New Mortgage Rules Make Documentation Biggest Challenge
Because credit unions already generally abide by new final qualified mortgage and ability-to-repay rules released Jan. 10 by the Consumer Financial Protection Bureau, the most difficult compliance burden will be to document the process, said John Bundy, compliance manager for CUNA Mutual.
“Credit unions may already have underwriting that looks like this, but now they’ll have to document it, and formalize those good practices so they can prove they’re in compliance,” he said.
The CFPB also issued a new rule that requires higher priced mortgages maintain escrow accounts for a minimum of five years, an increase from the current requirement of one year. Unlike the other rules, which don’t take effect until early 2014, the escrow rule goes into effect in June 2013.
Stritzke said most credit unions don’t offer higher priced mortgages because, among other things, they didn’t want to maintain an escrow program. However, when the CFPB finalizes rules this fall that could redefine what is included in annual percentage rate calculations, some fees credit unions charge could boost mortgages into the higher priced category and trigger the escrow requirement.