ALEXANDRIA, Va. (1/7/14)--National Credit Union Administration field staff "will take into account a credit union's good-faith efforts to comply" with new qualified mortgage regulations as they conduct their early-stage examinations, the agency said in a supervisory letter to credit unions (14-CU-01) released Monday.
"As CUNA has been advocating for some time, NCUA has now put into writing that it will take into account, during examinations, credit unions' good faith efforts to comply with the new mortgage rules," Credit Union National Association Deputy General Counsel Mary Dunn said.
"Coupled with the guidance issued last week CUNA also sought--in which NCUA made it clear that it would not expect credit unions to make only 'qualified mortgage' loans--credit unions can structure mortgage loans to meet members' needs and do not have to fear they will be written up for noncompliance with the new mortgage rules as they are working to meet their compliance responsibilities," she added.
The agency letter said NCUA field staff will place particular emphasis on the safety and soundness implications of mortgage lending. Whether a credit union originates Qualified or non-Qualified Mortgages, "examiners will be evaluating credit risk, liquidity risk, and concentration risk," the agency added.
NCUA Chairman Debbie Matz in the letter emphasized that non-QM lending "can be an effective member service if conducted safely and soundly." The agency, she said, "will not subject a mortgage to safety-and-soundness criticism solely because of the loan's status as a QM or non-QM.
However, "credit unions choosing to make non-QMs will need to take into account the potential new market and legal risks," Matz added.
The new QM rule becomes effective on Jan. 10, and will apply to all federally insured credit unions.
For the full letter, use the resource link.