By now, credit union leaders have become accustomedto new regulations coming down the pike. Less awareness exists,however, for the importance of moving early on the steps it takesto comply with these new regulations.

Most recently, mortgage regulations proposed and now finalizedby the Consumer Financial Protection Bureau have taken centerstage. But because these particular regulations that are made up ofextremely complex rules requiring multiple changes to a creditunion's mortgage program are not set to go into effect untilJanuary 2014, some credit union lending teams may be putting offimplementation.

Compliance professionals who have studied the thousands of pagesof mortgage regulations will tell you this is not the best courseof action. Two sets of mortgage rules in particular requireimmediate action due to their complexity. They are the ability topay/qualified mortgage rules and the mortgage servicing rules. Eachset calls for strategic, calendared planning to achievecomprehensive and on-deadline compliance by January.

A basic implementation strategy is composed of three main parts:1) understanding what regulations apply to which of a creditunion's products; 2) acquiring, updating or creating the properdocuments, disclosures, policies, procedures and other forms; and3) training loan officers and other staff charged with complyingwith the rules. With a mere six months remaining until the mortgagerules become law, credit unions that have not begun at least thesethree basic steps should start today.

In terms of understanding the final rules, credit unions canfind help by partnering with compliance experts who have digestedthe many pages of regulations and know how to apply them toindividual financial institutions based on their size, mortgageproducts and operations, as well as other factors. Understandingwhich of the many complex exceptions of the mortgage servicingrules apply to a particular credit union, for example, can be anoverwhelming task. Here again, the benefit of time is unmistakablyhuge for lending teams, particularly those who work for smallcredit unions.

Lending teams must consider, too, that the mortgage regulationsare likely to impact their secondary market strategies. To continuesuccessful mortgage selling programs, credit unions will need todemonstrate that their origination process is absolutely up tosnuff. Otherwise, what had become a lucrative market essential tothe cooperative's lending initiatives could dry up fast. Mostmortgage buyers issue selling guidance to the financialinstitutions they work with. If you have not yet received such adocument from the partners your credit union works with, contactthem soon to ensure you are meeting their requirements.

As credit union lenders are at it, it would be wise to devotesome implementation resources to ensuring the credit union's FairLending policies and procedures are up to date, and importantly,actually operating as stated. In visiting numerous credit unionseach year, it's not unusual for me to uncover clerical, softwareand human errors on the reporting of Home Mortgage Disclosure Actdata. In most cases, the errors are unintentional and overlooked.But as we know, ignorance is no excuse in the eyes of examiners whohave recently taken a hard line on fair lending compliance.

To reiterate, it's important to start now. If you find yourselffrustrated or even bolstered by the CFPB's history ofeffective-date pushbacks, consider changing your perspective. It'strue the agency has developed somewhat of a pattern, but there isno guarantee it will continue. Working in the best interest of yourcooperative, it's smart to take published regulatory deadlines asgospel. The worst case scenario is extra time for you and yourstaff.

Jason Skemp is director of compliance solutions forPolicyWorks.
Contact
515-221-1858 or [email protected]