KENNEWICK, Wash. — A coalition of small credit unions is urging federal regulators to ease or eliminate certain mortgage-related compliance requirements, arguing the rules impose significant burdens with little benefit to consumers.
In two letters dated March 20, the Endangered Small Credit Union Defense (ESCUD) called on both the National Credit Union Administration and the Consumer Financial Protection Bureau to scale back enforcement of requirements tied to the Nationwide Multistate Licensing System (NMLS) and the Secure and Fair Enforcement for Mortgage Licensing Act.
In its letter to NCUA Chairman Kyle Hauptman, ESCUD asked the agency to direct examiners to stop enforcing or reviewing NMLS/SAFE Act compliance for smaller institutions.
The Asks
The group specifically requested that examiners:
- Stop requiring NMLS identification numbers on mortgage documents
- Cease reviewing annual SAFE Act compliance audits
- Avoid issuing findings or supervisory criticisms tied to NMLS compliance
The request applies to credit unions with less than $500 million in assets or those originating fewer than 500 mortgages annually.
ESCUD said such changes could be implemented through supervisory guidance without formal rulemaking and would align with a March 13 executive order directing regulators to reduce regulatory burdens on smaller lenders.
Call for CFPB Rulemaking
In a parallel letter to CFPB Acting Director Russell Vought, ESCUD sought more permanent relief through formal rulemaking or interpretive guidance.
The coalition asked the CFPB to exempt qualifying small credit unions from:
- NMLS identification requirements on loan documents
- Annual SAFE Act audit obligations
- Registration, renewal, and fingerprinting requirements for mortgage loan originators
ESCUD said such action would complement any supervisory changes by the NCUA and provide lasting regulatory certainty.
Coalition: Compliance Burdens Divert Resources
ESCUD, led by Tri-CU Federal Credit Union CEO Doug Wadsworth, said it represents 30 small credit unions nationwide with more than 100,000 members and roughly $1 billion in combined assets.
The group argued that NMLS requirements were designed for higher-volume mortgage lenders and do not reflect the operational realities of small credit unions.
According to the letters, compliance with the requirements consumes “hundreds of hours” for small institutions while offering “zero meaningful consumer benefit,” diverting resources away from member services and lending.
Tied to Executive Order on Mortgage Access
Both letters cite the March 13 executive order, “Promoting Access to Mortgage Credit,” which calls on federal agencies to reduce duplicative licensing requirements and tailor regulations for smaller lenders.
ESCUD said easing or eliminating NMLS-related requirements would help small credit unions expand mortgage access, particularly in rural and underserved communities, while maintaining safety and soundness standards.
The group said it is prepared to provide compliance cost data and additional information to regulators as they consider potential changes.
The Members of ESCUD
The letter was sent on behalf of Granco Federal Credit Union (Ephrata, WA), Mint Valley Federal Credit Union (Longview, WA), Nordstrom Federal Credit Union (Everett, WA), Tri-CU Federal Credit Union (Kennewick, WA), Connection Credit Union (Silverdale, WA), Spokane Media Federal Credit Union (Spokane, WA), Spokane City Credit Union (Spokane, WA), evergreenDIRECT Credit Union (Tumwater, WA), Prime Source Credit Union (Spokane, WA), IBEW 76 Federal Credit Union (Tacoma, WA), Community Healthcare FCU (Everett, WA), Waterfront Credit Union (Seattle, WA), United Trades Federal Credit Union (Tualatin, OR), Benton County Schools Credit Union (Corvallis, OR), POLAM Federal Credit Union (Los Angeles, CA), Vida Federal Credit Union (Ontario, CA), Desert Valleys Federal Credit Union (Ridgecrest, CA), SEG Federal Credit Union (Laurel, MT), American Southwest Credit Union (Sierra Vista, AZ), Campus Credit Union (Wichita, KS), Ascension Credit Union (Gonzales, LA), New Orleans Firemen’s FCU (New Orleans, LA), Milestones Federal Credit Union #5144 (Lewiston, ME), IBEW 26 Federal Credit Union (Lanham, MD), Revity Federal Credit Union (Greensboro, NC), Acclaim Federal Credit Union (Greensboro, NC), Bessemer System Federal Credit Union (Greenville, PA), Good Neighbors Federal Credit Union (Depew, NY), Chelsea Employees Federal Credit Union (Chelsea, MA), Cranberry Federal Credit Union (West Wareham, MA).
