Credit union representatives commented on a proposed rule onpurchased mortgages and the Treasury has clarified it's addressnotification ruling.

A Federal Reserve proposal on notifying homeowners when theirmortgage is purchased is well-intentioned but should be slightlymodified, CUNA and NAFCU wrote in comment letters.

The proposal would require people or institutions that acquiremore than one mortgage in a 12-month period to notify theborrower.

CUNA Assistant General Counsel Jeffrey Bloch wrote that the rulewould have limited applicability to credit unions because mostdon't buy mortgages, though it will have a greater impact onCUSOs.

He suggested that participation loans should be exempted because“borrowers will be confused when they receive a notice that detailsthe various parties who have purchased portions of these loans. Inour view the confusion of borrowers outweighs the benefits.”

NAFCU Associate Director of Regulatory Affairs Dillon Shea wrotethat only institutions that acquire more than five mortgages a yearshould be required to comply with the regulation. He suggested thatthis will help institutions and that “only acquire mortgages on alimited basis.”

He also suggested that the regulation's provision exemptingmortgages held for less than 30 days should be expanded to 60 days.This will help financial institutions because title holders willsometimes take longer than 30 days to sell a mortgage. It will alsohelp consumers because they “may become confused if they receivemultiple notices in a short period of time.”

Separately, the Treasury Department's Financial CrimeEnforcement Network ruled that a financial institution doesn't haveto obtain a customer's residential or business address if thecustomer is part of an address confidentiality program.

Those customers “shall be treated as not having a business orresidential address” and the secretary of state or other stateofficial will act as a contact individual for purposes of complyingwith FinCen's rules, Jamal El-Hindi, the associate director ofFinCen's regulatory policy and programs division, wroterecently.

He noted that the Bank Secrecy Act requires financialinstitutions to implement a customer identification program thatincludes “risk-based policies that enable it to form a reasonablebelief that it knows the true identity of its customers” and thelaw also requires that the institution obtain an address. But henoted that the address requirement can be waived if a state hasdetermined that the person's anonymity must be protected.

According to NAFCU's compliance blog, 31 states have set upaddress confidentiality programs, and they are used to protectvictims of domestic violence, sexual assault and stalking.

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