WASHINGTON (6/22/15)--In a letter sent Friday, CUNA asked the Consumer Financial Protection Bureau (CFPB) to clarify an inconsistency and to exempt credit unions that make five or fewer mortgages in a calendar year from the Know Before You Owe rule, which includes the Truth-in-Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) integrated disclosures (TRID) rule.
Last week the CFPB proposed to extend the effective date of this rule from its original date of Aug. 1 to Oct. 1. (See related story: Missed deadline by CFPB factor in TRID delay.)
In the letter to CFPB Director Richard Cordray, CUNA noted a discrepancy between the CFPB’s previous TILA-RESPA Small Entity Compliance Guide and supplementary information to the TRID rule compared with text in the latest Small Entity Compliance Guide and the final rule text.
“Now that the effective date for the regulation has been extended, we believe there is adequate time for the CFPB to correct this inconsistency so that the lending operations of credit unions are not negatively impacted and members can continue to receive financial services to meet their needs,” CUNA wrote.
CUNA estimates that more than 700 credit unions would be exempt from TRID under the definition provided in the CFPB’s September 2014 version of the TILA-RESPA Small Entity Compliance Guide, which states, “Consistent with the current rules under TILA, the rule also does not apply to loans made by a person or entity that makes five or fewer mortgages in a calendar year and thus is not a creditor.”
However, when the delay was announced, CUNA discovered that the Small Entity Compliance Guide had been updated this month and now reads: “Consistent with the current rules under TILA, the rule also does not apply to loans made by a person or entity that is not a creditor.”
Although listed as a “miscellaneous administrative change,” the new rule is a substantive change for credit unions that make five or fewer mortgages in a calendar year, CUNA noted.
“We urge the CFPB to address our concern and confirm that creditors that make five or fewer mortgages per year, as outlined in the rule’s supplementary information and the September 2014 Small Entity Compliance Guide, are exempt from the TILA-RESPA rule,” the letter reads.
CUNA continues to engage with the CFPB to seek clarification on this important matter, and it appreciates the bureau’s discussions about this issue.