ACUMA: Mortgage Rules Present ‘Opportunity’

Credit unions should see the “opportunity in the challenge” offered by the new mortgage rules from the Consumer Financial Protection Bureau.

That was the message from Tim Segerson, deputy director of the Office of Examination and Insurance for NCUA. On Wednesday Segerson told attendees of the American Credit Union Mortgage Association’s Annual Convention in Las Vegas that predatory and non-consumer focused organizations have more to fear from the CFPB than do credit unions.

“The ability to repay and qualified mortgage rules take effect in January 2014, so it would behoove credit unions to be ready at this point,” he observed. “Both ability to repay and qualified mortgage rules are a standard in Truth in Lending. They also are an opportunity for small lenders to penetrate markets. Risk lies in robustness of underwriting and loan quality standards.”

The majority of CUs originating mortgages qualify for the small lender provisions per the qualified mortgage rule, Segerson noted. “As long as credit unions have good policies, procedures and documentation, there should not be a problem. I don’t know that credit unions should be as concerned about these rules as other types of lenders. I don’t think non-qualified loans are going to be as big of a problem as people think they will be.”

NCUA’s view is QM poses “some” risk, Segerson continued. However, with the exception of a few CUs, he said most already have portfolios or components that cannot be sold easily. “Most targeted practices never existed at most, if not all, credit unions,” he asserted. “In a few years, when conditions normalize, credit unions will be in a better position. They just need to make sure their liquidity ducks are in a row and the credit union will have ability to hold non-QM loan on its books.”

Segerson suggested credit unions look at CFPB.gov for implementation tools.