NAFCU Says Adopting Proposed Illustrations Now Would Be a 'Leap of Faith'
ARLINGTON, Va. -- NAFCU President Fred Becker, in response to NCUA's request for comment on the Proposed Illustrations of Consumer Information for Nontraditional Mortgage Products and the Proposed Illustrations that were simultaneously issued with the Interagency Guidance Regarding Nontraditional Mortgage Products by the five federal regulatory agencies, has written NCUA and expressed his concern that use of the Proposed Illustrations will become mandatory even though the agencies have explained they're only meant to be examples.
"NAFCU generally supports the Proposed Illustrations as demonstrations of ways to provide information to credit union members," Becker wrote in his letter to NCUA Secretary of the Board Mary Rupp.
"NAFCU appreciates the Agencies' pronouncement that the Proposed Illustrations are not mandatory and are provided for demonstrative purposes only. Nonetheless, NAFCU is concerned that use of the Proposed Illustrations will become mandatory despite the Agencies' stated intent. Therefore, NAFCU encourages the Agencies to ensure that use of the Proposed Illustrations remains non-compulsory. By ensuring that the use of any of the Proposed Illustrations is not mandatory, the Agencies would enable credit unions to seek more effective ways, if and where appropriate, to communicate the information to members," he added.
In addition, wrote Becker, "while the Agencies provide the Proposed Illustrations as samples of how to present important information to consumers on nontraditional products, there is no evidence that they would be useful or effective."
NAFCU recommends that the federal agencies--NCUA, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision--conduct consumer testing to determine how useful and effective the Proposed Illustrations are.
"Without further evidence of the effectiveness of the illustrations, credit unions adopting the illustrations would be taking a leap of faith that the information they seek to provide to members is presented in a manner that is most useful and valuable to all parties involved," Becker wrote.