WASHINGTON — The Defense Credit Union Council is urging the Consumer Financial Protection Bureau to modernize mortgage regulations and eliminate requirements it says create unnecessary delays and compliance costs for credit unions without providing meaningful benefits to borrowers.
In comments responding to the CFPB’s request for information on promoting access to mortgage credit, DCUC said credit unions play an important role in relationship-based mortgage lending, particularly for consumers whose circumstances may not fit standardized lending models.
DCUC represents more than 200 defense-affiliated credit unions serving more than 40 million members.
“Consumer protections should be preserved, but the CFPB should eliminate requirements that do not materially improve consumer understanding and that disproportionately burden credit unions,” said Jason Stverak, DCUC chief advocacy officer.
DCUC said its recommendations are intended to preserve the core consumer protections of the Truth in Lending Act and Real Estate Settlement Procedures Act while giving financial institutions greater flexibility in implementing mortgage regulations.
The Recommendations
Among its recommendations, DCUC called on the CFPB to:
- Modernize TRID timing and disclosure requirements to reduce delays when changes have little or no effect on a consumer’s decision to proceed with a mortgage transaction.
- Eliminate the three-business-day rescission period for rate-and-term refinances when borrowers have already received and had an opportunity to review the Closing Disclosure.
- Provide greater flexibility for smaller credit unions, including tailored requirements and safe harbors that recognize their more limited resources and lower mortgage volumes.
- Expand electronic mortgage processes through clearer guidance supporting electronic disclosures and signatures, remote processes and digital document delivery.
- Review tolerance thresholds and other requirements involving costs that cannot reasonably be determined or controlled by a creditor at the time of application.
Avoiding ‘Compromise’
“These recommendations are about making the mortgage process work better for consumers without compromising the protections that matter,” said Anthony Hernandez, DCUC president and CEO and a retired U.S. Air Force colonel. “Servicemembers and military families often face tight timelines when relocating or making a permanent change of station, and their credit union should be able to provide timely access to mortgage credit without unnecessary regulatory delays.”
DCUC said smaller credit unions face particular challenges because they typically operate with fewer employees, more limited compliance resources and smaller mortgage portfolios. Fixed compliance costs can make some mortgage products difficult for those institutions to offer, potentially reducing consumer choice in communities where smaller financial institutions are an important source of credit.
“Credit unions are particularly well-positioned to serve borrowers whose circumstances may not fit conventional lending models,” Stverak said. “Modernizing outdated processes can help preserve that access while allowing credit unions to focus their resources on serving members.”
DCUC urged the CFPB to maintain clear regulatory principles and meaningful consumer protections while giving financial institutions more flexibility in determining how to communicate information and provide mortgage services as the lending process becomes increasingly digital.
Earlier, America’s Credit Unions provided its feedback to the CFPB on the same issue, as reported here.
