a very strong statutory and public policy case to be made that credit unions ought to be fully exempt from the QM rule. "That case is also based on how credit unions are structured, which produces a set of operational incentives that is different from for-profit financial institutions, and also on the historical performance of credit union mortgage loan portfolios," CUNA says in the statement.
"Only Congress can protect credit unions and other lenders from this threat, and we continue to urge you to take action on this matter as soon as possible," the statement adds.