4 Things to Ponder on Monday AM

April 21, 2014 at 8:26 am Leave a comment

If you are like me, you haven’t been paying much attention to the news over the past few days, so here are 4 things to ponder as you begin your credit union work week.

  • The CFPB recently issued a guide instructing lenders how to comply with the combined TILA-RESPA integrated disclosures that take effect August, 2015.  The CFPB does a phenomenal job with these guides in which it cuts through the more technical aspects of its regulations and provides lenders with practical tips on complying with some of its lending regulations.  I know some of you have understandably taken a break from obsessing about mortgages now that you have gotten your qualified mortgages policies and procedures up and running (you have, right?) but you should remember that the CFPB’s regulation introducing brand new lending application and closing disclosures will have a huge operational impact on those of you who provide mortgages.  For example, closing disclosures will generally have to be provided three business days before closing.  To me this remains one of the most foolish requirements promulgated by the CFPB, but I hope I am wrong with this prediction.  On the bright side I have always been disgusted by the needlessly complicated disclosure process we use when buying and selling houses and in my opinion these new integrated disclosures can’t be any worse that the current disclosures provided to home buyers.  Bottom line, take a look at the manual.  It is not too early to see how you are going to comply with these new requirements.
  • While we are on the topic of mortgages, there is a great article in the Wall Street Journal pointing out a silver lining in an otherwise atrocious mortgage origination market.  According to the Journal, credit unions and community banks are leading the way in loosening lending standards.  Specifically, the paper notes that many lending organizations, desperate to find income now that the low hanging fruit of mortgage origination is no longer available, have reduced requirements for, among other things, the size of mortgage down payments. It will be interesting to see if this trend continues and if it is robust enough to jolt some life into the mortgage market.  It has always been the hope of the CFPB that smaller credit unions and community banks will make mortgage loans using the same standards that they had in place before Dodd-Frrank and the qualified mortgage rules. 
  • The CFPB filed a brief on Wednesday defending itself against a long-shot lawsuit claiming that Congress violated the Constitution when it created it under the Dodd-Frank Act.  The lawsuit, centers on claims that Congress violated the separation of powers doctrine when it gave the Bureau the power to create regulations free of the oversight of Congress or the need for annual Congressional appropriations.  The lawsuit also argues it is illegal that the director cannot be removed at will by the President.  In October the federal District Court for the District of Columbia dismissed the lawsuit.  Morgan Drexen, Inc. et al v. Consumer Finance Protection Bureau, 13-5342.  
  • If Heather Anderson’s report in the CU Times is any indication, then NCUA can expect about as warm a reception as the one Congressmen received as they tried to defend Obama Care at town hall meetings.  OK, maybe I am exaggerating a little but after seeing reports that credit union executives asked pointed questions of the NCUA staff at a recent session dedicated to the Risk-Based Capital proposal at a NACUSO conference in Orlando, it appears that NCUA staff better get working on answering some basic questions.  Among the questions for which the audience did not receive satisfactory answers were how NCUA weighed the need to allow credit unions to take risks in search of higher returns against the perceived need for stricter capital requirements.   There are two basic issues being debated with NCUA’s risk-based capital proposal.  One is whether or not the proposal make sense for the credit union industry at this time.  Secondly, did the NCUA perform adequate due diligence in devising this specific plan?  I sincerely hope the answer to the second question is yes, but one of the most striking aspects of the published proposal is a lack of substantive explanations for the specific requirements it is seeking to impose on credit unions. 

Entry filed under: Compliance, Legal Watch, Mortgage Lending, Regulatory. Tags: , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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