Credit unions can't depend upon in-house homeownershipcounselors to be in compliance with CFPB mortgage rules for higher-priced loans,according to CUNA Mutual Compliance Manager Lauren Capitini.

According to the rule that governs loans that fall under theHome Ownership and Equity Protection Act Rule, borrowers mustreceive loan counseling from someone who is not affiliated with oremployed by the lender.

Additionally, Capitini said, there is a prohibition againststeering someone to a particular counseling agency. Instead, theCFPB has posted a list of approved counseling providers on itswebsite, she said Wednesday during a webinar that addressed CFPBmortgage rule myths..

The majority of mortgage compliance myths presented during theevent educated credit unions about the fact that they will have tomake adjustments to their operations as a result of recent CFPBrules. Even credit unions that don't offer mortgages could beaffected, Capitini said.

“If you think you don't do mortgage lending, you need to rethinkthat,” Capitini said. “Think more broadly. Many rules will apply toboth open and closed-end transactions. And some secured bydwellings that include motor homes, RVs, trailers and boats may becovered by these rules as well.”

Other rules have triggers, like certain interest rates or loanstructures, that could create additional compliance burdens, shesaid.

Capitini devoted a considerable amount of time during thewebinar to detail how credit unions that serve rural or underservedareas may be affected by the rules. She stressed that despiteexemptions for such institutions, plenty of rules still apply.

“Even if you're a small servicer, or serve rural or underservedareas, you're covered by rules, generally speaking,” Capitinisaid. “You will get some relaxed requirements to makecompliance easier, but don't think you'll be exempt from one or allof the rules.”

Another myth busted during the webinar was what Capitini saidwas a common belief among many credit unions that they can onlyoriginate qualified mortgages.

While she said qualified mortgages provide better legalprotection and will make exams easier, credit unions could still bein compliance if they underwrite mortgages that don't meet QMstandards provided they verify and document eight underwritingcriteria. Those eight criteria take a closer look at the borrower'sdebt and income, and may be something credit unions are doingalready, she said. The documentation must be retained for at leastthree years, she said, which many credit unions already do.

The mortgage lending webinar was the first in a series of sixthat CUNA Mutual is offering to its customers through October.