At first glance, a proposed rule issued Jan. 10 by the CFPB that provides aqualified mortgage exemption to institutions with fewer than $2billion in assets is a big win for small lenders.

However, upon further analysis, compliance experts say theproposed rule doesn't provide much regulatory relief to creditunions after all.

Andrea Stritzke, vice president of regulatory compliance for theDes Moines, Iowa-based compliance firm PolicyWorks, said the proposed rule eases the 43%debt-to-income ratio requirement for qualified mortgages for smalllenders that fund fewer than 500 mortgages per year.

However, the lenders must keep the mortgage in their portfoliofor at least three years to qualify, and must also meet all otherqualified mortgage product and underwriting standards.

“We'd rather have this proposed rule adopted rather than not atall, but (CFPB) could have eased the burden on credit unions a lotmore than in just that one piece,” Stritzke said.

John Bundy, compliance manager for CUNA Mutual, said uponpreliminary analysis, he thinks the rule might allow credit unionsto offer new mortgage products that were previously restrictedunder current rules, such as closed end home equity products. Mostcredit unions fall well within the 43% debt-to-income ratio forfirst mortgages, Bundy said, but borrowers who own their homesoutright and have enough equity to qualify for home equity lendingare often older members on fixed or lower incomes.

Bundy added that the proposed rule and its increased flexibilityto small lenders is a sign the bureau recognizes credit unionsdidn't cause the financial crisis.

“But, it remains to be seen how much effect it will have oncredit unions,” he said.

The rule included a footnote explaining the CFPB's choice of $2billion as a threshold for the proposed rule does not imply that itwill use the mark to distinguish “small firms” for otherpurposes.