A quickly approaching June 1 deadline to comply with new rules that prohibit charges related to single-premium credit insurance has prompted CUNA to ask the Consumer Financial Protection Bureau for an extension.
CUNA said it supports the Dodd-Frank mandated prohibition against the financing of actual single-premium credit insurance.
However, CUNA President/CEO Bill Cheney told CFPB Director Richard Cordray in the April 19 letter that language included in the Supplementary Information, which was not included in the proposed rule, is unclear and appears to prohibit the addition of any monthly charge for the insurance to the loan balance.
“This practice appears to be fairly common among credit union mortgage lenders as a number of credit unions’ data processing systems add the insurance premium amount to the loan balance on a monthly basis and as a result, it will be quite costly for the necessary changes to be made by June,” Cheney wrote.
The CFPB is already planning to release a new proposed rule on the subject that addresses the language issues, Cheney said in the letter.
In light of that, the trade requested a delay in the effective date of any provisions that could impact products other than actual single-premium credit insurance. Cheney suggested a target date of Jan. 10, 2014, when the majority of the CFPB’s mortgage loan originator compensation rule takes effect.
NAFCU has suggested, as part of its five-point regulatory relief plan, granting the NCUA the authority to delay rule implementation for credit unions, as well as the ability for the NCUA to tailor CFPB rules to better accommodate the unique structure of credit unions.