There are not many credit unions that service more than 5,000 mortgages,and therefore must comply with the Consumer Financial ProtectionBureau's new servicing rules – 131 credit unions by CUNA'scount.

However, CUNA Chief Economist Bill Hampel said the rule mayaffect more credit union mortgages than the numbers suggest.

“I suspect most of those loans are actually serviced bysubservicers, and since servicing is a scaled business, they mostlikely will be covered by the rule,” Hampel said.

However, that doesn't mean credit unions that contract servicingout will be tasked with compliance. That burden will fall on thesubservicer, Hampel said, who will have to change procedures andbear the brunt of costs to ramp up compliance.

Subservicers may increase prices to recover those costs, butHampel said he doesn't anticipate any potential rate hikes to bebig ones. But consolidation among loan servicing firms could resultfrom the new rules, he said.

One aspect of the rule that could affectcredit unions is the requirement that servicers provide borrowerswith all available options to avoid foreclosure, and that servicers hold off on foreclosureuntil those options are exhausted.

“That could delay the time from the initial expectation of needto the actual execution of the foreclosure,” he said, which couldincrease foreclosure costs and reduce recoveries.

Such a situation would probably be rare, Hampel added, and willbecome even more uncommon as the housing market returns to normaland foreclosures “fade back into being as rare as they once werefor credit unions.”

Hampel said his methodology for determining 131 credit unionsfall under the servicing rule includes counting 1^stmortgages held in portfolio, 1^st mortgages sold butstill serviced, and closed-end 2^nd mortgages, which arealso subjected to the rule. Those 131 credit unions represent just2.6% of those that offer mortgage loans; however, they service 56%of total industry mortgages, $231 billion out of an industry totalof $414 billion, he said. –[email protected]