Everyone in the mortgage world has been inundated with articles,training and webinars on the new CFPB Mortgage Rules and what theimpact is on lenders. Don't get me wrong; there are significantchanges and impacts on lenders, likely more so than everbefore.

But how will the new mortgage rules impact your members?

While the impetus to create the CFPB may have truly been toprotect the consumer, any time new rules and regulationsare implemented there may be unintended consequences. TheDodd-Frank Act, and the subsequent modifications to those rules bythe CFPB, may cause some of those unintended consequences.

Availability and Cost

Many think that the Qualified Mortgage and Ability to Repayrules will significantly limit the number of qualified borrowers.At the very least, if they don't fit into the QM space, but areable to obtain a loan under the ATR definition of a particularlender, they will more than likely have a higher rate and feestructure than those who can qualify for a QM.

This issue will especially be true when investors pop up toprovide a market for lenders to sell non-QM loans. The cost tooriginate and service a loan has already increasedsignificantly. The new employees required and the cost ofupdating systems to comply with the new regulations will continuethat rising trend. Consumers will undoubtedly suffer theconsequences with higher rates in the long run.

Confusion

One of the CFPB's goals was to provide clarity and transparency,allowing all borrowers to make an informed decision as to who thebest lender is for them. Often, however, new regulations tend toaccomplish the exact opposite and muddy the waters for both thelender and the end consumer – in this case, your member. Imagine aquestion mark forming over your member's head as he orshe receives multiple valuations such as anappraisal, AVM, or maybe even an automated underwritingreport from Freddie Mac to comply with the ECOA Evaluationsrule.

In addition, imagine their confusion if the values aredifferent? This could also be with closings that may need tobe delayed to comply with the portion of the rule that requires theborrower to receive the appraisal or other valuations at leastthree days prior. Your member, their realtor, and theseller will be upset and not satisfied with anexplanation of legal requirement.

What can you do?

Anyone who will be talking to the member during the loan processneeds to be cognizant and aware of the new rules. But, inparticular, it is the loan originator who is key. The LO must setthe proper expectations of each transaction, and be proactive ifthere is an issue that arises adversely impacting your member.Application data and system data input must be accurate.

Credit unions are well positioned to leverage their ability totake the time and trouble to educate their members on any changesthat will affect them – and perhaps offer “less” expensive non-QMportfolio loans than their competitors are offering.

You should also leverage relationships you have with yourmortgage partner who may be able to absorb some of the regulatoryrisks and costs of origination and servicing of mortgages in thenew mortgage world. Your partners may also have resources, systems,and training that will help you adapt thereby making your membersexperience as good as it can be.

Wallace Jones is vice president of training at CU MembersMortgage.