WASHINGTON–America’s Credit Unions told NCUA that reforming the capital treatment of mortgage servicing assets and real estate exposures under NCUA’s risk-based capital framework is needed.
In its letter, the trade group is calling on the agency to initiate rulemakings to:
- Eliminate the MSA deduction threshold to match anticipated forthcoming bank reforms. The current threshold discourages credit unions from building servicing operations without addressing any demonstrated risk
- Adopt loan-to-value-sensitive mortgage risk weights so capital charges reflect actual credit risk, rather than a flat ratio
- Preserve statutory comparability with the bank capital framework, as required by the Federal Credit Union Act
- Support the return of mortgage activity to regulated depositories and away from nonbanks that lack stable funding and prudential oversight.
“These changes would provide particular relief for smaller credit unions, which are disproportionately affected by the expensive upfront investments,” America’s Credit Unions said. “These investments can often only pay off at higher volumes of servicing mortgages.”
Deadline for Comment is Today
Separately, the deadline is today for comment to NCUA on several of proposals as part of its Deregulation Project, including:
- Removing and outdated nondiscrimination requirements
- Rescinding the service to underserved areas interpretive ruling and policy statement
- Rescinding community chartering policies interpretive ruling and policy statement
- Rescinding the federal corporate credit union chartering interpretive ruling and policy statement.
