CFPB Sought CU Input When Mulling Proposed Mortgage Servicer Rules
Part of a group of 16 representatives from “small entities”, which include commercial banks and credit unions with fewer than $175 million in assets, those comments were compiled into a report the bureau posted Monday on its website.
The proposed mortgage servicer rules were released Aug. 10. The outreach meeting was in April.
Credit unions provided the panel with an estimate between $20,000 and $40,000 in start-up costs to implement one of the proposed requirements, which would provide consumers with regular monthly mortgage statements that would include a breakdown of payments by principal, interest, fees, and escrow, the amount of and due date of the next payment, recent transaction activity and warnings about fees.
One credit union representative stated it recently cost the cooperative $20,000 to make “minor changes” to statements, and another credit union reported that switching to a periodic statement system would cost as much as $40,000 in start-up costs, not including time.
In general, the small entities represented use third-party vendors to provide mortgage statements, and as small clients, they said they would have little influence over price increases to comply with the proposed rules.
However, they also conceded that if vendors were required to implement the proposed rules for all clients, costs would be somewhat mitigated.
Another proposed rule would require servicers to provide borrowers with two written notices before charging borrowers for force-placed insurance.
The report didn’t reveal much objection among credit unions in attendance, as one credit union said it already provides notices similar to those proposed, and another credit union said its force-placed insurance notification policy provides more information than proposed.
In general, the CFPB reported, the small entity representatives stated that generally, they did not engage in many of the practices that contributed to the mortgage market crisis.
Small companies generally use a “high-touch” model of mortgage servicing that involves constant customer contact and high levels of service in order to ensure that loans perform well.
New compliance burdens such as those proposed by the CFPB would make it increasingly difficult for small firms to stay in the market and to provide choices to consumers, the group said.
However, the small entity representatives also told the CFPB that they did not foresee the proposed rules would increase the cost of credit to consumers.
The five credit union executives included Brian Barkdull, president/CEO of the $164 million American Southwest Credit Union of Sierra Vista, Ariz., Tiffany Michel, vice president of lending at the $59 million Omaha Police FCU of Nebraska, David Wright, president/CEO of the $43 million Services Center FCU of Yankton, S.D., Victor Petroni, senior vice president of lending at the $78 million First New England FCU of East Hartford, Conn., and Christine Wiley, president/CEO of the $156 million Rocky Mountain Law Enforcement FCU of Denver.