The Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 (S. 2155), signed into law on May 24, 2018, provides targeted regulatory relief to credit unions and banks.
It also strengthens consumer protections for student borrowers, seniors, veterans, and victims of identity theft.
CUNA and the leagues engaged heavily with both the Senate and House throughout the process, resulting in historic regulatory relief for credit unions.
What follows is a brief compilation of the key provisions that may affect credit unions, particularly mortgage lenders.
Note that many of these provisions will require rulemaking by the financial regulatory agencies, so this is the beginning rather than the end of the journey.
Expect additional guidance in the months ahead.
Ability-to-repay: Section 101 creates a new qualified mortgage compliance option under the Truth in Lending Act (TILA) for depository institutions with less than $10 billion in assets that originate and hold mortgages in portfolio. This is in addition to the existing Small Creditor Portfolio Qualified Mortgage.
Appraisals: Section 103 provides a tailored exemption from appraisal requirements for federally related mortgages with a transaction value of less than $400,000 in rural areas—when the lender has contacted three state-licensed or certified appraisers that couldn’t complete an appraisal within a “reasonable” amount of time.
Escrow requirements: Section 108 exempts any loan made by a credit union or bank from the TILA escrow requirements if the institution has assets of $10 billion or less, has originated fewer than 1,000 mortgages in the preceding year, and meets certain other criteria.
Home Mortgage Disclosure Act (HMDA) adjustment: Section 104 exempts small-volume mortgage lenders from the expanded HMDA data reporting requirements, which became effective Jan. 1, 2018, if certain conditions are met.
For closed-end mortgage reporting, the conditions require that the credit union has originated fewer than 500 of such loans in each of the preceding two calendar years.
For home equity lines of credit (HELOC), the credit union must have originated less than 500 HELOCs in each of the preceding two calendar years. In addition, lenders subject to the Community Reinvestment Act (CRA) must achieve certain CRA compliance ratings.
Member business loans: Section 105 amends the Federal Credit Union Act’s definition of “member business loan” to exclude loans made by federal credit unions for one- to four-unit single-family homes that are not the member’s primary residence.
These loans will no longer count against a credit union’s member business lending cap of 12.25% of assets.
SAFE Act: Section 106 allows state-licensed mortgage loan originators (MLO) who are licensed in one state to temporarily work in another state while waiting for licensing approval in the new state if they meet certain conditions.
It also permits MLOs who move from a credit union or other depository institution (where MLOs don’t have to be state-licensed) to a non-depository institution a grace period to complete the state’s licensing requirements.
TRID waiting period waiver: Section 109 eliminates the three-day waiting period (between receipt of the mortgage disclosure and closing) required by the TILA-RESPA Integrated Disclosure regulations if the creditor extends to the consumer a second offer with a lower annual percentage rate (APR) than was offered in the previous TRID disclosure.
NCUA budget: Section 212 amends the Federal Credit Union Act to require NCUA to publish a draft of the agency’s proposed budget in the Federal Register, hold a public hearing to discuss the draft, and solicit and consider public comment about the draft budget.
Online account opening: Section 213 permits financial institutions to use a scan of, make a copy of, or receive the image of a driver’s license or identification card to record the personal information of a person requesting to open an account or use some other service through the internet.
The provision requires deletion of the image after use, and pre-empts state laws that conflict with this provision. CUNA is seeking additional clarification regarding the deletion requirement.
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